Armin Frauenknecht, president of the Swiss Chamber of Commerce and Industry in Japan, discusses life inside the European Business Council.
J@PAN INC: Can you tell us about the Swiss Chamber?
ARMIN FRAUENKNECHT: Here at the chamber, we’re a one-woman show. The embassy takes over when it comes to helping new Swiss companies establish themselves in Japan. If a small Swiss company had a product they want to sell in Japan, we’re probably the first place to call on.
Up until now, the chamber has been to a large extent a social meeting place. We host monthly luncheons, and this year we were quite successful in getting some really good speakers. Many years ago, we always had three major banks responsible for the speakers on a rotation basis. Of course, there was competition with each bank trying to get better speakers than the year before, and 20 years ago it was still possible to get the chairman for Nestlé or Roche. However today it’s almost impossible; they don’t have time to talk to a smaller chamber anymore. Although Switzerland is a very small country, we have some of the world’s biggest companies (Laughs).
JI: For an average Japanese person, Switzerland is general consumer goods, right?
AF: It’s mainly watches: Rolex and Swatch and the many companies that Swatch owns. I’m not quite sure, but maybe Omega is still the best-known brand, being the official timekeeper of the Olympics. I don’t think the average Japanese realizes that Nestlé is a Swiss company.
JI: Switzerland and Japan have been working to develop an Economic Partnership Agreement (EPA)—can you explain more about it?
AF: The whole thing started about two years ago. Our goal is to create a free trade agreement that encompasses a wide range of fields including the trade of goods, investments and intellectual property rights. Negotiations have been going back and forth between the two countries and the very last stages will probably take place in late September or early October in Switzerland. After everything is approved in Parliament, the plan is to have a large-scale economic and financial symposium in Tokyo next October with the Swiss Minister of the Economy and business leaders. This is the first EPA between a European country and Japan, and we’re very excited about it. The EPA itself will reduce taxes on both sides, and is more beneficial for consumer goods than for, say, banking. Apparently the agricultural side of the negotiations is a bit of an issue, which is amusing because Switzerland isn’t much of a food-producing nation. The Japanese ambassador is a friend, and when I asked him what the problem was, he said jokingly, “We’re now down to just Swiss wine and sake.” But really, we don’t export Swiss wine, and it’s difficult to get here. Likewise, sake is the same in Switzerland.
The Swiss side is pushing for the EPA to address issues such as management and maintenance of facilities. The Schindler incident was likely a big motivation for that. If you think of elevators and escalators, a company sells this product and installs it but the service doesn’t end there. It runs for years, and at some point you’re bound to have an accident. We’ve seen in the case of Schindler, though, that there’s zero-tolerance here for accidents. During our June luncheon, Ambassador Luzius Wasescha spoke a little about the issue and how the EPA will be important for “areas such as facilitation to get permits for installers and repair people” for manufacturers. I think he was addressing Schindler there.
JI: Why did it take so long for a European country to make an EPA with Japan? Why did Switzerland take the challenge?
AF: I think these agreements are usually done with developing countries. We are not part of the EU so it was easier to address the issue. Negotiations through the EU with Japan would be far more complicated. Japan and Swiss relations reach all the way back to 1863 when Switzerland became the 10th European country to sign a treaty on friendship and trade. This positive relationship has stretched all the way to modern times and we are happy to take that relationship to the next step.
JI: What’s the Chamber’s relation to the European Business Council (EBC)?
AF: Although we’re not part of the EU, here in Japan we are part of the EBC. This is the most important function we have because we can attend EBC meetings and have our say. Once a year they publish a white paper that is broken down into industries. If the Swiss chamber were to present a paper, nobody would care, but the EBC white papers are definitely read by the government. Even for Swiss companies, all big issues go through the EBC—it’s really a tool for the smaller chambers.
"I have no idea what kind of lobbying goes on behind the scenes but I’m sure those larger chambers are aiming to have this position."
The story is a bit different for larger groups such as the German, French and British Chambers, though. These chambers have quite a bit of power. The chairman Mr. Collasse (President of Chanel Japan) has been running this for seven years now and he’ll retire towards the end of the year. I have no idea what kind of lobbying goes on behind the scenes but I’m sure those larger chambers are aiming to have this position. There must be a lot of power struggles going on.
I’ve heard people say, “Do we really still need national chambers, or just the EBC?” Personally I think for many issues, the EBC is enough. Of course, larger countries will still want to have their own individual chambers that’s good for things like networking. It’s a lot like a social environment, really. But at least here the reality is that the heads of many larger companies are no longer Swiss, and they see themselves as part of a global company. They don’t really care where company headquarters is.
The EBC is a big partner for us, It’s been around for years and is quite well established. Although some particular countries might try to assert their influence, I think the organization will stay independent. If there was an EU chamber, then Switzerland would be excluded, and we would have to make another bi-lateral agreement. (Laughs).JI
SWISS CHAMBER OF COMMERCE AND INDUSTRY IN JAPAN
Bilateral trade: 8.2 billion Swiss Francs
Major Swiss companies: Nestlé, Roche, Novartis, UBS, Credit Suisse, ABB, Swiss International Air Lines, Zurich, Swiss Re
First Swiss company in Japan: Favre-Brandt & Co. (1863)