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Two-way
Investment Key
to Further Strengthen
Indo-Swiss Trade Ties
- Fabian T. Stiefvater
Right at the outset, Indo-Swiss
Business salutes Fabian T. Stiefvater,
for his courage of conviction in
taking up his new assignment in
Mumbai as Director, Swiss Business
Hub India, despite security concerns
and the advice to delay his arrival
in the wake of the November 26 terrorist
attacks on the city. “We decided
to come in order to send a strong
message that we stand in solidarity
with the victims and people of India,”
he says in an interview with Satya
Swaroop, Managing Editor, New Media.
Stiefvater also talks in detail
about the challenges and opportunities
that the emerging Indian domestic
market offers to Swiss companies.
As India and Switzerland celebrate
the 60th anniversary of their friendship
treaty, Stiefvater calls for two-way
investment to further strengthen
it. He says that while in terms
of export promotion Swiss SMEs are
increasingly focusing on the emerging
Indian market, it is crucial for
Switzerland to overcome its picturesque
holiday image and to more actively
promote its competitive business
advantages as the prime location
for European headquarters. Excerpts.
What was your motivation
for moving from Switzerland to Mumbai?
It's the challenge of India's emerging
economy and the exciting opportunities
that the Indian market offers for
export driven Swiss companies. While
growth opportunities are limited
in the traditional, well developed
markets, the emerging Indian market
will be one of the most important
battlegrounds in the years to come.
It's the dynamic of Indian economy
which is fascinating me and the
exciting challenges Swiss investors
are facing in terms of market entry,
risk management and cultural differences.
Last but not least the motivation
to come here relates to my passion
for India and my genuine interest
in Indian culture - which is a precondition
for feeling comfortable in daily
Indian routine and workaday life.
I travelled numerous times throughout
India and India has in the meantime
become my home.
Arriving in Mumbai in the
aftermath of the terrorist attacks:
Did you ever regret your decision
to move from safe Switzerland to
Mumbai?
There is no longer such a thing
as a safe place. Be it London, New
York, Mumbai or Zurich anything
can happen anytime. Despite security
concerns and recommendations to
postpone our arrival we decided
to come in order to send a strong
message that we stand in solidarity
with the victims and people of India.
Mumbai is generally safe and I feel
privileged to have the opportunity
to live in such a vibrant and exciting
place.
What are your priorities
to strengthen the business ties
between the two countries?
In times of credit crunch and recession
of US and European economy, it is
crucial for the export depending
Swiss industry to partly compensate
the decrease in demand in the traditional
markets by focusing on new emerging
markets such as the Indian. Once
it was all about cost saving and
leveraging, now, it is about growth
and the potential offered by the
strong domestic Indian market. While
the majority of big multinational
Swiss firms are already playing
an active role and successfully
doing business with India, the focus
of the SBH India is against the
background of export promotion to
strengthen the business ties between
small and midsized Swiss and Indian
enterprises (SMEs). Hence, in terms
of export promotion our main focus
is to facilitate and improve the
access to the Indian market for
Swiss SMEs and to support their
ability to successfully compete
at international level.
What is Switzerland 's concept in
terms export and foreign trade promotion?
Under the roof of OSEC (the official
Swiss export, import, investment
and location promotion agency) the
SBH India together with its network
of expert partners and consultants
supports SMEs in their efforts to
successfully penetrate the Indian
market. OSEC can draw on an extensive
network of expert partners (“Pool
of Experts”) in the field
of foreign trade in Switzerland
and abroad. The online database
www.PoolofExperts.ch offers with
more than 400 experts worldwide
a quick and easy support for Swiss
SMEs in all aspects of internationalisation.
The interested SME can select an
expert based upon country-, market-
and functional competencies. As
for export promotion our main priority
is to render together with our Pool
of Expert Members efficient and
effective high quality consulting
services. Within Switzerland OSEC
cooperates with Cantonal Chamber
of Commerce and other industry organisations
and offers its services to export
focused SMEs. Swiss companies seeking
export advice for India can either
contact us directly or indirectly
via their local OSEC consultant.
OSEC and the SBH are using a transparent
“Export Step-by-Step”
consulting concept (initial information,
basic consulting and detailed consulting).
Typical areas of expertise include
services such as:
• Market research and analysis
as well as market clarification
(market check)
• Identification of business
opportunities by industry sectors
(business opportunity check)
• Identification of qualified
business partners (business partner
check and mediation)
• Evaluation of opportunities
to promote SMEs (promotion check)
• Organisation and coordination
of visits in the target market (experience
check)
• Initiating and coordination
of trade fair participation (Swiss
Pavilion)
• Information gathering regarding
public tenders
One of the SBH's main goals for
2009 is to cultivate and extend
our existing network of Pool of
Experts.
What are the pitfalls Swiss
SMEs are today facing in India ?
In order to manage risks in emerging
markets effectively, it is crucial
to understand the local market and
its sectors. Local expertise is
critical in order to find the right
business partner and to develop
strong local relationships. To understand
local laws, regulations, cultural
aspects and usages is a precondition
for doing successful business with
India.
While the big Swiss multinationals
are mainly operating their Indian
business through 100 percent subsidiaries,
many of the Swiss SMEs rely on joint
ventures or mere contractual collaboration
with Indian partners (e.g. distributorship
agreement). Joint ventures can be
risky if the partners have different
objectives or if there is an imbalance
in levels of expertise, investment
or assets brought into the joint
venture by the partners. It takes
time and effort to build the right
relationship and there are numerous
examples of successful joint ventures
between Swiss and Indian firms.
However, before setting up a joint
venture it is crucial to make sure
that the services or knowledge of
interest can not be bought through
an arm's length contract (i.e. without
sharing ownership). Against the
background of how costly and difficult
an exit can be joint ventures should
be the last resort. In terms of
content of a joint venture agreement
it is decisive to have a simple
and clear exit provision as well
as incentive provisions penalizing
non-cooperation. Against the background
of adverse future impacts non-competition
clauses need to be carefully drafted.
What nowadays becomes more popular,
are flexible joint ventures with
a limited life span only covering
limited commitments in certain areas
of collaboration.
What needs to be done in order to
improve the investment climate in
India?
An important step towards a more
investor friendly environment was
the conclusion of a Memorandum of
Understanding on Intellectual Property
Rights in August 2007 and the launch
of negotiations for a broad-based
agreement on trade and investment
between India and the EFTA countries.
Even though investment climate in
India has improved significantly
over the last years, Swiss firms
doing business in India are facing
according to a survey conducted
by SECO (Swiss State Secretariat
for Economic Affairs) the following
main obstacles:
• Tariff barriers (customs
duties, taxes etc): High import
duties for certain products
• Non-tariff import barriers:
Import procedures, administrative
burden, bureaucracy etc
• Intellectual property rights:
Protection of trade marks and patents
• Rigid labour laws
• Difficulties in public tender
/ procurement
• Taxation: Transfer pricing
rules
What are your priorities in terms
of location promotion following
the 60 years' of Indo-Swiss friendship
treaty celebration?
As a result of India being one of
the fastest growing emerging markets,
Indian companies have in the past
years significantly increased their
presence in Switzerland. At a time
when more and more Indian firms
are internationalizing their activities,
Switzerland is of course very keen
of being a partner of Indian companies
seeking to invest in Europe. Our
focus in terms of location promotion
is to more actively promote our
business advantages and to create
awareness that Switzerland is a
prime headquarter location in Europe.
According to a report of the consultancy
firm McKinsey, Switzerland does
not get the right message across
in Asia. While in general the perception
of Switzerland is a definitely positive
one, most Asian decision makers
do not perceive Switzerland as a
prime business location but more
as a tourist destination. Many Indians
still have a Bollywood image of
Switzerland but do not have the
awareness of the competitive advantages
Switzerland offers for European
headquarters.
This is in contrast to the fact,
that more and more multinationals
are choosing Switzerland as the
place to establish their International
Headquarters or Principal Companies.
Besides social and political stability,
first-rate infrastructure, high
quality of life, high productivity
and highly skilled labour force,
competitive business environment
and flexible labour law Switzerland
offers traditionally low taxes -
one of the key reasons for having
attracted more than 180 multinational
firms in the past decade. In 2009
we will tour across India with interesting
events such as investor seminars,
CEO roundtables, ambassador's breakfast,
trade shows, networking events and
roadshows in order to be in a position
to tab the full potential. According
to the McKinsey Report, at least
1,400 Asian companies are looking
to establish operations and headquarters
outside of Asia. It is our goal
to attract more than 120 regional
headquarters in the next ten to
fifteen years. |
