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Political & socio-economic overview

Sharing borders with France, Germany, Austria and Italy, this central European, landlocked country has been at the heart of commercial and industrial development for centuries. Consisting of 26 cantons, or federal states, the country boasts the use of 4 official languages and regional differences in culture, geography, politics and attitudes.

Sharing borders with France, Germany, Austria and Italy, this central European, landlocked country has been at the heart of commercial and industrial development for centuries. Consisting of 26 cantons, or federal states, the country boasts the use of 4 official languages and regional differences in culture, geography, politics and attitudes.

With a generally highly skilled population, strong salaries, high levels of taxation and a good social system, the cost of living can be high.

Swiss Federal Statistical Office (FSO) data also indicates interesting insights as to the make-up of the population. In 2014 for example, families with 2 children made up 42% of that population, whilst those with one child numbered 41%. This is out of a total of 1.237 million households with children. With 3.57 million households in the country, it is important for merchants to note the opportunities that this represents.

According to the OECD in 2017, employment levels were at 80% of the population (OECD average in same period was 68%).

In addition to strong employment levels, and salaries generally commensurate with the cost of living, the level of savings held per person is also high at around 14% of the household budget, which suggests to a stable economy and prudent citizens. This approach has been shown to encourage a value-driven consumer, where quality is held in high esteem. Shoppers will however look for quality and better prices.

The good communications links, as well as shared land borders and languages between Switzerland near-neighbours mean that cross-border trade is prevalent. That was the case even before the advent of ecommerce.

Recent global economic uncertainty increased the value of the Swiss Franc (CHF) in comparison to other major currencies, such as the Euro (€) and US Dollar ($). The Swiss currency is often seen as a ‘safe haven’ in times of economic uncertainty. To protect the currency, negative interest rates were introduced by the Swiss National Bank in January 2015, meaning that it cost money to keep it in a bank (for some). The rise in the strength of the currency also moved to increase the attractiveness of cross-border shopping, via both digital and physical channels. In 2016 alone, it is estimated that around €10.6 bn was spent in cross-border transactions.

Figure 2: Value of cross border transactions during 2016. Source: Regiodata Research

For many brands, the size of the population could be seen as a limiting factor, resulting in many of them deciding to service the market from other countries. For example, Amazon currently serves the Swiss market via its German operation.

However, the same traits that make the country a safe haven for investors, also benefit business. A stable economy, government structures and taxation system make Switzerland ideal for market development. Strong international transport links and a population used to a global perspective make this an attractive market for merchants looking for new opportunities.

Source: UN Comtrade / World Bank & globaledge.msu.edu

Whilst Switzerland has close ties with the European Union, it isn’t a member state. It is part of the European Free Trade Area, which has benefits in terms of tariffs, taxation and movement of goods and services. As a member of the Schengen Area, EU and Swiss citizens benefit from freedom of movement, although there are still restrictions on length of stay.

 

 

 

Demographics

Online and mobile usage

Online shopping behaviours

Marketing and branding

Finance and payment

Legal framework and regulation

Logistics and delivery

References

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