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Introduction

Associated Costs of Doing Business in Switzerland

Supply of Talent to Fill Roles in The Company

Legal Aspects Associated with Hiring People in Switzerland

Cultural Aspects Within Switzerland

Commercial Risk Factors

Political Risk Factors

Legal Risk Factors

Economic Risk Factors

Financial Risk

Economy

GDP Breakdown

Resources and Productivity

Technology & Innovation

Conclusion

References

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6.What Natural Resources Are Important for Industry?

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6.What Natural Resources Are Important for Industry?

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Switzerland is relatively poor in natural resources compared to other countries. However, its industries rely on:

Hydropower: A significant source of renewable energy for industrial and residential use (Swiss Federal Office of Energy, 2023).

Forests: Used for wood products and some traditional industries (Swiss Forest Agency, 2023).

Water Resources: Switzerland’s pristine water bodies are vital for hydropower and tourism.

Scenery/Climate: While not a "resource" in the traditional sense, the Alpine environment supports the tourism industry, a cornerstone of Switzerland's economy (World Tourism Organization, 2023).

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Demographics (age and gender distribution) 

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Demographics (age and gender distribution) 

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Age Distribution:

•           0–14 years: 15.23%

•           15–64 years: 66.43%

•           65 years and over: 18.34%

Gender Distribution:

•           Males: Approximately 4.43 million (49.68%)

•           Females: Approximately 4.49 million (50.32%)

Switzerland’s demographic profile is characterized by an aging population, with a significant proportion over 65 and most of the population between the ages of 40 and 60.

(Federal Statistical Office, 2023)

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Roughly 70% of total tax revenue

Corporate tax on profits at rates of between 11.7% and 21.6%

Direct taxes comprise income tax at progressive rates

(TaxFoundation, 2023)

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Taxes in Switzerland are progressive, meaning the tax rate increases as income rises. Since taxation is determined by federal, cantonal, and municipal authorities, the effective tax rate varies significantly depending on where a person resides.

Low-Income Brackets: Both federal and cantonal tax rates for low-income individuals are relatively modest, often below 10%

High-Income Brackets: High-income earners can pay a combined effective tax rate of 25% in low-tax cantons (e.g., Zug) or up to 40% in high-tax cantons (e.g., Geneva)

Effective Tax Rates: The actual percentage of income paid in taxes is often lower than the marginal tax rate due to deductions for dependents, insurance premiums, and professional expenses

(PWC, 2024)

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Switzerland is a federal direct democracy combined with elements of a representative democracy.

Swiss citizens have the power to propose or block laws through initiatives and referendums.

Switzerland is one of the most decentralized and citizen-empowered democracies in the world.

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Federal Assembly (Parliament).

President of the Swiss Confederation.

The Federal Chancellor.

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Trade Regulations: Switzerland has trade agreements with many countries, which makes it easier for Swiss companies to export goods. There are also no tariffs (extra taxes) when trading with major markets. This makes Switzerland a great place to export watches to other countries.

Legal Considerations: Switzerland has strong laws to protect intellectual property, like trademarks and patents. This helps protect Swiss watch brands from being copied or counterfeited, making it safer for watch companies to do business.

(S.M.E., 2023)

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Switzerland has a civil law legal system

Public Law:

Public law governs the organization of the State, as well as the relationships between the State and private individuals

Private Law:

Governs the relationship between individuals

mainly comprised in the Swiss Civil Code and in the Swiss Code of Obligations

Intellectual property law are also areas of private law

Labor law is governed by private and public law

(GlobaLex, 2024)

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Operating a GmbH (German) / Sàrl (French) / Sagl (Italian)

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Operating a GmbH (German) / Sàrl (French) / Sagl (Italian)

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There are subtle differences between each official language used in Switzerland, some of these might be:

All documents must be in the same language

The language used depends on the canton where the company wants to be established

Each Canton has its own taxation rules

Requirements:

Minimum founding capital of CHF 20,000

At least one shareholder required

Mandatory registration in the Swiss Commercial Register

Limited liability protection for members

Governance:

Board of managers

A general meeting of members

(S.M.E., 2024)

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Requirements:

Minimum founding capital of CHF 100,000, with at least CHF 50,000 paid in initially.

At least one shareholder.

Registration in the Swiss Commercial Register.

Shares and Capital:

Shares can be publicly traded.

Shared capital.

Taxation:

Corporate income tax.

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The Luxury Watch Market size is estimated at USD 51.31 billion in 2024, and is expected to reach USD 68.17 billion by 2029, So economically there is no risk of doing business in this industry, and it is very stable.

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Revenue of the Swiss Luxury Watch Industry

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Revenue of the Swiss Luxury Watch Industry

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The graph shows the revenue of the Swiss luxury watch industry worldwide from 2019 to 2029. It depicts a steady growth trend over this period, with revenue increasing year over year. The growth rate seems to be relatively consistent, suggesting a strong and stable demand for Swiss luxury watches in the global market.

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Account for roughly 30% of all tax revenue in Switzerland

The main indirect tax is value added tax (VAT)

VAT is currently payable at a rate of 8.1% of the total cost of the transaction

A reduced rate of 3.8% is levied on accommodation services

A 2.6% rate applies to necessities

(TaxFoundation, 2023)

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Here is the latest World Governance Indicators (WGI) chart comparing Switzerland and Malaysia for 2022. This bar chart displays their percentile ranks (0-100 scale) across six governance indicators:

Control of Corruption

Rule of Law

Regulatory Quality

Government Effectiveness

Political Stability and Absence of Violence

Voice and Accountability

Switzerland consistently ranks higher across all indicators compared to Malaysia, reflecting stronger governance scores.

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Tax regulations are designed to encourage investment in intellectual property (IP), research and development (R&D), and patents, making it an attractive location for companies involved in innovation.

Patent Box Regime

R&D Tax Deductions

General Corporate Tax Rates

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How technologically advanced is Switzerland?

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How technologically advanced is Switzerland?

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According to the 'Global Finance' index, Switzerland is the 5th most technologically advanced country in the world.

Internet users as a percentage of a country’s population, and LTE (4G) users as a percentage of the population

This conglomeration is based on multiple factors including technological knowledge, current technological strength, and readiness/capability to create and advance new innovations.

The final metric is the portion of GDP spent on research and development (R&D)

(GlobalFinance, 2024)

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Ranked as the most innovative country in the world by the Global Innovation Index

The country remains at the forefront of science and technological research

Switzerland has gained a reputation for being the center for research around artificial intelligence.

Switzerland holds the most AI patents in the European healthcare industry

(Swisslinx, 2020-2023)

The latest value from 2023 is 67.59 points

The world average is 33.17 points

The average for Switzerland from 2011 to 2023 is 66.55 points

The minimum value, 63.8 points, was reached in 2011 while the maximum of 68.4 points was recorded in 2018

(TheGlobalEconomy, 2023)

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Consumption as a percentage of GDP refers to the proportion of a country’s gross domestic product (GDP) that is attributed to household spending on goods and services.

The most recent value is 50.3 percent as of Q2 2024

Historically, the average for Switzerland from Q1 1980 to Q2 2024 is 55.11 percent

The minimum of 49.37 percent was recorded in Q2 2021, while the maximum of 60.2 percent was reached in Q1 1983

(TheGlobalEconomy, 2024)

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Gross fixed capital formation including land improvements; plant, machinery, and equipment purchases; and the construction of roads, railways, and the like, including schools, offices, hospitals, private residential dwellings, and commercial and industrial buildings.

The most recent value is 24.85 percent as of Q2 2024

Historically, the average for Switzerland from Q1 1980 to Q2 2024 is 27.79 percent

The minimum of 24.04 percent was recorded in Q1 1997, while the maximum of 34.99 percent was reached in Q2 1989

(TheGlobalEconomy, 2024)

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Includes all government current expenditures for purchases of goods and services (including compensation of employees). It also includes most expenditures on national defense and security, but excludes government military expenditures that are part of government capital formation.

The latest value from 2023 is 11.38 percent

The world average is 16.14 percent

Historically, the average for Switzerland from 1970 to 2023 is 10.68 percent

The minimum value, 7.77 percent, was reached in 1970 while the maximum of 12.13 percent was recorded in 2020

(TheGlobalEconomy, 2023)(TheWorldBank, 2023)

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The latest value from 2023 is 100.69 billion U.S. dollars

The world average is 69.63 billion U.S. dollars

Historically, the average for Switzerland from 1970 to 2023 is 40.37 billion U.S. dollars

The minimum value, 1.94 billion U.S. dollars, was reached in 1970 while the maximum of 100.69 billion U.S. dollars was recorded in 2023

(TheGlobalEconomy, 2023)(TheWorldBank, 2023)

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Exports of goods and services represent the value of all goods and other market services provided to the rest of the world.

The exports of Switzerland are calculated by the total amount of goods and services produced at home and sold abroad.

If exports are about 15 percent or less of GDP the economy is considered relatively closed to international trade

Many small European countries export over 40 percent of their production

The latest value from 2023 is 75.33 percent

The world average is 45.76 percent

Historically, the average for Switzerland from 1970 to 2023 is 51.61 percent

The minimum value, 38.64 percent, was reached in 1972 while the maximum of 76.94 percent was recorded in 2022

(TheGlobalEconomy, 2023)(TheWorldBank, 2023)

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The latest value from 2023 is 666.6 billion U.S. dollars

The world average is 179.17 billion U.S. dollars

Historically, the average for Switzerland from 1970 to 2023 is 212.08 billion U.S. dollars

The minimum value, 10.33 billion U.S. dollars, was reached in 1970 while the maximum of 666.6 billion U.S. dollars was recorded in 2023

(TheGlobalEconomy, 2023)(TheWorldBank, 2023)

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Here is the Fragile States Index (FSI) comparison chart for 2022 between Switzerland and Malaysia. So, What is FSI ?

The Fragile States Index is a tool to assess and monitor a country's vulnerability to crises, providing a snapshot of where interventions may be needed to enhance stability and resilience.

In this chart:

Switzerland has a low FSI score of 20, indicating high stability.

Malaysia has a moderate FSI score of 70, reflecting relatively higher fragility compared to Switzerland.

A lower score on the FSI indicates greater stability, while a higher score suggests more challenges related to state stability and resilience.

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Established and Profitable Businesses

Operational and Financial Stability

Location Criteria

Documentation and Planning

Challenges for Startups

(Benjamin Manz, 2021)

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BRIDGE Programme

Proof Of Concept (130,000 CHF).

Discovery (850,000 - 2,550,000 CHF).

Swiss National Science Foundation

NRPs (300,000 – 2,000,000 CHF).

IICT (No maximum budget).

SPIRIT (500,000 CHF).

Sinergia (50,000 - 3,200,000 CHF).

Swiss Innovation Power (450,000 CHF).

(Catalyze Group, 2024)

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Strength of the Currency Against Two Major Currencies Over a 10-Year Period

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Strength of the Currency Against Two Major Currencies Over a 10-Year Period

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The Swiss Franc (CHF) is known for its stability and status as a "safe-haven" currency. Over the past decade:

Against the USD: The CHF has remained relatively strong, often trading in the range of 0.90 to 1.10 per USD (IMF, 2023).

Against the Euro (EUR): The CHF has shown consistent strength, trading around 1.05 to 1.20 per EUR for much of the last decade. Notably, the CHF reached parity (1:1) with the Euro in recent years (European Central Bank, 2023).

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Swiss National Bank (SNB) Interest Rates 

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Swiss National Bank (SNB) Interest Rates 

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Switzerland 10-Year Government Bond Yield

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Switzerland 10-Year Government Bond Yield

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Swiss Federal Office for Customes and Borders

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Bilateral economic ties with the United States

Free Trade Agreement with the European Union

EFTA Convention

33 FTAs with 43 partners

(USA Government ITA, 2022)

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2006

Switzerland: 9.0

Germany: 8.8

Malaysia: 6.0

2023

Switzerland: 9.1

Germany: 8.8

Malaysia: 7.3

(Economist Intelligence Unit, 2024)

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Steady Productivity Levels: Switzerland remains among the most productive countries globally, 5th in the world (The Global Economy).

Innovation as a Driver: top-ranking innovation system, strong research and development investments, and high educational standards

Post-COVID Recovery

(TradingEconomics, 2024)

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1. Cost of Living Overview

High Living Costs: Switzerland is one of the most expensive countries globally.

Housing:

Average rent for a 3-room apartment: CHF 1,500–2,500/month (Federal Housing Office, 2023).

Average house price: CHF 1.2 million.

Supply shortages in urban areas drive up prices.

Other Expenses:

Healthcare premiums: CHF 300–500/month per person.

Public transportation: CHF 75–120/month for city passes.

Food and dining: Average monthly groceries CHF 400–600.

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Rising Wage Expectations:

Employees in high-cost areas (Zurich, Geneva) demand higher wages to match living costs.

Competitive housing markets intensify pressure for higher income levels (Swiss Federal Statistical Office, 2023).

Regional Variations:

Wage demands are lower in rural areas where living costs are comparatively reduced.

Urban housing shortages impact industries needing local talent.

Employment Attraction:

Companies offer housing allowances or flexible working options to attract employees in high-cost regions.

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Limited Housing Supply:

Low vacancy rates in cities like Zurich (0.5% in 2023).

High demand for affordable housing creates competition.

Government Initiatives:

Cantonal policies incentivize construction of affordable housing.

Limited impact so far due to rising land costs.

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Average Labour Costs/Median Income (L, W):

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Average Labour Costs/Median Income (L, W):

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Switzerland has one of the highest average labor costs globally due to its high standard of living and robust economy. In 2023, the average labor cost was estimated at $66/hour, one of the highest in Europe (OECD, 2023). The median income in Switzerland is approximately CHF 6,500–7,000 per month, depending on the region and sector (Swiss Federal Statistical Office, 2023).

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Average Labour Costs/Median Income (L, W):

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Average Labour Costs/Median Income (L, W):

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The share of 25-34 year-olds without upper secondary educational attainment remains at 9% since 2023 (5 percentage points below the OECD average)

64% of 25-34 year-olds without an upper secondary qualification are employed, compared to 87% of those with an upper secondary or post-secondary non-tertiary qualification. (The corresponding OECD averages are 61% and 79%, respectively)

the share of NEETs (young people not in Employment, Education, or Training) decreased from 9.4% to 8.9% (Across the OECD, the average NEET rate decreased from 15.8% to 13.8%) (2016-2023)

In all OECD member countries, women aged 25-34 are as likely or more likely than their male peers to have a tertiary qualification (54% compared to 41%) In Switzerland the rate is 54% for women and 50% for men

52% of young women with educational attainment below upper secondary educational level are employed, while the corresponding share for young men is 74% (the corresponding OECD averages are 47% and 72%)

90% of young women with a tertiary qualification are employed, while the corresponding share for young men is 94% (the corresponding OECD averages are 84% and 90%)

70% of 25-64 year-olds who have at least one parent with tertiary attainment also attained a tertiary qualification. In contrast, only 23% of 25-64 year-olds with parents without an upper secondary qualification have obtained a tertiary qualification themselves. (The OECD averages are 72% and 19%, respectively)

(OECD, Education GPS, 2024)

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The latest value from 2024 is 0.9 index points, a decline from 1 index points in 2023 (the world average is 4.98 index points)

Historically, the average for Switzerland from 2007 to 2024 is 1.75 index points

The minimum value, 0.9 index points, was reached in 2024 while the maximum of 2.4 index points was recorded in 2014

The highest value was in Samoa with 10 index points and the lowest value was in Australia with 0.3 index points

(TheGlobalEconomy, 2024)

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Recent Data (TheGlobalEconomy, 2024)

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Employment Rates by Gender:

Men: Approximately 73% are employed

Women: Approximately 62.6% are employed

Unemployment Rates by Gender:

Men: 2.1% unemployment rate

Women: 1.9% unemployment rate

(Statista, 2024)

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Primary Sector (Agriculture, Forestry, and Fishing)

Share of Employment: ~3.0% of the workforce

Secondary Sector (Industry and Construction)

Share of Employment: ~20-22% of the workforce

Men dominate employment in this sector (~75-80% of workers)

Tertiary Sector (Services)

Share of Employment: ~75% of the workforce

Women make up a significant share (~60-65% of workers in this sector)

(Federal Statistical Office, 2024)

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National Languages

-German

-French

-Italian

-Romansh

Dialets

Large Foreign Population (English/Portuguese)

(AboutSwitzerland, 2022)

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Switzerland is the 2nd country in life expectancy, just behind Japan, with an average life expectancy of 83.6 years. 12 years above the global average.

Healthcare System

Quality of Life

Lifestyle and Diet

Environmental Factors

(Federal Statistical Office, 2024)

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For Mexico and Qatar: Use hierarchical leadership, clear rules, and emphasize group achievements.

For Spain: Blend structured leadership with collaboration, promoting work-life balance and relationships.

For Switzerland: Empower employees with a decentralized, participatory style that values results and independence.

(Country comparison tool, 2020)

(Meyer, E., 2017)

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Cultural Dimensions Categories (High & Low)

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Cultural Dimensions Categories (High & Low)

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Nationals:

Swiss citizens have full access to the job market without restrictions.

Often preferred for public sector roles and jobs requiring native language proficiency.

Non-Nationals:

Approximately 25% of the Swiss population are foreign nationals (Swiss Federal Statistical Office, 2023).

Many work in healthcare, construction, hospitality, and IT sectors.

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Switzerland is a highly stable and favorable country for opening a business, the main benefits in our opinion are:

Reputation and Branding

Being associated with “Swiss Made” enhances the perceived quality and value of your watches, leveraging Switzerland’s global prestige in the luxury watch market

Innovation and R&D Support

Generous tax incentives for innovation and access to skilled labor

Access to Global Markets

Free trade agreements and Switzerland’s role as a trade hub simplify exports to key markets

Stable Business Environment

Low corruption, strong governance, and a robust legal framework ensure a secure and predictable environment for investment

In summary, Switzerland’s unparalleled reputation in the watch industry, combined with its business-friendly environment and innovation incentives, makes it an excellent choice for establishing a watch company.

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Countries with a population higher than 500.000

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Swiss and EU/EFTA Nationals: No work permits needed, but a residence permit is required for stays over 90 days.

Third-Country Nationals:

Hiring allowed only if no suitable candidates from Switzerland/EU/EFTA are available.

Must meet qualifications for specialized skills or professional expertise.

Anti-Discrimination Laws: Employers must avoid discrimination based on gender, age, race, nationality, religion, or disability.

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2. Working Conditions (Legally Required)

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2. Working Conditions (Legally Required)

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Working Hours:

Standard: 40–44 hours/week (industry-dependent).

Overtime capped at 140–170 hours/year and paid at +25% unless offset by time off.

Paid Leave:

Minimum 4 weeks/year (5 weeks for employees under 20).

Maternity Leave: 14 weeks.

Paternity Leave: 2 weeks.

Public holidays vary by canton.

Minimum Wage:

No national minimum wage.

Some cantons (e.g., Geneva, Neuchâtel) and collective agreements set minimum wages.

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Occupational Safety:

Risk assessments, protective equipment, and safety training are mandatory.

Strict standards for high-risk industries like construction and chemicals.

Ergonomics:

Proper lighting, ventilation, and ergonomic setups required for offices.

Insurance:

Employers must provide accident insurance covering occupational and non-occupational incidents.

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Termination Rules:

Notice periods: 1–3 months depending on tenure.

Dismissals must not be discriminatory (e.g., pregnancy, union membership).

Collective Labor Agreements (CLAs):

Industry-specific agreements may dictate wages, hours, and benefits.

Workplace Equality:

Equal pay for equal work under the Gender Equality Act.

Employers must prevent harassment.

Data Protection:

Employee data must comply with Swiss Federal Act on Data Protection (FADP).

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Advantages of Nationals:

Familiarity with local laws, languages, and cultural norms.

No need for work permits or additional administrative costs.

Advantages of Non-Nationals:

Fill skill shortages in specialized industries.

Bring diverse perspectives and innovation.

Challenges for Non-Nationals:

Work permits required for third-country nationals.

Language barriers and integration into Swiss work culture.

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Equal Pay:

Swiss law mandates equal pay for equal work, regardless of nationality (Gender Equality Act, 2023).

Discrimination Protections:

Employers must ensure fair treatment and opportunities for all employees.

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The ‘anti-hijab’ proposal was put forward by Swiss Congress, which campaigned with slogans such as 'stop extremism'. Official results of a 2021 referendum showed 51.2% voted in favour of the ban.

From January 1, Switzerland has officially banned burqas, hijabs or any other face coverings in public.

The Lower House of Parliament in September 2023 cemented the ban into federal law and set a fine of up to 1,000 francs for violators.

(News18, January 2nd 2025)

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The Swiss watchmaking industry has conquered the world with its high-quality products. The industry operates primarily in the luxury segment and generates around 4% of Switzerland's GDP. In terms of value, Switzerland is the world's largest exporter of watches. (AboutSwitzerland, 2023)

Companies such as Rolex, Patek Philippe, Audemars Piguet, Omega, and TAG Heuer dominate the luxury market, while Swatch Group, with brands like Swatch and Tissot, dominate the mid-range and affordable segments.

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Geneva: Home to luxury brands like Rolex and Patek Philippe.

Vallée de Joux: Known as the cradle of fine watchmaking, housing brands like Audemars Piguet.

Biel/Bienne: A hub for movement manufacturing and brands like Omega.

Neuchâtel and La Chaux-de-Fonds: Key areas for innovation and production.

(Crown Watch Blog, 2024)

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Generates approximately CHF 22 billion annually.

50% of global watch market revenues despite producing less than 2% of the total units.

Creates 4% of Swiss GDP.

It employs 60,000 people.

(About Switzerland, 2023)

(Federal Statistical Office, 2024)

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Luxury Mechanical Watches

Affordable and High-Precision Quartz Watches

Limited Editions

Innovative Movements

Maintenance and Servicing

Watchmaking Components

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Master Watchmakers

Movement Engineers

Craftspeople

Designers

Sales and Marketing Specialists

Supply Chain Managers