Switzerland is a country long known for four things:
- Fervent neutrality.
- Strong, secretive banks.
- The International Committee of the Red Cross and Red Crescent.
- World-class chocolate.
The chocolate brings with it certain joie de vivre, and the global Red Cross/Red Crescent headquarters assures the country an international leadership role. But it's the first two on that list that give the country an incredibly solid economic foundation in an ever more global economy.
Strength from stability
Switzerland's neutrality and strong banking system help it maintain a stable currency, and its stable currency encourages investment beyond just in the banks themselves. Add to that a stable, democratically elected government, relatively low corporate tax rates, and a well-educated, multilingual workforce, and you have a very solid foundation for encouraging companies to flourish.
Because of these advantages, many multinational companies call Switzerland home, including:
- Pharmaceutical giant Novartis
- Industrial & electric equipment titan ABB
- Offshore drilling kingpin Transocean
Transocean's location in Switzerland may seem especially strange on the surface, given that Switzerland is landlocked and thus has no "shores" from which to drill. But when you realize that its effective tax rate of around 23.9% is several points below its Texas-based competitor Diamond Offshore Drilling's
Of course, low taxes are just one aspect of what make Switzerland attractive. Successful pharmaceuticals research and development takes both a highly educated workforce and a stable government that respects property rights. That's why the country is attractive not only to Novartis, but also to American pharmaceutical giant Johnson & Johnson
And speaking of stability, industrial and electrical equipment titan ABB has a history in Switzerland going back as far as 1891. No company can survive 120 years in a country that's actively hostile to it. ABB's longevity and success there showcases just what's possible when a country has the right conditions for its businesses to thrive.
ABB's reputation and success have global implications, as well. For instance, its U.S. competitor Emerson Electric
You can still bank on it
Of course, Switzerland is still home to some of the strongest banks in the world. UBS
All told, whether it's from the top-notch chocolate, the fortress-like banks, the global Red Cross & Red Crescent headquarters, or the fervent political neutrality, Switzerland has a lot going for it. Investors looking for a place to park their capital while the rest of the world straightens itself out could do far worse than buying shares in some of Switzerland's strongest businesses.