Swiss SMEs are feeling the effects of increased protectionism
Global economic activity is slowing. The uncertainty associated with the trade war between the US and China is a drag on the economy, and now is not an easy time for the export sector. In addition, exporters face growing protectionism around the globe.
This year's SME study by Credit Suisse therefore focuses on the topic of protectionism and export hurdles. Nearly 560 Swiss SME exporters took part in the survey, which shows that Swiss SMEs are more frequently finding trade and customs barriers a challenge than they did five years ago. However, the difficulties are seen as surmountable.
To what extent is your company affected by protectionism compared with your regional and sector peers? Take the test on the website of Credit Suisse!
Greatest challenges facing Swiss SME exporters
Tariff measures such as customs duties and levies are a barrier to trade for almost half the SMEs surveyed. However, non-tariff barriers such as customs procedures and the associated costs have a greater impact. So too do the costs involved in conformity assessments and the provision of certificates of origin.
Yet these tariff and non-tariff trade barriers are by no means the biggest challenge facing Swiss SME exporters. The higher level of prices for Swiss products and services, as well as exchange rate risks and the strong Swiss franc, are described as having an even more harmful impact on exports.
Despite trade barriers, SMEs view the situation as positive
The link between growing protectionism and the business situation for SME exporters is not quite as clear-cut as might be expected. Despite the challenges, a majority of Swiss SMEs rated the business situation in exports as positive at the time of the survey. A not insignificant proportion of the participants indicated that they were satisfied with their own levels of export activity, yet at the same time were experiencing either some or major difficulties with trade barriers.
Export activity is dependent not only on trade barriers but also on the economic cycle. Although the survey results lead the authors of the SME study to conclude that companies perceive the barriers as a challenge, they note that SMEs do seem to have a plan or strategy for overcoming these obstacles.
Possible measures for dealing with trade barriers
- Exploit free trade agreements or export to countries that have a free trade agreement with Switzerland
- Switch to exports of products that are less affected, or to other countries with fewer trade barriers
- Hire specialists (e.g. export managers) and/or involve advisors (e.g. lawyers)
- Cooperate with external partners or existing local networks (e.g. distribution partners, clients, or suppliers)
- Cooperate with certification and authorization bodies
- Seek assistance from institutions such as Switzerland Global Enterprise (S-GE), chambers of commerce, Swiss embassies, or foreign authorities that promote trade
- Adjust value chains (e.g. establish local branches or production facilities)
- Make changes to products and services