The recipe for the outperformance of Swiss businesses

A-LISTERS from the world of politics, business, academia, media and the arts descended on Davos on May 22 for the first in-person bash of the World Economic Forum (WEF) in more than two years. For over half a century the great and the good have used the annual get-together to address the world’s most pressing problems. They feel at home in Switzerland. Just as the small mountain village punches far above its weight as a global talking shop, Switzerland has prospered as a haven for businesses far beyond what might be expected of a small, landlocked country with scant natural resources. It is home to 13 of the top 100 European companies by market capitalisation and 12 of the top 500 worldwide. What is the secret sauce of the Swiss?

Something remarkable must be going on in the nation of mountains and valleys that before playing host to world-beating firms was perhaps best known for inventing yodelling. Relative to its GDP Switzerland has the highest density of Fortune 500 companies in the world. Multinationals contribute around one-third of Switzerland’s economic output, a much higher share than in other countries of comparable size. Foreign firms are drawn to Switzerland: Google set up its largest engineering centre outside America in Zurich. Swiss blue-chip firms outperform European rivals: the Swiss stockmarket index has risen by 29 per cent over the past five years, compared with 3 per cent for the Euro Stoxx 50, an index dominated by French and German behemoths.

Swiss firms’ name recognition has spread far beyond the country’s borders in banking (UBS and Credit Suisse), insurance (Swiss Re and Zurich), pharmaceuticals (Roche and Novartis), food (Nestlé), commodities trading (Glencore and Gunvor), watchmaking (Richemont, Patek Philippe and Rolex), hotels (César Ritz was the youngest of 13 children of a Swiss farmer) and, inevitably, chocolate (Lindt & Sprüngli and Barry Callebaut, the world’s biggest chocolate-maker).