Aargau Services: You Aargau-ing to love it here – Monika Ulrich
With financial and political systems across Europe undergoing significant change, many organisations are seeking stable places in which to do business. Although increasingly rare, such locations do still exist. Monika Ulrich of Aargau Services reveals where.
Although Europe is holding up better than many predicted, the business climate is still rife with uncertainty. Earlier this year, France's AAA investment rating was downgraded by Standard & Poor's and negative outlooks hang over a number of others. Many states are undergoing significant regulatory overhaul, the true impact of which will not be understood for some time.
In this climate of unpredictability, Switzerland is looking like an increasingly attractive place to set up a new business. Long known for its low-tax regime, the country also benefits from a stable regulatory environment and relative separation from the troubles engulfing the eurozone.
"Switzerland has always been a place where it's easy to do business," says Monika Ulrich, deputy manager of Aargau Services. "It's a stable, secure country with clear laws, so you know what will happen tomorrow."
A hub of industry and research
The canton of Aargau is particularly well placed to take advantage of new business. Lying at the heart of Switzerland's strongest economic region, within easy reach of Zürich, Basel and Geneva, the canton has a long history of industrial production.
Today, it is among the leading destinations for high-tech companies across a number of industries.
"We are at the confluence of four of Switzerland's biggest rivers, so industrialisation started very early in Aargau," Ulrich explains. "BBC, which later became ABB, was founded here. They developed water and steam turbines, which led to the formation of the big Swiss electrotechnical cluster. Today we are still number one in that area, but have also added a lot of other high-tech industries such as pharmaceuticals, med-tech, machinery and plastics."
The Government of Aargau places great stock in research and development. As the location of a number of high-ranking technical universities, as well as Switzerland's largest research body, the Paul Scherrer Institute, companies are certain to find strong R&D partners and well-qualified employees. The state government also offers a research fund that can be tapped to spur the development of new technologies.
"Aargau is the research valley of Switzerland," Ulrich says. "We have twice as many employees in that field than the Swiss average. We also have a strong education system, including the University of Applied Sciences, which provides a lot of young talent for these industries. Most will speak several languages - a great advantage when doing international business."
Surprisingly, for an area of the country with such an established industrial base, Aargau is a relatively cheap place to set up a new business. Costs of office space and production sites are low compared with the major cities, as are real wages. Like the rest of Switzerland, the canton benefits from first-class healthcare and education systems, as well as beautiful scenery. The local government is in a strong position financially, allowing it to offer levels of taxation that are low even by Swiss standards.
Difficult economic times have forced many cantons to abandon planned tax cuts or even consider the introduction of tax rises. Aargau, in contrast, has introduced a series of measures to help businesses and their employees. Individuals with assets of between CHF100,000 and CHF250,000 have had their wealth tax lowered by 16% and income from holdings in stock corporations are taxed at a rate 20% lower than the national average. Ulrich is quick to stress, however, that attractive tax rates alone are not enough to stay competitive.
"Both corporations and individuals enjoy very moderate taxes," Ulrich says. "But the low-tax approach is becoming more difficult and can only be viewed as a short-term strategy. We take a very long view. We try to make business easier by looking at all the factors a company has to consider, such as low production costs and corporate-friendly governance. It really is about working on all these fronts - not just tax."
High-quality contacts and assistance
Although the area predominately attracts companies focused on the front part of the supply chain, many consider Aargau to be a strong manufacturing base. In Ulrich's view, companies find that the high initial cost of production is easily recouped thanks to their ability to justify high prices for exported goods.
"If what you make is of high quality or high precision, Switzerland is still an attractive place to come," she says. "It might not be the cheapest place on Earth, but if you are looking for quality, the Swiss label will get you a good price. The country has bilateral trade agreements with most countries in the world. We are in touch with a lot of German companies and a lot of American and Japanese firms also appreciate this, as well as our research know-how."
As well as promoting the canton as a place to do business, Aargau Services takes an active role in helping companies and their employees settle. As well as providing a network of valuable industry contacts, the organisation acts as a direct link to both cantonal and federal authorities, easing the administrative burden of moving to a new location.
"We have teams to deal with migration, tax and trade registry, as well as consulting partners such as lawyers and tax advisers," Ulrich explains. "We can support companies in finding the right site, and help individuals and their famillies with official procedures. We try to make it easy for people to come here so they can be free to concentrate on their business."
A competitive place to work
Looking ahead, Aargau will continue to target the high-tech sector. Known within Switzerland as one of the country's largest industrial player, the next year will be geared towards galvanising that reputation abroad.
With competition from 25 other cantons, it can't be easy to differentiate yourself. Ulrich, however, views this competition as a key driver of success.
"We are a high-tech canton and always will be," she says. "We want to promote this fact so that it is better known outside of Switzerland.
"We will continue to try and improve the conditions for high-tech companies and would like to attract some more big names. With so much competition, it isn't especially easy, but it means we have to pay close attention to our products and services, and look to get better every day."
Europe's regulatory outlook remains unclear, but there is little doubt that low-tax areas of the continent will face greater restrictions than ever before. In this environment, well-established players, such as Aargau, with strong industrial track records look like an increasingly attractive proposition.