Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Distribution channels in Switzerland are varied but are generally similar to those in the United States. Capital goods manufacturers may prefer exporting directly when contracts with a limited number of customers represent an appreciable share of the market. However, often new-to-market exporters and exporters with products that require training for use and after-sales service engage the services of a technically qualified Swiss agent with good market knowledge. As a rule, Swiss buyers of raw materials use specialized importers. Large orders, however, may also be placed directly with foreign producers. Geneva has become an important hub for global commodities trading, and some of the largest international trading and shipping firms are based in Switzerland. They operate networks of bonded warehouses and other facilities offering services for international trade.
Consumer Goods: Suppliers of consumer goods may deal with an importer or wholesaler, engage the services of a representative, or sell directly to buying offices of large retail chains, especially if dealing with mass-produced goods. A representative or agent, usually specialized in one or more product groups, is often responsible for distribution in all of Switzerland.
Import and Wholesale Trade: Many Swiss wholesalers are also importers who may expect exclusive regional or national rights for the imported product. Wholesalers maintain stocks of a range of products and provide quality control, transport, warehousing, and financing. Associations of wholesalers in various sectors protect their common interests and facilitate more effective competition with other forms of distribution. Many wholesalers and importers also belong to the Swiss Trade Association, through sector associations.
Retail Trade: The number of independent retailers is decreasing, giving way to a growing number of discount stores and supermarket chains. Retailers with competitive prices are gaining market share. Individual retailers have set up organizations to provide wholesale purchasing, importing, and other services to compete with large, vertically integrated retail establishments. Some leading retailers are legally structured as cooperatives.
Using an Agent or Distributor
An agent is not required to do business in Switzerland. However, a U.S. business wishing to sell products or services in Switzerland may benefit from an agent familiar with potential clients and Swiss business culture, as well as from an agent’s local market expertise and locally based after-sales services. Working through an agent allows a company to test the market while limiting costs, compared to running an independent office. A network of agents serving the various linguistic regions of Switzerland (German, French, and Italian) may be a beneficial option. The process of considering a potential Swiss partner firm begins with a check of the cantonal commercial registries and a request for a financial profile of the company.
Agents: According to Swiss law, an agent is a person who undertakes to act on a continuous basis as an intermediary for one or more principals in facilitating or concluding transactions on their behalf and for their account without entering into an employment relationship with them.
Agency contracts are governed by article 418a through 418v of the Swiss Code of Obligations (which can be found here); Articles 419 through 424 further govern the actions of the agent and principal. Commission agents: If the partner company acts in his own name rather than in the principal’s name in exchange for payment of a commission to sell and/or purchase goods, the partner company is not a (commercial) agent, but a commission agent, subject to the provisions governing agency apply to the commission agency relationship, unless otherwise provided in Title Fifteen governing the commission contract (Swiss Code of Obligations, Article 425).
Establishing an Office
Entrepreneurs from countries outside the EU/EFTA area who want to become self-employed in Switzerland must meet Swiss labor market requirements. The only third-country nationals who have a legal right to establish a business are individuals with a C permit (settlement permit for third-country nationals), spouses of a C permit holder, and spouses of Swiss citizens. All other third-country nationals outside the EU/EFTA area must submit an application to the respective cantonal authority. It is decisive in the evaluation that the company have a lasting positive effect or influence on the Swiss labor market. A lasting positive effect on the Swiss labor market is considered to be given if the new company or self-employed person contributes to the industry-specific diversification of the regional economy, preserves or creates several jobs for local staff, makes substantial investments and generates new orders for the Swiss economy.
If an application is accepted by cantonal authorities, the entrepreneur is granted at least a short-term residence permit for third-country nationals (an L permit) or a residence permit (B permit). Both permits are subject to quotas set annually by the Federal Council.
The Swiss government provides checklists and initial guidance on what legal form to choose to set up a business in Switzerland. By registering at the Swiss government’s website www.easygov.swiss, a company can file information to determine the most appropriate legal structure, the necessary steps, and important contact details. Swiss cantons also have specialized economic promotion agencies in place that can help with questions related to the opening of a new business.
Location is among the most important factors to consider when establishing an office in Switzerland. There are wide differences in tax laws, availability of work permits, availability of labor force, and availability and cost of business facilities among Swiss cantons. Some cantons may offer special investment incentives. The choice of business location also impacts potential market size and the linguistic requirements of the employees.
The Swiss government recommends potential new businesses search the Zefix database to make sure their potential business name is not already in use in Switzerland.
Detailed information regarding setting up and staffing a business enterprise in Switzerland is available on the SME Portal for small and medium-sized enterprises on the website of the Federal Department of Economic Affairs, Education, and Research as well as from the Handbook for Investors published by Switzerland Global Enterprise (SGE). More information on investment in Switzerland is included in the Investment Climate Statement, Chapter 6 of this report.
For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statements website.
Switzerland is generally welcoming to franchise systems. Franchising appears in many forms and applicable legal norms depend on the nature of the contract between the franchisor and franchisee. Switzerland has no specific legislation on franchising. The Swiss Franchise Association offers additional information about the legal environment for franchising in Switzerland.
There are various channels of direct marketing widely practiced in Switzerland, including sales over the internet, sales calls, or visits by a company representative at home to present a product (shopping at home). Companies need to focus on the clarity and completeness of the information they provide to consumers prior to purchase, and on their approaches to collecting and using customer data. The more than 330 members of Switzerland’s mail order association comply with a code of conduct which includes voluntarily offering consumers the right to cancel a purchase within 14 days. The State Secretariat for Economic Affairs (SECO) website provides a brief overview of the most important provisions based on Swiss rules regarding distance-selling and on-line commerce. The website of the Swiss Association of Direct Marketing Companies also provides background information.
U.S. firms may use joint ventures in Switzerland to improve market penetration. In Switzerland, joint venture legislation falls under the purview of the Competition Commission (COMCO) and the Swiss Takeover Board. COMCO may prohibit the establishment of a joint venture that creates a dominant market position likely to eliminate effective competition, unless the establishment of the joint venture improves conditions for competition in another market (see article 10 of the Federal Act on Cartels and other Restraints of Competition). Special rules apply for banks. COMCO actively participates in different networks of competition authorities such as the Competition Committee of the Organization for Economic Cooperation and Development (OECD) or the International Competition Network (ICN). In 2014, an agreement between the Swiss Confederation and the European Union on cooperation in the application of their competition laws entered into force. The agreement enables COMCO and the Directorate-General for Competition of the European Commission to notify and coordinate enforcement activities and to exchange information.
Licensing is also a potential avenue for market entry in Switzerland. Unless the rights holder has a dominant market position, Swiss antitrust law does not restrict owners’ freedom to use their industrial property rights, including the exploitation of a patented innovation.
Many international express delivery companies, such as DHL, FedEx, and UPS, are active in Switzerland. These companies ship domestically and internationally, provide a wide range of delivery options and prices, and have grown significantly as a result of the increasing importance of e-commerce and due to market opening following the partial liberalization of the Swiss government owned postal company Swiss Post. Express deliveries sent within Switzerland are generally reliable and usually arrive at their destination within one business day, while deliveries sent from the U.S. to Switzerland typically take three to four days.
Although the vast majority of Swiss importers are financially reliable business partners for U.S. exporters, there are, nonetheless, occasional bankruptcies. U.S. exporters should use normal precautions, perform appropriate due diligence, and analyze relevant company financial background information before establishing a business relationship.
When conducting due diligence, the Swiss Commercial Register is a key source for checking the background of Swiss companies. Swiss companies with annual sales of $100,000 or more must be listed in the Swiss Commercial Register with the following information:
- name of firm
- legal form
- head office (legal domicile)
- list of branch offices, purpose
- owners, partners, managing directors
- persons having power of attorney
- number of shareholders
- year of establishment
- share capital
- registration number
Any firm listed in the Swiss Commercial Register is considered a legitimate company and is required to keep accounts and to maintain a balance sheet. However, the register does not reveal information about a company’s financial status or business practices.
Each canton also maintains information on whether or not a registered company has defaulted on payments. That information can be obtained directly from the relevant cantonal debt enforcement office. Debt enforcement agencies provide information on whether or not any debt collections were made by Swiss companies. Debt enforcement agencies require a letter of interest in order to provide this type of information.
The Kompass Register, a listing of most Swiss companies, is roughly equivalent to the American Thomas Register. Provided by the listed companies, the information includes complete contact address, bank reference, name of president, members of the Board and managing director, a short description of company’s activity, trademarks, share capital, number of employees, and year of establishment.