Trade relations between Switzerland and China through a historical lens
Trade between China and Switzerland has been characterised by pragmatism and vigilance since the 1970s. With the support of the SNSF, an anthropologist and a historian have analysed these relations.
China is Switzerland’s third largest trading partner after the European Union and the United States. And Switzerland is one of the few countries in Europe – alongside Iceland – to have negotiated a free trade agreement with Beijing. How do these two countries navigate a relationship that has long been torn between mistrust and interest, while their two economies are deeply integrated? A study (*) supported by the Swiss National Science Foundation (SNSF) traces the evolution of trade between the two countries over a period of almost half a century.
While the sheer scale of the Chinese market has long motivated commercial ambitions in Switzerland, the relationship is not always straightforward. The study mentions the issues of intellectual property rights and the political tensions that have weighed on the partnership, particularly due to pressure from several Western democracies on the issue of human rights in China. It also highlights the transfer of technology and knowledge from Swiss businesses to their increasingly competitive Chinese rivals. Finally, it takes a closer look at the challenges facing expat entrepreneurs from the two countries – in particular, administrative hurdles and inequality of treatment in China as well as public mistrust of Chinese investments in Switzerland’s telecoms sector.
In order to paint as complete a picture as possible, Lena Kaufmann, anthropologist at the University of Fribourg, and Niklaus Remund, historian at the University of Zurich, decided to combine their approaches. Remund focused on the period from the 1970s to 2000, combing through official documents – corporate and federal archives, correspondence, travel reports, diplomatic declarations – and collecting personal accounts. This process allowed him to reveal the long-term evolution of these relations. Meanwhile, Kaufmann worked on the period from the turn of the 21st century to the present day. Focussing on Chinese companies in Switzerland, she collected testimonies from around 50 people of both nationalities.
As an anthropologist, Kaufmann emphasises the importance of understanding the aspirations of individuals. “[Aspirations] play a key role in the expansion of these companies. Everywhere, we realise that beneath the surface, people are much more critical that they at first appear, whether towards their government or their company.” The anthropological approach, which is essentially field based, complements the historian’s approach, Kaufmann explains: “By interviewing and observing people, we can access information that we won’t find in official documents.”
Certain accounts highlight the specific history of Swiss companies in China, such as that of the elevator manufacturer Schindler, which entered the Chinese market in the early 1980s and became the first Western joint venture in the country. A former executive of the company, now aged over 70, recalls how the government of Deng Xiaoping – de facto leader of the Chinese Communist Party from the late 1970s to the late 1980s – made elevators a priority as he was keen to promote vertical urban expansion to preserve the autonomy of towns and rural areas. The former executive explains how this state-dictated policy allowed Schindler direct access to the Chinese domestic market. At the time, nearly all foreign companies that manufactured in China were forced to export in order to bring foreign currency into the country. This history could explain why the Swiss manufacturer still has a large share of the Chinese domestic elevator market.
A lack of trust in Chinese telecoms
From the early 2000s, things started to move in the opposite direction, with a growing number of Chinese investments flowing into Switzerland. Huawei, Alibaba Cloud and China Telecom all set up operations in Switzerland. These companies often have an image problem in Western Europe, particularly in the sensitive telecommunications sector. This reputation is accentuated by pressure exerted by the United States on its partners to limit the use of Chinese products in this sector, but also China’s own laws, which allow the Chinese government to compel operators to hand over data it considers important to national security.
A Chinese executive from Huawei who was one of the founding members of the team in Switzerland was asked about the company’s collaboration with Swiss partners. She explained her initial difficulties in building a rapport with them. Even after overcoming this, public perception often remains critical. “People don’t trust us,” she said. Chinese companies have adopted several approaches to overcome this mistrust, such as employing Europeans and mainstreaming the use of terms with a positive connotation in Switzerland, such as ‘sustainability’, ‘green’ and ‘innovation’. This is a strategy that Kaufmann also observed in the Zurich office of technology giant Huawei, where “a life-sized plastic cow – a reassuring nod to Swiss values – greets visitors in the lobby.”
Taking account of the cultural context and global geopolitics
The anthropologist’s work supports a number of recommendations. On the one hand, she recommends that Switzerland invest more in expertise relating to China – linguistic, cultural, historical, political and economic. “In Zurich, for example, high school students only have two hours of history lessons per week. Due to the dense curriculum and insufficient number of lessons, China can hardly be covered. The federal government should strengthen and cultivate this expertise,” she explains.
She also underscores the importance of considering trade relations within the global geopolitical framework. She points out that Switzerland’s approach, which is relatively neutral and pragmatic compared with that of other European countries or the United States, has placated Beijing, but sometimes at the risk of sparking mistrust among its Western partners, particularly Washington. She believes that pressure from Europe or the US could affect the Swiss-Chinese partnership.
This geopolitical aspect is taking on added significance as Switzerland feels the full force of US tariff policy. A situation that prompts many Swiss companies to turn more towards the Chinese market, notes the researcher. Although, with China, the power imbalance is not to Switzerland’s advantage either, she warns. “It’s important to remember that Switzerland is in a weaker negotiating position as its economy is much less important to China than the other way round. I suspect that the Chinese government’s response to perceived policy changes or criticisms would be more subtle and implicit than introducing tariffs, however. It could, for example, relate to the free trade agreement.”