What does the future of Switzerland-Mexico Relations Look Like?By Alessa Flores | Thu, 08/27/2020 - 09:50
Q: What does the near future look like in terms of economic cooperation between Switzerland and Mexico, and what investment opportunities and challenges do you see?
A: A Swiss product means uniqueness, sophistication, innovation and top quality. The accumulated Swiss foreign direct investment in Mexico was roughly CHF122.84 billion (US$135.14 billion) from 1999 to 2019. Bilateral trade with Switzerland amounted to US$2.62 billion in 2018, which placed it as the No. 1 commercial partner for Mexico among the countries that make up the European Trade Association (EFTA).
Mexico is the second-most important trading partner for Switzerland in Latin America, and Switzerland is the ninth largest investor in Mexico. Thus, investment protection is of great importance for the Swiss economy. Longer-term prospects for export-oriented manufacturing remain good given competitive wages, a skilled workforce and deep integration in US value chains. The size of the country's domestic market is one of the main attractions for companies that seek to invest and expand their presence in the world. Now is a good time for Swiss automotive, manufacturing and aerospace companies to enter the market to establish or expand their presence. The "Made in Switzerland" seal is synonymous with top quality and high standards.
Q: What are Switzerland’s plans with the state of Queretaro? What other states are attractive to Switzerland in terms of investment and international cooperation?
A: Queretaro is the state that hosts the most Swiss companies after Mexico City's metropolitan area; therefore, it is of great importance for us. Currently, Swiss companies in the automotive sector, such as Adval Tech, or in the chemistry sector (Givaudan) have announced investment plans to expand their production plants and implement new technologies in their production processes. Other states with investment plans from Swiss companies are Yucatan, Veracruz, Tamaulipas, San Luis Potosi, Nuevo Leon, Mexico City and Mexico State.
Q: Switzerland is among the countries that has supported Mexico through the pandemic thanks to donations of medical supplies. What has Switzerland donated to Mexico and in what other ways are both countries cooperating around the pandemic?
A: Company members of the Swiss-Mexican Chamber of Commerce and Industry have launched an initiative to promote actions to mitigate the negative economic impact of COVID-19 and to support the health sector in Mexico: the Consortium for Mexico's Well-being. To name just some examples, Novartis pharmaceutical has donated US$250,000 to FUNSALUD and has brought medicine to Mexico that will benefit 20,000 COVID-19 patients. Roche has donated protective material and medicine to public health institutes, has promoted clinical research and has diagnostic technology to carry out COVID-19 tests. Zurich Insurance has supported more than 80 institutions and together with UNDP has created a social investment program, which will benefit more than 30,000 people directly and more than 128,000 indirectly on issues of economic reactivation and mental health. Other Swiss companies that have donated are ABB, Credit Suisse, Holcim, Nestlé and Regal Springs.
Q: What best practices could Mexico learn from Switzerland for the development of its financial and manufacturing sectors?
A: Switzerland is not only a country of traditions but also of innovation, cutting-edge research and high technology. According to the 2019 World Innovation Index, Switzerland is the leading country in the world in terms of innovation. It is also the fifth-most competitive country according to the 2019 ranking of the World Economic Forum. Switzerland's prosperity is based on the quality of its products but also on its high capacity to innovate. Large Swiss groups, the country's numerous SMEs and startups have the habit of continually improving their products, services and processes through significant investments in research and development. However, these good results worldwide are also due to the quality of the vocational training system, oriented toward the market's needs. The current health crisis and its economic and social consequences have increased the urgency for actions and measures to guarantee young people's employability in the long term. This pandemic highlighted the importance of betting on digitalization and the need to develop digital skills among future generations to prepare them for the world. Dual education programs that drive youth employability create human capital and ensure that young people learn, through practice, the skills that current and future challenges require.
Q: What investment opportunities are there for Mexicans and Mexican companies in Switzerland?
A: Switzerland has a particular set of qualities that make it the ideal place to do business: innovation, technology, a liberal economic regime, political stability, close relations with foreign markets, excellent educational and health systems, optimal infrastructure and a competitive tax system, among others.
The Swiss Business Hub Mexico was launched in 2014. Its main objective is to overcome existing inhibition thresholds. It also facilitates access to all foreign markets by arranging contacts and providing expert advice for Swiss companies that can become exporters and are interested in doing so, especially SMEs. Comprehensive investment protection is extremely important for the Swiss economy. The Swiss Business Hub Mexico provides support to various sectors. Some of its priority segments are the following: automotive, pharmaceutical, chemical, medical devices, aeronautics, machinery, consumer goods, food and beverages, innovative materials, clean technologies, information technologies, fintech and e-commerce.
Q: The Great Maya Aquifer Project received US$100,000 in financial support from the Swiss government. What other projects are you planning to support?
A: We have a permanent interest in collaborating with Mexico in this field. In 2017, both countries signed an agreement on the Return of Cultural Property, which gives us the possibility to consider Mexico as a priority country for the collaboration and cooperation in safeguarding and promoting movable cultural heritage. The Great Mayan Aquifer Project is a mixed heritage project – cultural and natural – that aims to investigate the existing water system in the subsoil of the Yucatan Peninsula. In 2018, the Swiss government financed the restoration of the pre-Hispanic tomb of Santiago Tillo, in the Oaxacan region of Mixteca. This project was carried out in collaboration with the INAH’s National Coordination for the Conservation of Cultural Heritage (CNCPC). On July 9, 2020, we held a videoconference about this work that can be found on our official Facebook. Concerning future projects between Switzerland and Mexico related to cultural heritage, we are constantly strengthening our relations with Mexican institutions, intending to continue our collaboration, this time in the northern part of the country.
Q: What would the Swiss Embassy highlight regarding relations between Mexico and Switzerland?
A: This year is a critical year for Switzerland and Mexico because 2020 marks 75 years of diplomatic relations between the two countries. That is over seven decades of friendship, solidarity, and cooperation between Switzerland and Mexico. For more than seven decades, our two countries have cooperated in the economic field, in health, education, science and technology and human rights, among others. With US$7.1 billion in 2018, Mexico is the second-leading destination for Swiss foreign direct investment in Latin America. In Mexico, there are more than 400 Swiss companies, representing 40,000 direct jobs. This pandemic has also allowed us to strengthen our relationship and reaffirm our bonds of union and our fraternal solidarity.
Q: Quintana Roo announced a strategic free trade area in Chetumal. What advantages do you see in this initiative for Swiss investment?
A: The automotive industry is one of the most important and dynamic in Mexico and Swiss firms are highly active in this sector. This has been reflected in the increase in the number of jobs and foreign direct investment, among others. Tier 2 and Tier 3 providers have higher expectations than the rest of finding ways to save costs in all areas. This includes the relocation of their production plants. Another sector that could highly benefit from the installation of this free trade area is the aerospace industry, which is a sector characterized by the production of high value-added goods that use high technology in its processes. It favors exports and therefore the payment of higher wages. Also, it affirms that the research and development carried out by high-tech industries benefit other commercial sectors through the development of new products and expanded commercial activity.