The goods inspection company “Société Générale de Surveillance” (SGS) is one of the multinational firms based in Switzerland. With its fields of business, SGS covers more than half of the global market. Headquartered in Geneva, it is represented in nearly 140 countries and employs a staff of 37,000 worldwide. Better known to the public than SGS are names such as Nestlé, ABB, Novartis, Roche and Holcim. Those five Swiss firms are counted among the largest corporations in the world. Their combined global turnover corresponds to almost half of the Swiss aggregate income. Nestlé belongs to the most global of Swiss companies: With a staff of 230,000 employed in 500 plants, this consumer-goods corporation is present in almost every country.
The high-tech corporation ABB, which provides the world with manufacturing, processing and consumer goods, employs a staff of 160,000 in over 100 countries. With Novartis and Roche, two of the world’s five largest pharmaceutical corporations are headquartered in Switzerland. Novartis employs approximately 98,000 people in 140 countries, Roche 80,000 people in 180 countries. Last but not least: With a staff of 87,000 and a turnover upwards of 25 billion Swiss francs (2008), Holcim is the second global market leader in the cement business.
In addition, there are a whole array of smaller Swiss companies such as Geberit, Phonak, Oerlikon, Schindler, GF and Bobst, predominantly in the engineering, metal and electrical industries, who have a strong presence on the world markets.
Switzerland is an attractive headquarters location
All of the above-mentioned companies have consistently globalized their production and employment structures, but their corporate headquarters continue to be located in Switzerland. Corporate strategy design and main corporate process control, thus, originate from the home base in Switzerland. The decision in favour of the location of Switzerland is anything but grounded solely in “patriotic considerations”. Rather, Switzerland ideally seems to meet the specific location demands that corporate head offices have. Those include the central European location, political stability, well-developed infrastructure, superior educational institutions and high availability of skilled labour in our country. The liberal corporate and flexible labour legislation of Switzerland is also significant in this regard. However, it is the Swiss tax system that represents a key factor in the choice of the location. Taxation is moderate in Switzerland. Switzerland has internationally highly advantageous regulations when it comes to areas that are important to corporate functions. In addition, it offers an extensive network of double taxation agreements, a low VAT rate and a comparatively low personal income tax rate. The advantages also include the “tax climate”, which is characterized by mutual understanding and respect.
Foreign multinational companies are also drawn to Switzerland
The strong appeal of the location of Switzerland has also been convincing to numerous large foreign corporations. Switzerland shows a high amount of direct investments. The presence of “business clusters” causes an increasing number of successful multinational firms to relocate their head offices and central corporate functions to Switzerland.
Our country is considered the leading headquarters location in Europe after Great Britain. Foreign company establishments are concentrated in a handful of cantons. Sixty per cent of the international headquarters of foreign companies are, thus, located in Zug, Zurich, Vaud, Geneva and Fribourg. The concentration of such corporate head offices is particularly impressive in the region along Lake Geneva, between Geneva and Montreux. Internationally famous groups such as Adecco, Caterpillar, Chiquita, Colgate, Hewlett Packard, Nissan, Procter & Gamble as well as Philip Morris have settled here. The total count of international headquarters in Switzerland is estimated to be approximately 500 (including those of Swiss corporations).
The density of multinational companies in Switzerland is practically twice that of the Netherlands, three times that of USA and even five times that of Germany.
Headquarters are highly significant for the Swiss economy
In the light of that density, it is not surprising that multinational firms have a significant impact on the Swiss economy. A typical headquarters creates an average of 100 jobs and contributes 25 to 30 million francs to the country’s gross domestic product. Since foreign firms typically establish additional corporate functions in Switzerland (such as research and development as well as specific production units), their economic significance surpasses this average by a great deal. Overall, Swiss multinational firms are assumed to contribute one quarter, foreign ones based in Switzerland one tenth to the country’s gross domestic product. Switzerland belongs with the winners of globalization. Thanks to multinational companies, our country comes in eighth in a worldwide comparison of foreign direct investments per capita. It also ranks among the top ten in terms of export quota. Moreover, a considerable portion of the international trading in raw materials, energy and agricultural products takes place via our country.
Future prospects: Switzerland as a location for corporate headquarters
The global economic crisis has temporarily put a small damper on the dynamics of foreign-group settlements in Switzerland. However, the economic recovery is expected to increase the number of foreign companies coming to Switzerland. While today the majority of such companies are from USA, an increasing number of firms from the BRIC countries (Brazil, Russia, India and China) may be settling in Switzerland in the future.
Switzerland would be well advised to take care of its attractive structural conditions and to continue to react foresightedly to developments in other important locations.
The author was born in 1949 and is chairman of the executive board of SwissHoldings. He studied political science at the University of St. Gallen and international relations at the University of Geneva. He then worked in the field of international civil aviation and several years for the Swiss Federal Tax Administration. In 1990, he joined the Swiss association of internationally active corporations in Bern.