Sino-Swiss Business News
Chinese President Xi Jinping on September 14th exchanged congratulatory messages with Simonetta Sommaruga, president of the Swiss Confederation, on the 70th anniversary of the establishment of diplomatic ties between China and Switzerland. In his message, Xi noted that Switzerland was one of the first Western countries to establish diplomatic ties with the People’s Republic of China. The two countries have jointly cultivated a cooperation spirit of equality, innovation and win-win over the past 70 years and set an example of friendly cooperation between countries that are different in social systems, development stages and sizes, he said. Xi underscored the mutual assistance between China and Switzerland in the fight against the COVID-19 pandemic. He said he is willing to make joint efforts with Sommaruga to promote further development of bilateral innovative strategic partnership. Sommaruga said, Switzerland and China have upheld principles of openness and mutual respect in developing bilateral relations over the past 70 years.
The World Intellectual Property Organization has crowned Switzerland the most innovative country in the world for the tenth consecutive year. Switzerland not only offers fertile ground for innovation, but also inspires many new creations, as the number of patent applications shows. For the past ten years, Switzerland has ranked top of the Global Innovation Index (GII). The Index is published by the World Intellectual Property Organization (WIPO), French business school Insead and Cornell University. It ranks the performance of 130 countries, examining both the necessary conditions for innovation and the new creations that result from innovation. According to the report, Switzerland offers particularly fertile ground for innovation. It scored 69.42 points in the corresponding category of Innovation Input and ranks second in the world. The average in this category is 41.39 points. In addition to substantial investment in research and development, Switzerland’s strong position is due to the high quality of local universities and extensive human resources. Furthermore, it performed highly for its stable political environment, good regulatory environment and infrastructure. Switzerland is followed in the rankings by Sweden, the USA, the UK, the Netherlands and Denmark. China is ranked 14th in the world.
The Chinese life sciences company Hengrui Medicine is establishing a Swiss subsidiary in Basel. The European hub for clinical research and development will help the company to advance its innovative drugs, including cancer treatments. The Basel life sciences ecosystem is set to grow by another major global player. The international company Hengrui Medicine is establishing a Swiss subsidiary, Hengrui Europe Therapeutics AG. Founded in 1970, the Chinese company reportedly has a market capitalization of about USD 70 billion and therefore ranks as one of the top 30 life sciences companies in the world. It has more than 25,000 employees worldwide and currently runs more than 120 clinical trials globally. The Basel site will be dedicated to the clinical research and development of Hengrui’s innovative drugs in Europe. Hengrui Medicine operates in various fields, though its primary focus is on cancer treatments. The investment and innovation promotion agency Basel Area Business & Innovation is supporting Hengrui Medicine in establishing the Basel subsidiary.
DKSH Business Unit Performance Materials has won the “Ringier Technology Innovation Award 2020 – Food & Beverage Industry (Category: Food & Beverage Ingredients – Functional)” by Ringier, Switzerland’s largest internationally operating Swiss media company. The award was presented to DKSH for the innovative product Cluster Dextrin®, produced by Glico, DKSH’s valued business partner. DKSH provides Market Expansion Services to Glico Nutrition and exclusively distributes its products to the food and beverage industry in China. Cluster Dextrin® is a functional carbohydrate that provides quick and sustainable energy to significantly enhance performance during exercise and sports. It is made from non-GMO waxy corn starch utilizing Glico’s original enzyme technique. Cluster Dextrin® is highly uniform in its molecular structure, highly water-soluble and the solution allows a quick supply through the stomach into the intestine. Compared to traditional carbohydrate sources like glucose and dextrose, Cluster Dextrin® is clinically proven to enhance stamina, reduce intestinal discomfort and fatigue as well as suppress inflammatory stress.
V-ZUG, the Swiss manufacturer of household appliances, plans to open more stores in both top- and second-tier cites in China, and will introduce new digitalization of related products into the country’s lucrative market for the long term. Many opportunities arise from Chinese consumers’ growing demand for high-end home appliances, such as ovens, high-efficiency stoves and fabric-care appliances, as well as the evolution of consumer needs, from purchasing expensive products to customized solutions, said Jennifer Bao, managing director of V-ZUG (China). She said China is a market with attractive potential. According to statistics, high-end goods are bought by more than 400 million middle- and high-income residents in the country and the number will continuously grow. Being the second-largest market after Switzerland globally, V-ZUG currently has 60 sales outlets in 21 cities across China.
Nestlé has launched a campaign on three continents, taking aim at the fast-growing market for plant-based meat alternatives that has been led by startups like Beyond Meat. Nestlé began selling its Garden Gourmet Sensational Burger — a plant-based ready-made patty — in Europe this month. It also targets the huge U.S. and Chinese markets. The entry of the world’s largest food company broadens the field of competition in plant-based meat, which has gotten a boost from increased health awareness during the coronavirus pandemic. “Success in plant-based foods will be a once-in-a-generation opportunity,” CEO Mark Schneider has said. The company is accelerating its push into meat alternatives around the world. In China, it is investing CHF 100 million (USD 110 million) to expand a factory in Tianjin, with plans to start producing artificial meat there by the end of the year. The company sees significant room for growth in China, the world’s largest consumer of pork.
Credit Suisse Group AG is set to reap the benefits of a secret investment it made in Alibaba Group Holding Ltd. (NYSE: BABA) subsidiary Ant Financial Services Group, as the latter goes public in Hong Kong and Shanghai, Bloomberg reported. The Swiss bank invested $100 million during the Chinese financial firm’s latest funding round in 2018, which brought Ant’s valuation to $150 billion, according to Bloomberg. Asset management firm Bernstein projects Ant Financial’s valuation to be $210 billion, a premium of 40% over Credit Suisse’s investment. The lender didn’t previously disclose the amount it invested in Ant and does not have plans to sell its stake, people familar with the matter told Bloomberg.
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.