International Financial Markets
Switzerland versus France
The establishment of an overseas subsidiary company or even a Greenfield project requires careful analysis of a given countries suitability in terms of factors that contribute to maximum realization of profits. Factors such as the currencies of a country, its trade policies, affiliation to international trade blocs, its population, labor force, and many other factors that directly or indirectly affect the process of trade are carefully scrutinized and a comparison carried out against other countries. On this account this paper will scrutinize two countries one a member of the European Union and the other one a non-member in view of determining the most suitable for the establishment of Greenfield project; Switzerland a non-member of the European Union and France a member are the two chosen countries.
The official currency used in Switzerland is the Francs commonly denoted as CHF, Switzerland is the only European country that uses franc as her official currency. The CHF is by far the fifth most traded currency after the US dollar, the euro, the sterling pound and the Japanese yen. Currently the CHF transacts at 0.8962 against the US dollars. The strength of the currency makes goods produced in Switzerland to be highly valued in the international community; this also makes the importation business less expensive. [Gross Domestic Product – estimates, 2008] On the other hand France uses the euro a currency that is use by eleven other European Union member states, Euro is usually managed by European Central Bank that is stationed in Frankfurt and other European Systems of central banks. This makes France goods to remain competitive in the international markets, especially in European countries. [The French Revolution of 2007]
Away from currency issues, Switzerland has got a very strong capitalist economy, it ranges second after Ireland among European countries. The 2005 median household income in Switzerland was estimated to reach 95,000 CHF which is equivalent to the wealthiest states in US like Vermont and California. Switzerland has got very low taxation and interest rates that makes it to be in controversy with other European nations, it has also a policy of banking secrecy that makes it the most suitable destination for foreign investors. [Gross Domestic Product – estimates, 2008] On the other hand France is the fifth world strongest economies after countries like US, Japan, China and Germany. However, its bank interest rates and taxation rates relatively high and in conformity to the set EU rules. [INSEE, 2008]
Another core issue is that of the labor force, Switzerland envoys a constant flow of highly trained and professional man power, this made possible by a well structured and flexible education system that allows for the training of students into three categories i.e. the fast, middle and the slow learners. [Swiss labor Force Survey 2008] On the other hand France has got a large population that is unemployed but poorly trained especially following an unreliable university curriculum that does not fully prepare students for the job market, again, the labor laws in France are rigid with a short working hour day. [The French Revolution of 2007]
Both countries boast of a well structured network of transport that extends to their neighboring countries making it possible to move goods and people with much ease. Water transport is well established in both countries as they all boast of contacts with large water bodies; this makes it possible for the importation and exportation of heavy goods. The two countries also have got well established agricultural sectors that provide enough food for the working population and the surplus sold to other countries. The Switzerland government subsidizes agricultural activities in view of conserving the environment whereby only those farmers who show commitment of employing environmentally friendly farming activities are given the subsidies.
My careful scrutiny of the viability of the two countries in regards to the setting of Greenfield facility has led to my recommending Switzerland over France, this recommendation is based on the fact that a Greenfield facility should be established in an area that is uneconomically untapped and that is environmentally pure. My rationale is that Switzerland fulfills this demand as it has got a currency that is relatively strong and that is not used by many other neighboring nations. Again the government policies on trade are very accommodative especially to foreign investors a phenomenon that has led to an unordinary presence of foreign investment corporations in the country. The country has also a flexible and a well trained labor force that is comprised of both local and foreign citizens. [Swiss labor Force Survey 2008] The country also has a sufficient and environmentally friendly energy sector that is also cheap and therefore eliminating much production costs. Switzerland agricultural sector is thriving well especially due to subsidizing by the government which makes it possible for the cheap supply of food to workers and the surplus is sold to overseas countries. [Gross Domestic Product – estimates, 2008]
Swiss labor Force Survey 2008, Swiss Bureau of federal Statistics (November 2008) , accessed on January 19, 2009
Gross Domestic Product – estimates, states Secretariat for Economic Affairs SECO (2008-07-03), accessed on January 19, 2009
French national Institute for statistics and Economic Studies (INSEE), available at;
http://www.insee.fr, accessed on January 19, 2009
The French Revolution of 2007 – Nicholas Vardy, march 9, 2007 – investor perspective on changes affecting French markets and economy, accessed on January 19, 2009