Sino-Swiss business relations raised to new level after series of historic firsts

It would be trite of him to say it, but there's no doubt that Kurt Haerri got a big lift out of sharing a table with Li Keqiang at a lunch during the Chinese premier's recent visit to Switzerland.

The lunch event in Zurich attended by business and financial leaders was organized by the Swiss-Chinese Chamber of Commerce, of which Haerri is president.

Like everybody there, he was delighted to hear Li talk about how Switzerland was among the first Western countries to establish diplomatic relations with China and recognize its market economy status, and how the next historic first was set to be a free-trade agreement between the two countries.

Haerri, 51, who has worked at Schindler Elevators Ltd for more than 25 years - from 1996 to 2003 in China - was particularly pleased to hear Li note in his speech that a Swiss company was involved in the first industrial joint venture in 1980 that China entered into after the beginning of reform and opening-up. That company was Schindler, whose Top Range Division Haerri now heads.

On May 24, China and Switzerland signed a memorandum of understanding at the conclusion of free -trade talks during Li's visit. Switzerland would be the first country in continental Europe and of the world's top 20 economies to reach a free-trade agreement with China.

"Switzerland was always a pioneer in China," Haerri confirms, adding that bilateral ties are true and trusted.

The luncheon for Li was a good way to show what the Swiss-Chinese Chamber of Commerce is doing and the role it plays in Swiss-Sino relations, Haerri says. "It was the highlight event for us."

The SCCC is a non-profit Swiss organization, founded in Zurich in 1980 by Dr Uli Sigg, former Swiss ambassador to China, and a group of business professionals. Its main goals are to promote commercial relations between Switzerland and China and strengthen the political and economical bonds between governments and institutions.

"We have about 700 members so far, most of them are companies, and some individual members," Haerri says.

About 400 Swiss companies are based in China, while about 65 Chinese companies operate in Switzerland.

Holding a monthly business event, the organization focuses on networking, getting members engaged and talking about their experience, to promote "better understanding of both parties, Switzerland and China".

SCCC China was set up in 1996 with an office in Beijing. The following year, a branch was opened in Shanghai. It now also has offices in Guangzhou and Hong Kong.

As the president of the SCCC since 2006, Haerri says the development of economic relations between the two countries continues to be promising. In 2012, trade between the countries reached $26.31 billion, with China's imports from Switzerland accounting for 87 percent of that volume.

Swiss figures show foreign direct investment in China reached 8 billion Swiss francs ($8.4 billion; 6.4 billion euros) in 2010 and more than 12.5 billion Swiss francs in 2011.

"Following a big wave of foreign direct investment in China by large Swiss companies, many SMEs have also invested in China," Haerri says.

According to Premier Li, over the next five years, China will import $10 trillion in goods from the rest of the world, and its overseas investment will reach $500 billion.

Haerri says that by vigorously advancing urbanization, hundreds of millions of its rural Chinese will become urban residents, greatly increasing consumer demand.

"For large Swiss companies with a considerable global market share in their industries, it will be increasingly important for them to gain a certain market share in the fast growing Chinese domestic market in order to defend their global market positions," Haerri says.

But he also stresses it is also important for Swiss companies going to China to learn a different business culture.

Swiss companies that are successful in China, he believes, hire employees locally and normally have a Chinese CEO, but have a Swiss CFO and technology director.

Swiss people can do the financial management and quality management, but a local CEO will do the right things, in keeping with the local business environment, he says.

Haerri says some companies that enjoy great success at home are confident of achieving the same in other countries overnight. "But it's not true, everyone should obey local rules and customs, then develop step by step.

"We have also seen an increasing number of Chinese companies investing in Switzerland," he adds.

Chinese companies are interested in the advanced technology that Swiss companies can provide, particularly with regard to environmental concerns.

"There are big opportunities for companies providing solutions in the sector of energy efficiency and environmental protection," Haerri says.

He suggests it may be easier for Chinese companies to buy or invest in companies in Switzerland than for small or medium-sized Swiss companies to set up in China.

But, referring to the landmark free-trade agreement between the countries, Haerri adds, "Switzerland has a very big number of small and medium-sized companies offering great innovations at a relatively higher cost. The elimination of taxes will enhance their competitiveness."

In turn, Switzerland's central location in Europe and its good infrastructure provide great opportunities for Chinese investment, he says.

The FTA will cover goods and services, environmental protection, intellectual property protection, market competition and labor protection.

"The FTA addresses very important aspects besides removing trade barriers - for example, regulations towards a better protection of intellectual property rights for both countries," he notes.

Haerri says he was very impressed by an article Premier Li wrote for the Swiss newspaper Neue Zuricher Zeitung before his visit.

In the article, Li said: "Switzerland is the first European destination on the list of countries I will visit after becoming China's premier. In Chinese culture, being first always carries symbolic meaning.

"My choice of Switzerland is in no way haphazard," Li wrote, adding that the first job was to secure progress in building a China-Switzerland FTA.

Li said such an agreement would not only increase business and investment cooperation but also send a powerful message to the rest of the world that "we reject trade and investment protectionism and instead embrace trade liberalization and facilitation".

Haerri is confident that companies from both countries can benefit from the FTA, which will inject fresh impetus to China-EU business ties.