Swiss SMEs: Combating Locational Disadvantages with the Latest Technologies
SMEs consider the Swiss location to promote success. However, they see considerable locational disadvantages compared with abroad in terms of production costs. For combating these locational disadvantages SMEs primarily focus on new technologies and digitalization.
There are well over half a million SMEs operating in Switzerland and together they provide employment for more than two thirds of the country's working population. We conduct an annual analysis of the assessment of the Swiss location and its underlying conditions by SMEs. The core theme of this year's study comprises the locational disadvantages of Switzerland from a global perspective and possible solution approaches.
Swiss Location Continues to Promote Success for SMEs – Franc Exerting a Negative Impact
Altogether the SMEs consider the underlying conditions at the Swiss location in 2016 to promote success. An important reason for this positive overall assessment comprises employees and their skills. They exert a strongly positive effect on the corporate success of SMEs.
However, the SMEs consider the economic environment and foreign ties to be negatively impacting their current success. An important factor here is the strength of the franc: Owing to the appreciation of the franc in 2015, many SMEs once again lost price competitiveness at home and abroad that ultimately also curbed the growth of the domestic economy.
Micro Firms and SMEs from Transport and Transportation More Skeptical
Micro firms (fewer than ten employees) assess the Swiss location somewhat more cautiously than other SMEs. They do not view the impact of skilled labor on their success quite as positively as larger companies. This is likely to be due to the fact that micro firms potentially have more difficulty than larger companies in attracting highly qualified specialists. SMEs from transport and transportation also assess the Swiss location somewhat more skeptically, particularly in terms of infrastructure. The partially overburdened road network will be a contributory factor here.
SMEs View the Future of the Swiss Location More Cautiously than the Present Situation
The SMEs view the future of the Swiss location somewhat more skeptically compared with the current situation. Above all they expect the influence of the underlying regulatory conditions on corporate success to deteriorate significantly. The economic environment is also likely to have a more negative impact on their success. However, the Swiss research environment should exert a more positive influence compared with today. Of all the success factors inquired about, the SMEs expect this to gain the greatest significance in the future.
Switzerland Is at a Significant Disadvantage Compared to Abroad in Terms of Production Costs
Despite the good overall underlying conditions in Switzerland, the SMEs also see considerable locational disadvantages compared with abroad, above all in terms of production costs (including labor and transport costs). Industrial SMEs in particular see major cost advantages abroad. However, the majority of SMEs canvassed see no significant locational disadvantages for Switzerland with regard to the availability of skilled labor and the strictness and complexity of laws.
New Technologies and Digitalization Are Important Measures for Countering Locational Disadvantages
The most important measure for Swiss SMEs for countering global locational disadvantages is the introduction of new technologies. 72.3 percent of the SMEs canvassed are focusing strongly to very strongly on this measure in the fight against Switzerland's locational disadvantages. The digitalization of work and production processes is set to play an important role here as 77.5 percent of SMEs are of the opinion that making very strong use of the latest digital technologies can significantly enhance the global competitiveness of Swiss companies. The second most important measure against locational disadvantages is the development of new products and services, followed by investments in employees, increased importing of advance deliveries and outsourcing abroad.
More than a Fifth of SMEs Are Highly to Very Highly Digitalized
The importance of the latest digital technologies for Swiss SMEs is already apparent today: According to our survey, more than one fifth of the SMEs canvassed already make strong to very strong use of them. Digitalization has made the greatest inroads among younger and larger companies as well as companies from the ICT sector, the electrical industry and transport and transportation.
Roundtable Participants Banking on Digitalization, Innovation and a Clear Locational Policy
Four Swiss entrepreneurs taking part in the roundtable discussion also confirmed that production costs exert a negative impact at the Swiss location while digitalization offers a potential solution approach. Altogether the four participants consider Switzerland as a business location to be going through a difficult phase. In addition to digitalization they cite process and product innovations and their financing as a proactive solution approach. The SME representatives also call on politicians to provide a vision or long-term strategy for raising Switzerland as a business location to a new level.