Sino-Swiss Business News
Hong Kong will soon lose its status as the place with the world’s lowest corporate tax, replaced by the small mountainous canton of Nidwalden in Switzerland, a study found. That’s according to a taxation index by BAK Economics that regularly measures the attractiveness of Swiss cantons compared with each other as well as locations abroad. Switzerland is implementing one of the most significant tax reforms in decades. Tax burdens on corporate profits are expected to fall sharply in several cantons, especially Nidwalden, located on Lake Lucerne, according to the study. Unless Hong Kong changes its own tax regime, Nidwalden will push past it by 2025 with a corporate rate of 9.8%, the independent Swiss economic research institute concluded. Nationally, the Swiss corporate tax rate should fall to 13.5% from 16.8% when the reforms are fully in place by 2025, BAK estimated. That would be lower than Singapore. The canton of the capital Bern, with the highest tax burden in Switzerland, comes in ahead of European cities such as London, Munich, Vienna, Paris and Milan, the study found.
Our previous analysis of Swiss Businesses in China published in the 2019-summer edition of the Bridge was titled “Economic Slowdown becomes top concern”. The current survey was completed days before the Wuhan lockdown and the main concern was a further intensified “Economy Slowdown in China” with 69% of Swiss firms listing it as a challenge against only 51% in the 2019 survey. Finding and attracting talent remains the top internal challenge. With slower growth, however, the intensity of the challenge is diminishing while innovation and marketing become key competitive advantages to build up for success. Building these advantages is certainly more and more important as competition and rising costs remain the other key external challenges that businesses face in the Chinese environment. To sell, Swiss firms differentiate themselves very clearly from their Chinese competitors through “High Quality” and “Developing a Strong Brand”. They also woke up to the critical importance of R&D and market research, two elements where they are this year on a par with Chinese respondents. Chinese firms, traditionally weaker at branding and innovating, compete and differentiate by putting emphasis on service, distribution and providing cost effective goods and services (price/quality ratio). Overall and despite the geopolitical rivalry, trade war and increased top down management of the Chinese society, the Swiss have been confident about their business prospects for 2020 and in the 5 years to come. Their confidence level is as high as it has been in the last 5 years.
In a recent interaction with the media, Swiss Re China CEO John Chen shared how China domestic insurers should catch up with the rest of the world in the post-pandemic era. “Chinese insurance companies should launch products and services with targeted and customised features to increase the insurance coverage rate during post-pandemic,” he said. According to Mr. Chen, the current challenges facing the Chinese insurance market include – economic recovery after the pandemic, changes in the underwriting cycle, the catastrophe protection gap under climate change, comprehensive reform of auto insurance, the sustainable development of health insurance and digitalisation. He mentioned that the lockdown of cities in response to the pandemic control has brought economic activities and business operations to a halt. This has led to economic growth falling into a gradual recession and global supply chains being hit. In terms of life insurance, he noted that the pandemic has led to the shrinking of the traditional channel of sales.
DKSH Business Unit Technology and Bruker, renowned for its market leading analytical X-ray solutions, have extended their distribution agreement in China. Last year in April, the two companies strengthened their partnership in Asia by adding a business cooperation in China with the distribution of the Bruker XRF products S2 PUMA and S2 POLAR. With the extended agreement, DKSH will also provide marketing, sales and after-sales services in China for the Bruker 3D X-ray Microscopy product line. The 3D X-ray Microscopy product portfolio consist of three powerful benchtop systems and the SKYSCAN 2214, which is the highest resolution 3D X-ray microscope launched by Bruker, a pioneer in X-ray nano-tomography. The entire SKYSCAN series offers 3D X-ray microscopy at exceptional resolution with an unparalleled user experience. Utilizing the latest technologies in each of the components make the SKYSCAN series the most complete and versatile system on the market. DKSH aims to bring 3D X-ray Microscopy to customers across a range of material science industries, including geology, oil & gas exploration, polymers & composites, batteries & energy storage, pharma & packaging, automotive & aerospace, 3D printing and electronics.
Agrochemical giant Syngenta Group Co. Ltd. has officially debuted as part of China’s government-led mega-merger of two dominant state-owned chemical companies ahead of a possible IPO in China by mid-2022. The newly formed company Syngenta, which was registered last year, evolved from the Swiss pesticide producer that China National Chemical Corp. (ChemChina) acquired in 2017 and took in agricultural assets from ChemChina and Sinochem Group. In a statement announcing its launch Thursday, Syngenta said its first-quarter revenue was USD 6.3 billion, of which about a quarter was generated in China. The company last year surpassed Bayer AG to become the biggest agrochemical company in the world, racking up USD 23.2 billion in revenue. ChemChina acquired Syngenta AG, the predecessor of the newly launched company, for USD 43 billion in 2017 in the largest ever overseas acquisition by a Chinese firm. As part of efforts to reduce ChemChina’s debt after the takeover, it has been working through a merger with state-owned rival Sinochem. In January, the two Chinese state-owned chemical giants announced they would consolidate their agriculture chemical assets into the newly formed Syngenta Group as part of their ongoing restructuring plan.
The eagerly anticipated data on economies’ competitiveness has gone live, opening discussions on changes in the hierarchy on a national, regional and global level. The annual rankings, now in their 32nd year, have been released unlocking a wealth of data on the performance of 63 economies across the globe. Singapore was number one for the second year in a row. In second to fifth place, in order, came: Denmark, Switzerland, the Netherlands and Hong Kong SAR. A marked pattern in this year’s results, which are an amalgam of hard data taken from 2019 and survey responses from early 2020, is the strength of smaller economies. Arturo Bris, Director of the IMD World Competitiveness Center and Professor of Finance, says, “The benefit of small economies in the current crisis comes from their ability to fight a pandemic and from their economic competitiveness. In part these may be fed by the fact it is easy to find social consensus.”
Switzerland is the safest country in the world right now for COVID-19. South Sudan is, according to a massive 250-page report, the most dangerous nation. The report is based on 130 quantitative and qualitative parameters and over 11,400 data points in categories like quarantine efficiency, monitoring and detection, health readiness, and government efficiency. It’s by the Deep Knowledge Group, a consortium of companies and nonprofits owned by Deep Knowledge Ventures, an investment firm founded in 2014 in Hong Kong. “Switzerland and Germany achieve the #1 and #2 positions in this new special case study specifically because of their economy’s resilience, and due to the careful ways in which they are attempting to relax lockdown and economic freezing mandates in a fact and science-based manner, without sacrificing public health and safety,” the study says. China ranked 7th in the list.
Credit Suisse has taken a majority stake in its Chinese securities joint venture, granting it control for the first time over its business with the troubled Founder Group conglomerate. The Swiss bank joins a handful of other financial institutions taking advantage of an expedited opening of China’s financial markets, after years of slow, frustrating developments. Under pressure from the US to allow more foreign participation in domestic investment banking, asset management and insurance, China’s regulators have sped up reforms over the past two and a half years. Since then, UBS, Nomura, JPMorgan, Goldman Sachs and Morgan Stanley have secured majority stakes in Chinese securities joint ventures, or the regulatory permission to do so. Credit Suisse said on Monday that it had increased its shareholding in Credit Suisse Founder Securities from 33.3% to 51%, after receiving regulatory approval in April. The bank is injecting capital into CSFS, diluting Founder Securities’ stake.
Swiss industrial giant ABB established its first manufacturing joint venture in China in 1992. Since then, it has invested more than 2.4 billion U.S. dollars in the country. Zhang Zhiqiang, managing director of ABB China told CGTN that the coronavirus pandemic hasn’t shaken up the company’s confidence in China, and it will continue its investment. Zhang said that China is among the most favorable markets for foreign investment. He revealed that China serves as ABB’s second biggest market, where more than 90 percent of sales come from local production. Zhang talks about the Foreign Investment Law, and elaborates on ABB’s take on industrial chain restructuring in the post-epidemic era in the interview.
It’s a chance to finally get out of the city and to see things gradually getting back to normal. The diplomats’ visit comes just as northern Beijing’s Gubei Water Town makes a new debut after closing down during the COVID-19 outbreak. The scenic spot invited several diplomats to its reopening ceremony over the weekend, including Consul General of the Embassy of Switzerland in China Christian Gobet, Consul General of the Embassy of the Republic of Croatia in China Marija Haramija and World Health Organization representative Dr. Robert Kezaala. “It’s been a difficult period of time for a lot of industries, especially tourism. So for them to reopen now, I think that the public is obviously thrilled,” said Noah Fraser, managing director of the Canadian Chamber of Commerce in Beijing. “The recovery in Beijing is doing quite well. Slowly but surely, it’s going back to normal,” said Gobet. Gubei Water Town is located about 150 kilometers away from central Beijing. It’s modeled on southern China’s famous water town of Wuzhen with rivers running through it and traditional Chinese-style architecture.