Below you'll find the transcript of an interview with H.E. Mr. Blaise GODET, the Ambassador of Swiss Confederation to China. The interview was conducted by Xie Ning, deputy Editor-in-Chief of China Economic Net.
Xie Ning: Hello, welcome back to China Economic Net. We know Switzerland has a very stable and modern economy. In terms of the per capita GDP, Switzerland is one of the richest countries in the world with a per capita GDP over 75,000$. In 2010 the World Economic Forum ranked Switzerland as the most competitive country in the world, while ranked by the European Union Switzerland is Europe's most innovative country by far. So I think all of us want to know more about this fabulous country. Today it's a great privilege for us to have His Excellency Mr. Blaise GODET, Ambassador of Swiss Confederation to China to be with us in the studio.
Xie Ning: -Hello Mr. Ambassador. Welcome.
H.E. Mr. Blaise GODET, the Ambassador of Swiss Confederation to China.[CE Photo]
Ambassador: Thank you Mr. Xie Ning. Thank you for your invitation and your kind words.
Xie Ning: According to the statistics of the Chinese custom, by the end of the 2010, Switzerland is the 9th trade partner of China in Europe, while China is the largest trading partner for Switzerland in Asia. So what is the latest development of the bilateral trade relations between the two countries? And what's the general tendency of this development?
Ambassador: Thank you. Yes, firstly, let me say that we have the privilege of having, I should say, intense and diversified relations with China. It does not date back to yesterday, actually dates back to 1950 when we first among European countries with some others established diplomatic relations. And then of course these relations over the decades evolved and became something like a kind of partnership not only in the filed of diplomacy but in the field of trade, of investment and that it spans also the cultural field. It spans, for instance, partnership with regards to innovation, education, and science research. We have also more and more Swiss tourists we can speak about that later. So as I said this is becoming really a dense and diversified relation. And the last figures are really encouraging. Because if you take the Swiss export to China including Hong Kong, because actually it's just one economy, we have a figure of something like 15 billion dollars of Swiss export to China and that was for the year of 2010 with an increase of about 25% with regards to the year before, 2009. And we have also Swiss import from China for an amount of 8 billion dollars which basically as you can see leaves a trade surplus in favor of Switzerland and I have no reason to believe that this trend will not continue over the next years.
Xie Ning: You know, recently there is lot of talks about the negotiation of the Free Trade Treaty between Switzerland and China. And China highly appraised the negotiation of the Sino-Swiss Free Trade Treaty. And I remembered some officials said that is an unprecedented systematic project in the bilateral relations. So would you tell us something about the significance of this free trade treaty to both the countries?
Ambassador: I think both Switzerland and China attached a lot of importance and recognized both significance of this future free trade agreement. Why is it so? Because I think it should not mean only that some customs duty would be lowed or eliminated on certain industrial products. For us it means more than that. It means that such a treaty should have a scope of application which is as wide as possible. It should cover not only industrial goods but it should also cover areas like services if possible public procurement. There should be provisions on intellectual property rights. There should be provisions on the high competitions, rules about competitions between the two countries. It should have clauses about the peaceful settlement of disputes and so on. So for us, actually such an agreement goes beyond just eliminating trade barriers. It also should eliminate non-trade barriers and we do hope that this agreement will basically ensure for both countries a mutual legally secured and non-discriminatory access to the other markets.
Xie Ning: So if this treaty has been reached it would have be a win-win situation it would be a both benefit from that
Ambassador: It'll boost exchange in both directions
Xie Ning: So we know last month the third round negotiation of this free trade treaty was conducted in Berne. What's the substantial progress has been made?
Ambassador: Let me have a look my notes. I can tell you that actually it was an exchange of information on the respective regulatory systems on free trade agreement practices and discussions took place in various what should I say workshops or baskets and it covered areas like trading goods, trading services, intellectual property, roots of origin, customs procedures and facilitation, technical barriers to trade, also issues so important like sanitary and phytosanitary controls so that they don't become obstacles to trade. And we also discussed about investment and about cooperation on trade and on sustainable development. So as you can see it spans many areas and not just elimination or reduction of customs duty.
Xie Ning: So it's a very complicated procedure.
Ambassador: It is a complicated procedure. Because Switzerland and this is also a test case for China before who knows China embarks also on a similar process of negotiations with the European Union. It's not up to me to say. But that might happen one day. So Switzerland, because of its highly diversified economy, covering industrial production and services including financial services, is a little bit the EU in the nature, its a little EU in reduction, hence the importance for China to come to an agreement with Switzerland. We are the kind of testing ground for China.
Xie Ning: So it may take times.
Ambassador: But there's a political will to achieve
Xie Ning: Apart from the bilateral trade, there'll be mutual investment between the two countries. What's the latest development of the mutual investment between the two countries?
H.E. Mr. Blaise GODET, the Ambassador of Swiss Confederation to China.[CE Photo]
Ambassador: First, we have a revised agreement which entered into force about two years ago, a revised agreement with improved provisions with regard to investment which basically facilitated the flux of investments in both directions and that explains to a certain extent why we have so many investments, Chinese investment, in Switzerland but we also have a lot of Swiss investments in China. Let's state the Swiss investment in China. We have about 400 companies operating in China with approximately 700 representations or subsidiaries and we can say that they have been in China for some of them for quite a number of years. Think of traditional Swiss industrial companies like Nestle or the Swedish-Swiss joint venture ABB in the field of electricity. But more and more now the recent new trends which are the Chinese companies settling down in Switzerland making use of the bilateral agreements which we have concluded with the EU and address the European market from Switzerland and obviously they appreciate the business climate which prevails in Switzerland.
Xie Ning: So just we talked about many Chinese people, many Chinese companies want to seek the opportunities in Switzerland. So what preferential treatment policies has the Swiss government adopted for to attract Chinese companies?
Ambassador: I don't know what I should call that a preferential treatment. I would just generally say that Switzerland basically is a country which can be characterized by its political stability, its business-friendly climate, and its flexible labor market. I would also add an excellent infrastructure which makes you easy to operate from a location in the heart of Europe. I should also say that traditionally a good partnership in the field of research and development between universities, research institute and industry. So all that basically do allow for a good business climate which foreign companies like also to enjoy and I would also add traditionally the tax system in Switzerland is what I would call a reasonable tax system and it's been by Swiss and foreigners perceived as moderate. We don't want to a killing tax by over taxing the companies. So these ingredients make it seemingly quite logical for a foreign company to settle down in Switzerland and to make use of the various bilateral agreements which we have concluded with EU to address this European market based in Switzerland.
Xie Ning: I think as you know that in the recent years, the Chinese companies have increased their investments overseas. So there are many Chinese companies also wanted to look for opportunities to do business, to invest in, or to establish some corporations in Switzerland. So could you give them some suggestions of what kind sectors are more suitable for the Chinese companies? I think because Switzerland always stresses the ideal location for logistics for the companies, do you think it's suitable for Chinese companies?
Ambassador: Sure, absolutely. What are the, what should I say, sectors in which you can see that Chinese companies have invested in. Actually, the strong points in the Swiss industry are machinery, biotech, and life science if you want. I think I have to say pharmaceutical and chemical. I think also the technologies which are applied in the environment, so environment-related technology; of course I should add the watches and precision instruments. The whole financial sector, banking and insurance sector is a very strong one in Switzerland. And generally speaking, the green economy. So it is not surprising to see that more and more Chinese companies are investing in those sectors, just to give you some names, I think of Lenovo, I think of Huawei, and of the solar technology and so on. They are now based in Switzerland, Bank of China, also has been attracted into Switzerland that shows that more and more Chinese companies find a way to Switzerland, settle down and according to our estimates, I think there are about 60 sizable big Chinese companies operating from Switzerland.
Xie Ning: If any Chinese companies want to seek the opportunities in Switzerland, what should these companies take notice of in Switzerland?
Ambassador: I think these companies should as I might have indicated at right before, should be basically be attentive to the business climate which prevail in Switzerland with low tax system, with an excellent infrastructure, and with also the possibility to embark on research and innovation project because of the good partnership, that is to say between the private sector and some state's research canters or universities. And also, generally speaking you have in Switzerland, what I would call a multilingual climate, a cosmopolitan climate. Switzerland is a small market. So from decades and decades and I think it started early in the 19th century, Switzerland had to find foreign markets to basically sell their products. We have rather expensive labor force, this is a fact of life, but it's not that expensive if you basically related to the added value which we usually find in Swiss industrial goods or services. So it's always a question of balance and Switzerland could not with its small internal market find enough outlets. So they had basically to export. And this is actually the scheme of the Swiss industry that there is a production with rather high added value or rather high competitive value advantage. Otherwise, we are not competitive.
Xie Ning: We know that Switzerland is home to many multinational companies. But we also know there are a large number of small and medium enterprises in your country; do you think in the future these small and medium enterprises can go to China to do some business?
Ambassador: The Chinese market is a very interesting market, first, because of its size and because of its critical masses. For the time being, what you see from Switzerland or Swiss companies operating in China are more multinational companies. But increasingly, you see more and more medium companies. Small companies and medium companies can come and settle down in China. But I would advise them to come not just because there is a cheaper labor force in China than in Switzerland. I would advise them to invest in China. Because they have the strategy, because they have a niche in productivity that they know exactly how to produce it and how to sell it. I would advise them to settle down in China and do business if they want to serve the emerging Chinese internal market. And more and more, they should not just sell. But they should also proceed to exchange of know-how, to go into technology, to do some training and coaching after selling services or so, should be also in the mind of my fellow citizens if they want lastingly to set a foot in China. So this Chinese market is also in changes, evolving a lot, is transforming and becoming more sophisticated. So the foreign investors have to adjust to this changing environment
Xie Ning: We know Switzerland has a very closed economic connection with the European Union. But now, currently, will the Euro-zone crisis bring any negative impact on our bilateral economic relations in your opinion?
Ambassador: This is a delicate point. Switzerland comparatively is fairly well in the current crisis. Why? Because we have diversified economy, we have transnational companies, medium companies, and small companies so that allows us a certain flexibility of the industry fabric if I can say so, and we have the advantage of having a rather low public indebtedness with regard to the GDP, something like 40-50% well below the Maastricht Benchmark. But this has also some negative repressions. Because it makes Swiss francs very inviable, very attractive and we have the problem of Swiss francs which runs at the risk of being over appreciated, which then will make our export quite expensive. That's a difficult task now for the central bank of Switzerland which we call it National Bank of Switzerland to basically try to adopt a certain rate of exchange with that of euro so that we are not overly penalized.
Xie Ning: So I think Switzerland will be very confident facing the crisis. And we know Switzerland is the most favorable tourism destination to many Chinese people. And in the recent years, along with the rise of living standard, more and more Chinese tourists visited your country. So could you tell us, in your opinion, is there any potential between the two countries in the tourism sector in future?
Ambassador: I think the potential is huge. And it has many reasons for that. First, I'm glad to see that Chinese seem to like Switzerland and want to visit Switzerland. I'm not going to complain about that. The Chinese economy is comparatively in very good shape. So I think this trend will continue over next years. Thirdly also, which is sometimes for us difficult to cope with, more and more Chinese discover the pleasure of traveling individually and not only collectively in a group tour. So we have also adjusted to this new pattern of behaving in the tourism industry. And we expect for instance that next year we'll have to issue 40% more visas than it has been given in 2011. I'm also glad to see that, Swiss are discovering more and more China and there are more and more numerous tourists to visit China, not only the traditional China which is Beijing, Shanghai, and maybe Xian but they also will travel in the less known areas of China where still the reason need for development and for equipment. And I think this is a very very healthy trend.
Xie Ning: I want to ask one more question. You know that Switzerland has an ecosystem very fragile because it's a relatively small country and there are a lot of snow mountains. If the number of the tourists increase very rapidly, will that affect the environment of your country? How do you face the challenge of the tourism booming?
Ambassador: This is clear we should not allow a situation that Switzerland would be a victim of its own success and we are very strict with regard to urban planning. We are strict with regard to landscaping; we are very strict with regard to the constraints of natural preservation and protection. And so far Switzerland has been, I think. I can see, rather successful in keeping a certain balance between the needs for industrial development. We don't want to freeze our economy but also we want people to enjoy a certain, not only a certain, a high quality of life in Switzerland and I do think that what attracts people and I think it would be able to basically keep the balance for the years in the decades to come. I'm not ought to worry but we have strict rules, regulations but also we have a political will and financially I can tell you these also cost something to Switzerland for instance it took decades and a lot of money to cure the lakes of Switzerland but believe me the lakes today are much cleaner than they were when I was young and a child and I could not swim in.
Xie Ning: Yes okay, it's great! Thank you very much, Mr. Ambassador. Thanks for your being with us. Thank you very much.
Ambassador: Thank you very much. You also have given me the opportunity to talk about my country.
Xie Ning: -Thank you.
Ambassador: - Thank you.
(This transcript is written by Yang Haiyang, collated by Li Jingjing, and verified by Xie Ning)