The importance of multinational companies in Switzerland
Part of the great success of the “Swiss business model” is represented by the multinational companies in Switzerland which in turn benefit from ideal framework conditions for the economy. These conditions refer to the practical regulatory environment, attractive tax conditions and several other factors that make Switzerland an attractive location for multinational companies.
photo Elwood J Blues
Economic importance of multinational companies in Switzerland
Switzerland has become in a matter of a couple hundreds of years one of the richest nations in the world from once being one of the poorest in Europe. How was that possible? It was possible because its economy was internationalized at a very early stage, turning Switzerland into a competitive country, with modern economic frameworks. The Swiss understood earlier what other countries failed to do in time – that an open economy provides a series of mutual advantages, both for Switzerland and for foreign investors, companies and entrepreneurs.
In comparison to its size and population, there are a large number of multinational companies in Switzerland. On one hand, there are many companies which decided to relocate or establish their headquarters in Switzerland, while other companies opted for subsidiaries and company branches. Multinational companies account for 1/3 of the Swiss GDP.
Ever since the early stages of Switzerland as a confederation, freedom of industry and trade, standardization of weights and measures and the abolishment of customers barriers within the country laid the foundation for a modern state, based on services and industry, in the lack of mineral resources.
Local industry was focused mainly on textiles and watchmaking and the products obtained were quickly recognized due to their quality, a feature that is to this day common for most Swiss-made products. Companies started to grow and export most of the goods produced, which made them expand their activities on other markets, thus transforming in time small family businesses into multinational companies. In addition, the banking and finance sector was also developed to support the business operations of multinational companies in Switzerland.
photo/ günter
Switzerland as location for multinational companies
Due to the favorable business policy, attractive tax system and strong commercial and economic connection with other industrialized countries, Switzerland has become an attractive location for multinational companies facing worldwide competition.
Multinational companies in Switzerland account for one of third available jobs in the country, thus providing employment opportunities for the local labor market and for workers from other jurisdictions as well. The same companies also provide a high number of training places available in Switzerland, offering attractive opportunities for young people fresh out of high school.
In return, the companies benefit from the advantages provided by Switzerland as a business location, considering all the important factors form different sectors, such as:
- Politics – stability, regulations in order, legislation;
- Finance – state finances, taxes, exchange rate;
- Market – labor market, prices and wages, level of costs for business operations;
- Infrastructure – communication, energy, transport;
- Education – qualified workers, schools, vocational training, innovation, research and development;
- Society – quality of life, cost of life, culture, leisure, sport.
Structure and organization of multinational companies
Multinational companies in Switzerland and in general consist of a few up to hundreds of individual companies that are part of a group. The companies generally have various functions or are organized on geographical criteria to deal with different types of markets.
The headquarters are the main unit of a multinational company and it’s responsible with the overall business operations of the group, by establishing the corporate policy.
Global and regional headquarters may be established for a multinational company, depending on the company’s structure and on the characteristics of the markets it activates on.
For tax planning and logistic purposes, a large number of multinational companies choose to establish their headquarters in Switzerland.
Author: Ariana Smith
