- The Washington Times - Sunday, February 16, 2003

GENEVA This city, the world's foremost diplomatic center, has been known for centuries as a place where people come to talk. Now it is quickly turning into a place where people come to do business.
The reasons why many international organizations choose Geneva for their front office high quality of life, beautiful scenery, multilingual and multinational environment, good hi-tech and transportation infrastructure also attract foreign corporations, say city officials.
"Many companies set up their international or regional headquarters in Germany or France, but after a few years they are not international anymore 90 percent of their employees are French or German, which makes it difficult to get into other markets in Europe," said Philippe Meyer of Geneva's Department of Economic Affairs.
The many languages spoken on the streets of Geneva give the city a flavor that is usually associated with the ethnic and cultural diversity of New York. That, of course, is hardly a coincidence the United Nations may be based in the Big Apple, but its European headquarters is in Geneva. In fact, two-thirds of all U.N. activities take place here, even though Switzerland did not become a U.N. member until September.
"The international organizations sector is Geneva's biggest employer," said Daniel Haener, a Swiss diplomat who spent several years at his country's U.N. mission in Geneva and was recently assigned to the embassy in Paris. "The international organizations employ nearly 18,000 people and indirectly generate probably as many jobs as the private economy."
Geneva, regional headquarters for Europe, the Middle East and Africa of Dupont, the science-based corporation from Wilmington, Del., is an "extremely international site," with people of 45 nationalities, Nicolas Cudre-Mauroux, European technology manager, told a group of U.S. journalists during a recent tour of Switzerland organized by Location Switzerland, a promotional and consulting company.
The lakeside city and Switzerland as a whole "is one of the few places in Europe where you can stay international," said Mr. Cudre-Mauroux. "Here we are able to keep neutral and focused on Europe."
The trend of attracting foreign business can be seen in many Swiss cities. Over the past decade, Switzerland has increased its share of regional and global corporate headquarters more than sixfold from 9 percent in 1990-1992 to 59 percent in 1999-2001. According to a study by Arthur D. Little, a Cambridge, Mass., management-consulting firm, 88 percent of the regional and 23 percent of the global headquarters that moved to Switzerland in recent years belong to U.S. companies.
In the study, most executives from top 500 companies that recently relocated their headquarters said corporate tax advantages played a central role in their choice of location.
Another survey, conducted by KPMG, an advisory services company, found last year that Switzerland, with an average corporate tax of 21 percent, has lower rates than most other European countries except Ireland, which has an average tax rate of 16 percent and is expected to lower it even more. In comparison, Britain has an average tax rate of 30 percent; the Netherlands, 35 percent; France, 36 percent; and Germany, 42 percent.
Income tax rates are very attractive, too, said Jean-Max Arbez, general manager for Hewlett-Packard in Geneva. Many of the people who work in the Swiss city live across the border in France, he said. That way, they take advantage of the lower cost of life in France and lower taxes in Switzerland.
The high quality of life is the attraction most frequently mentioned by business leaders in the Alpine nation. Both the Arthur D. Little study and a survey by the William M. Mercer company show that three Swiss cities … Zurich, Geneva and Bern rank among the top 10 places in the world for quality of life. Arthur D. Little also said that, according to European executive search firms, it is easier to convince an experienced manager to move to Switzerland than to any other country.
"It's very important when you're seeking to recruit people and move people around," said David Davies, senior vice president for corporate affairs at Philip Morris International in Lausanne, about 40 miles outside Geneva. "Having a living environment that is pleasant and easy to deal with is not insignificant. It's not a challenge getting people to move here, but it is a bit of a challenge getting people to leave."
The New York-based company's first international acquisition was in the mid-1950s in Australia, and the second was the purchase of a Swiss cigarette maker in 1963, Mr. Davies said. Then the management "decided Lausanne was a nice place to be" and that's where it built its international headquarters, which would later manage expansion in the new and lucrative markets of Central and Eastern Europe.
"We did not look around for a place for our international headquarters and pick Switzerland, but rather made a conscious decision to stay here and grow, and last year made a conscious decision to move people here from New York," Mr.Davies said. The decision was "a reaffirmation of our commitment to Lausanne and our belief that Switzerland is a place where we can do business efficiently and effectively."
High living standards, however, come with steep living costs, and Switzerland is certainly one of the most expensive countries in the world. But in the grand scheme of things, business executives said, this drawback is overweighed by the many more advantages.
"The cost of living is high, but it's fully loaded," said David Pignolet, finance and administration manager of Autodesk, a California-based software design and digital content company, whose Swiss offices are in Neuchatel. "Costs must be analyzed for comparison for example, salaries, social charges, personal taxes, working hours, strikes."
Strikes are almost unknown to the Swiss. The country's responsible, highly skilled, multilingual and flexible labor force is actually another attraction for foreign companies, said Martin Zogg of Ernst & Young, a New York consulting firm.
But when it comes to labor regulations for foreigners, Switzerland's exclusion from the European Union creates complications such as extra paperwork and other human resource irritants. The Swiss government has tried to simplify the required procedures by signing bilateral agreements with the EU, which will soon make hires and transfers much easier.
For Herbert Riband, vice president and deputy general counsel for legal and external affairs at Medtronic International, a Minneapolis-based medical technology company, the Swiss reputation for precision played no small role in choosing a regional headquarters.
"Product quality is always important, but you can imagine when it's something that's going to be placed inside a person, that's essential. A device that is Swiss-made carries with it an image of quality that our patients and doctors identify with," he said.
Switzerland's location in the heart of Europe is another advantage often cited by executives. A flight from Geneva or Zurich, the two main airports, to most major European cities takes no more than a couple of hours. Unfortunately, the daily direct flight from Geneva to New York is no longer in service, which makes Zurich the only airport with nonstop flights to the United States.
But Geneva remains a favorite of many Americans, and the U.S. mission here is a much coveted posting for Foreign Service officers. The city is so popular among the world's diplomatic community that more than 100,000 officials come here every year for more than 2,000 meetings and conferences, Mr. Haener said.
"The economic impact of this activity is significant," he said. "The total of all the budgets approved by the organizations based in Geneva amounts to about $12 million, of which about $4.5 million is spent in Geneva and Switzerland on salaries, supplies or capital goods."
Some Swiss residents, however, are not very happy about their city being stretched to accommodate all visitors and events. In particular, Mr. Haener said, "the arrival of major multinational companies has had the effect of drying up the pool of residential housing, throwing off-balance the supply of places in international schools and increasing the cost of certain services."
"The combined growth in demand from the local population, as a result of the improvement in general economic conditions, and from companies relocating their headquarters to Geneva, seems to be penalizing the members of the diplomatic missions and international civil servants," he said. "But the fact that more international conferences are held in Geneva than in New York brings with it an obligation to develop a proportionate support infrastructure."

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