For those who have decided to internationalize their company, one of the first steps is choosing the target country. This is the first step to take after analyzing the internal and financial resources along with the actual ability to initiate this project.
The factors to be considered in evaluating a foreign country are, first of all, infrastructure, politics, economy, and culture. It is extremely important to understand the economic and political stability of the country and what it is investing in our specific industry. It is also important to evaluate any possible competitors as well as consumer habits and if there are cultural or tariff barriers.
Participation at trade fairs and events in the destination country is often very useful as they allow the establishment of the first important contacts for the company.
Studying the market in the intended country is the first step. The following are the primary points to consider for a structured market study:
o The macro aspects of the foreign country (land configuration, demographics, language);
o Political forms of government (governing structure and stability and foreign relations, specifically with your country);
o Economic and financial resources (structure of the economy, bank and insurance organization);
o Transport and communications (ports, airports, railways, domestic and international transport); o Foreign commerce, openness to international markets;
o Regulation of exchanges;
o (Information on the industry (competitors, consumers);
o Export statistics for the reference industry;
o The outlet for the product in that market;
o How to obtain a share of that market and what is the estimated space;
o Entry barriers;
o Customs, tax, and regulatory aspects.
Why choose Switzerland for internationalization
Switzerland is one of the most globalized countries in the world in terms of foreign trade. With an export surplus of over 30 billion Swiss francs, Switzerland creates much of its wealth by exporting goods and services. One of the densest network of free trade agreements with various areas, including the EU and China, contributes to simple and efficient foreign trade. Other positive factors are the simple and transparent legislative framework and a modern customs regime. With optimal supply management, Swiss companies can enjoy decisive competitive advantages over foreign competitors.
Swiss products are synonymous with quality, precision, safety, and reliability, and foreign buyers are willing to pay a lot for these characteristics. Thanks to Mutual Recognition Agreements (MRA), goods coming from Switzerland can receive official recognition of conformity in line with regulations related to the products of various trading partners, including the EU, which represents the world's largest trading market. The subsequent simplification of introducing and exporting goods offers Swiss companies a decisive competitive advantage over third parties that do not have such agreements.
Competitive trade advantages: Free trade agreements
In addition to the EFTA convention and the free trade agreement with the European Union (EU), Switzerland currently has a network of 32 free trade agreements. Plus, Switzerland has also initiated numerous highly advantageous bilateral trade agreements with other international countries such as Japan, China, Indonesia, and those in South America. Grazie a tali accordi, le imprese svizzere godono di notevoli risparmi sui dazi doganali e di un accesso privilegiato a numerosi mercati di esportazione.
For example, Switzerland was the first European country to sign a bilateral free trade agreement with Japan (2009). Then, in 2014, the bilateral free trade agreement between Switzerland and China came into force. China is Switzerland's third most important foreign trade partner, after the EU and the USA. Thanks to this agreement with China, Switzerland benefits from concrete trade advantages, as shown in the example below.
Plus, Switzerland is conducting negotiations to conclude free trade agreements with the following commercial partners: the Russia-Belarus-Kazakhstan Customs Union, Algeria, India, Vietnam, Malaysia, Thailand, and Mercosur (Argentina, Brazil, Paraguay, Uruguay, Venezuela). 2021
Swiss Made and rules of origin
In order to benefit from the preferential duty rates provided in free trade agreements, foreign companies operating in Switzerland must obtain "Made in Swiss" recognition for the specific product category. This is done through a quick and easy process observing certain rules of origin that determine the extent to which the product can be extracted, manufactured, processed, or transformed in other countries.
The following rules apply to the industrial sector:
• At least 60% of the production cost (including R&D) must be produced in Switzerland
• The activity that gives the product its fundamental characteristics must take place in Switzerland
• There are exceptions. Under certain conditions, the calculation may exclude raw materials and semi-processed materials.
To take advantage of the preferential duty rates provided by a free trade agreement, Swiss companies must present a certificate of origin (proof of origin) for the products to be exported each time. To determine whether a product can be introduced into the market of a free trade partner duty free and if it is worth it, the following steps must be taken:
1. Determination of the tariff heading of the product to be exported.
2 If a preferential duty rate does exist, another step must be taken to verify the specific rules of origin for the product in question.
3 If the product to be exported meets the rules of origin, the proof of origin documentation may be completed and export of the merchandise may be initiated.
For example, when applied to the free trade agreement between Japan and Switzerland, when exporting a Swiss product to Japan, there is no need to comply with a minimum share of the added value generated in Switzerland if the original materials come from Japan. The same principle applies to trade agreements with different countries, for example, those in the EU. So, a Swiss product based on original material from Italy and exported to Germany is exempt from the rules of origin.
Customs and rules for transporting goods
When exporting, companies must not only make sure their goods comply with the rules of origin; they must also ensure that they comply with the regulations related to the products that apply in the free trade partner's market. The related compliance measures are often linked to significant added costs.
Thanks to progressive harmonization of the regulations related to the products and a series of Mutual Recognition Agreements (MRA) between Switzerland and the EU/EFTA, these technical barriers to trade in the world's largest trading market were removed for many goods. The subsequent cost savings amount to between 250 and 500 million Swiss francs per year. In 1999, the MRA between Switzerland and Canada came into force.
The MRA between Switzerland and the EU authorizes Swiss companies to export their goods if they affix a CE mark, which is necessary for export to the EU. This mark is sufficient to introduce the products on the European market without further verification needed.
To import goods from the EU/EFTA area into Switzerland, where not regulated by the MRA, the "Cassis de Dijon" principle has been in force since 2010. This means that products that are legally traded in the EU or the EEA can circulate freely in Switzerland without prior checks. Given that Switzerland has aligned many of its product regulations with the EU, EFTA, and EEA, they are mutually recognized as being equivalent. Therefore, for many products, a single evaluation of conformity in line with the Swiss technical requirements is sufficient. The conformity assessment procedures at the appropriate Swiss offices are particularly quick and efficient.
Commercial support for companies
In Switzerland, there are numerous organizations that specialize in commercial support to Swiss companies for the import and export of goods. These associations are subsidized by the confederation and most of the services offered are free of charge.
• SWITZERLAND GLOBAL ENTERPRISE (www.s-ge.com)
• SECO - State Secretariat for Economic Affairs (www.seco.admin.ch)
• Federal Customs Administration (www.ezv.admin.ch)