Les exportations suisses

The success of swiss exports

Pharmaceutical products at the top of the list

Switzerland has never exported as much as it did at the beginning of 2022. These flows continue to maintain a steady pace. Swiss exports account for almost two-thirds of the country’s gross domestic product. Medicines and other pharmaceutical products generate the most demand, accounting for more than half of all exports.

The main sectors

Chemicals and pharmaceuticals, machinery with electronics, and watches are the three main sectors of the country’s exports. Together they account for more than CHF 184 billion.
The main countries of destination are the United States, Germany, and Italy. As for the supplier countries, we find Germany, Italy, and China.

The main figures

The increase in the flow of exports and imports has been very significant. Over the last 30 years, the Swiss country has gone from CHF 88.3 billion in exports to CHF 259.5 billion. For machinery, equipment, and electronics, the amount has increased from CHF 25.5 to 31.2 billion and for pharmaceuticals, the amount of exports has become 7 times higher to reach CHF 130.9 billion.

Diversity at the cantonal level

According to the foreign trade statistics of the Federal Customs Administration, not all cantons generate the same activity and there is a disparity. For example, the canton of Basel exports 50 times more goods than the canton of Appenzell Rhodes-Intérieures. Among the major exporters, we should mention the canton of Neuchâtel, which has the watchmaking sector in its sights. More surprisingly, the economic leader, Zurich, is almost in the last position.

What about the credit?

The export credit is a short-, medium- and long-term credit intended to finance the export of consumer and investment goods and services. It can be combined with a commitment credit and often forms the core of a real financing package.

When talking about this type of financing, we must emphasize the importance of the federal export risk guarantee, the buyer’s credit, the supplier’s credit, and the framework credit (crédit cadre).

The federal export risk guarantee (ERG)

This is an insurance policy designed to cover specific risks arising from exports. However, it does not directly cover the private buyer’s risk. The Federal Council has decided to open a procedure to cover this risk.

Given privatizations in importing countries and the increasing globalization of production, Switzerland’s position as a business location has been put at a disadvantage compared to its foreign competitors by the lack of coverage for private buyer risk.

ERG-insurable risks

ERG, however, provide convincing insurance for transfer, de ducroire, political, manufacturing, and currency risks.

  • Transfer risk: This is the risk that a solvent private debtor who is willing to pay is prevented by the state in which he is based from paying in foreign currency according to the contract.
  • De ducroire risk: It consists of the insolvency or refusal to pay the debtor. It will be covered by ERG in the case where states, municipalities, or public law entities are the buyers. But also in the case where companies under private law are owned by public authorities or have public functions and present themselves as buyers. Finally, in the case where private companies are buyers or borrowers but provide guarantees for governments and public authorities.
  • Political risk: By this risk, we mean extraordinary measures or political events such as wars or revolutions that prevent private debtors from fulfilling the contract or that result in goods belonging to the exporter being lost or damaged.
  • Manufacturing risk: This is the risk that the exporter may suffer damage as a result of the impossibility of demanding or carrying out delivery by the contract.
  • Contingent Currency Risk: This covers losses arising from the refinancing of a foreign currency credit, foreign currency forward contracts, or similar transactions occurring after a loss covered by the policy.

The buyer’s credit

This is a credit granted to foreign importers to finance deliveries and services of Swiss exporters. If the credit negotiations between the exporter’s bank and the buyer are successful, the exporter’s bank concludes the actual credit agreement with the buyer or his bank.

Figure 1 : The buyer’s credit procedure – Max Lüscher-Marty

The supplier’s credit

This credit will be granted to the Swiss exporter to cover the period between the shipping of the goods and the full payment made by the foreign buyer. Generally speaking, this credit is applied for smaller export transactions.

Figure 2 : The supplier’s credit procedure – Max Lüscher-Marty

Distinctions should be made between buyer’s credit and supplier’s credit

The supplier’s credit differs in several respects:

  • Firstly, the Swiss exporter appears as the lender to the foreign buyer.
  • In addition, the exporter and the buyer open themselves directly to credit negotiations.
  • In addition, the exporter chooses when and how to apply for refinancing from his bank. He can rely on an offer from his bank during the negotiation phase after the deal has been closed, or after delivery.
  • Another point is that there is only one agreement for export financing between the exporter and the exporter’s bank. There is no agreement and credit between the exporter’s bank and the buyer.
  • The buyer’s credit is very often granted to the foreign buyer, but the discount credit is usual for the supplier’s credit which is the Swiss exporter.
  • Finally, the credit against assignment is only possible with first-class buyers. 70 to 80% of the amount of the claim is pledged.

The framework credit (crédit cadre)

These credits are granted based on a framework agreement. They set a limit for the amount and conditions for individual credits and determine:

  • The advance payments and intermediary payments to be made
  • The terms of repayment
  • The margin

The interest rate is fixed based on the market situation.

We can differentiate three types of framework credit:

  • First, agreements in the strict sense which are small and medium export credits granted on the agreement between the Swiss bank or a consortium as creditor and the foreign institutions as debtors.
  • Secondly, transfer contracts, which are 10-year export credits based on an agreement between the Confederation and a foreign government to facilitate the export of investment goods.
  • Finally, mixed credits, which are export credits with the participation of the Confederation.

Swiss exports of goods are therefore doing very well. The recent pandemic has not stopped the activities and in 2022, the country’s foreign trade is in perfect health.

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