Sustaining Swissness

Ivo Kaufmann, head of Economic and Financial Affairs at the Embassy of Switzerland in Japan

Text by Andrew Howitt

After 10 years in academia, with a focus on international economic law and East Asia, Ivo Kaufmann decided to take up a post in the Swiss government. Since 1992, he has held several positions, mainly in trade and investment. Before coming to Tokyo, he served as deputy permanent representative to the World Trade Organization in Geneva for four years. Kaufmann has been the head of Economic and Financial Affairs at the Embassy of Switzerland in Japan since last September.

How extensive is Switzerland’s presence in Japan?

Switzerland is about the size of [the southern Japanese island] Kyushu and has two thirds of Kyushu’s population. But Switzerland is actually 20th in terms of GDP globally and 16th in terms of trade. It is a small country with a limited home market but, at the same time, we are among the countries with the highest per capita income. I think, more than in many other countries, our companies have internationalised well over time. That explains why there are more than 200 established Swiss companies in Japan, and these companies are here because they want to do business long-term.

You may have a Swiss subsidiary here where most or all the employees are Japanese, but the company’s Swiss DNA is still there. Our job at the embassy is to contribute to the economic success of Switzerland, so we try to help companies remain successful in a globalised economy while maintaining their Swissness.

What is the current level of investment between Switzerland and Japan?

It’s substantial. In terms of foreign direct investment [FDI] — business assets owned by Swiss companies in Japan — we rank 7th here. If you look at FDI from the so-called ultimate beneficial owner perspective, we are in 4th place. But there’s also FDI of Japanese companies into Switzerland. There are about 150 companies from Japan with a business establishment in Switzerland. Several have their global headquarters in Switzerland, for instance Japan Tobacco International and Sunstar. With our infrastructure, high level of education, the quality of life and a favorable tax environment, I think we are quite competitive.

What are some examples of Switzerland’s strengths in the Japan market?

The quality and durability of products is valued very highly here. To give you an example, I was at the Japan International Machine Tool Fair — one of the biggest machine tool fairs in the world — last November. Among about 1,100 exhibitors, almost 100 were Swiss companies. There were the big companies, but there were also many small, often family-owned businesses that are just the best in the world in their particular niche. Modern production processes need a lot of specialised machinery that needs to run 24 hours a day. Reliability and precision are extremely important, and these are part of the DNA of Swiss industry.

Are there plans to update the Switzerland–Japan trade agreement?

Yes. We’ve had the trade agreement for 10 years, and it has helped us further develop trade and investment between our two countries. But now the EU–Japan Economic Partnership Agreement has come into force. The competitive situation for our exporters of agricultural products, for example, is negatively affected by this new agreement. Something similar could be said for other areas where specific advantages are provided, such as access to new public procurement markets. Of course, we always try to avoid comparative disadvantages for our companies. After 10 years, we think it’s quite natural to update a free trade agreement, so this is something we are working on.

Could you tell me about the second Switzerland–Japan Economic Forum?

It’s an event organised in partnership with the Swiss Chamber of Commerce and Industry in Japan and the IMD Business School based in Switzerland. This year, the topic was Sports Values for Business in the context of the run-up to the 2020 Tokyo Games. The concept of the forum is to exchange experiences, mainly between top business representatives and high-level government representatives, on issues where it might be interesting for a Japanese audience to hear about Swiss experiences and vice versa.

For instance, ABB told us about their experiences getting into sports sponsoring. They recently became a main sponsor of Formula E — like Formula One, but for electric cars — which is now taking off. Another aspect was timing and sports. Since 1932, Omega has been the official timekeeper for the Olympic Games, and we had one of the legends of Swiss watchmaking, Jean-Claude Biver, talking about the relationship between watchmaking and sports.

What are some other events you’ve organised recently?

Every January, the World Economic Forum [WEF] — a private, Switzerland-based organisation — holds its main annual event in Davos, Switzerland. Japan has traditionally been an active participant and attends with very important people, including Prime Minister [Shinzo] Abe this year. At the embassy, we host a post-Davos event in cooperation with the WEF. This year, we had the founder of the WEF, Klaus Schwab, at this event. So, this is an excellent opportunity for us to bring people together and connect them.

Another event that happens annually in Switzerland is the St. Gallen Symposium. St. Gallen is a Swiss university town and is considered to have one of the leading business schools in Europe. Interestingly, the forum is organised by the students, the leaders of tomorrow, who invite leaders of today. There is a high-level group of Japanese personalities who all have participated in previous symposiums and help in recruiting top-level speakers from Japan. This year’s theme was Capital for Purpose — goals beyond just the return on investment and the share price.

The embassy invites participants from previous forums for a dialogue with the leaders of today and tomorrow. It’s just another example of how we can support and leverage the different links Japan has with Switzerland.   •