For the past 30 years and more, perhaps, the neoliberal model of capitalism has ruled supreme, promoting ultimate freedom in markets and the globalisation of finance to apparently deliver endless prosperity to all through consumption-led growth. The result has been massive environmental damage, depletion of natural resources and a growing gap between rich and poor. The model is unravelling, says Chandran Nair, as the hidden costs are surfacing everywhere.

Cities as industrial tools could be an outdated model, but they are still growing

In the West, it started with the financial crisis originating in the US. More recently the debt issues in Greece and other European countries have put paid to the alleged stability of the euro zone. In London, a sense of entitlement and moral decay triggered aimless violence and looting. Asia, often seen as the deus ex machina of the global economy because of its potential markets (mega-consumption), the cost of the boom is most visible in ravaged landscapes, a highly degraded environment, the rapid depletion of resources and the erosion of the most basic of social nets. And Asia has not even started. All of this, if one is honest, has its origins in the almost religious belief in the West that took hold globally in the last three decades: that ultimately free markets, technology, finance and democracy can offer everyone every freedom and solve all the problems of the world. It is time for a hard rethink.

The most obvious lesson from the recent crisis is that today’s version of unfettered capitalism is unable to self-correct. In financial markets, mathematical modelling was found to be so complex during the crisis of 2008 that even financial experts and senior bankers were at a loss when it came to clearing out the rot. The market became difficult to regulate, giving rise to the by now hackneyed expression “too big to fail.” Too few people knew how it worked in the first place. The ones who did know had a vested interest in keeping it going. Unable to come to grips with the entanglements of decades’ worth of financial hanky-panky, and usurped by those vested interests, regulators more or less threw in the towel. The only way to change the course of the dominant economic model at this point is to have an honest debate about capitalism in its current incarnation. It needs to be rid of its excesses and its strengths must be built upon, and Asia is perhaps best placed to lead the way.

Strong medicine

To get anywhere, however, Asia will need to reject the growth-at-all-cost model that hinges on encouraging relentless consumption. This growth paradigm, which thrives on under-pricing externalities, was fostered at the time of the Industrial Revolution, and then extended worldwide via colonialism. Then came the mantra of free markets and rejection of any suggestion that growth could reach a limit.

As the conditions for poverty are now better understood, Asian governments are being called upon to wake up and understand that to rely on the market to correct the inefficiencies in the allocation of resources is at best futile and naïve and at worst plain dishonest. The rampant profiteering and volatile nature of financial markets, where decisions taken today can have direct consequences on public policy decisions in the future, means that access to basic rights cannot be left solely to the dictates of the supposed free markets.

Asian governments will also need to reject the notion that wealth will trickle down by some ethereal gravity and that this is the only way to create more equitable and prosperous societies. These objectives should be without question the responsibility of governments and not abdicated to free markets and its agents. If Asian government’s follow this path, then the majority of their populations – which make up the majority of the world’s poor – will suffer dire consequences. To change course they will need to be bold and take on vested interests making this the political challenge of the 21st century.

The consumption-led growth model is well past its sell-by date. In fact, one could go as far as characterising the current challenges facing capitalism as equivalent to the death throes of a sick man: one born in an era of privilege, of abundance, global dominance of a minority and thus accustomed to consuming too much. The tools to correct the inherent market failures need to be redesigned to compute the true cost of resources to produce the goods and services that drive the global economy. Western nations find this transition very difficult and thus hope for some international consensus in the matter, but this is based on rules the developing nations of the world were not the authors of. This is often an attempt to shift responsibility, whilst at the same time looking to and inherently expecting Asian economies to continue to subscribe to and fuel the old model.

The developing world, intellectually subservient for the last few centuries, has sadly sought to ape and emulate this model and thereby unwittingly helped bring the harsh realities of this model to the fore. Asian governments for their part will therefore find it extremely difficult to reshape the expectations of billions who have been told they can have it all, too. But the great opportunity lies in the fact that the majority have not yet been accustomed to even the most basic of consumption needs taken for granted in the West. Thus Asian governments, if they are bold enough, can seize the opportunity to meet the most basic needs of the majority and thereby also ensure their legitimacy whilst reshaping capitalism and maybe even saving the planet.

Eating the planet

Unsustainable: the capitalist consume-and-waste system is its own greatest enemy

Imagine the world by 2050, in which up to five billion Asians are consuming like modern day Americans. As Asia’s global prominence increases, so too will its population’s expectations. The two billion Asians at the margins of the consumption economy will radically transform global demand and supply, not only for non-renewable commodities such as oil and coal (pumping their respective carbon emissions into the atmosphere), but also for renewables such as food (think meat consumption). This is no Malthusian rehash. China is already the world’s largest car market and many hope that India will follow suit. Chinese current car ownership is about 150 per 1000 people and in India it is only about 30 per 1000. This compares with an average of 750 cars per 1000 people in the OECD countries.

Europeans need to embark on an open and radical debate with Asia about the real benefits and pitfalls of the current growth model and how it should be restrained to be sustainable.

To do so would mean to rock the conventional western wisdom of free market liberalism and force public policy makers to question the ultimate objectives of the drivers of economic growth and address an inefficient system of resource allocation, which does not truly reflect the real cost and pricing of externalities. Europe and Asia will need to lead this effort as it is unclear if America’s politics of denial are ready for this shift.

A key issue is to acknowledge that technology cannot be expected to tackle the resource depletion and environmental impacts that growth “for growth’s sake” will have on the planet. This is why Asian government leaders must avoid aping the West and instead redefine the agenda to confront the ultimate challenge of how a global economy for 9 billion people in 2050 should operate within ecological limits. Resorting to the West’s rhetoric about green solutions only highlights the current lack of boldness and intellectual honesty. But why does it persist? First, it perpetuates the belief that technology alone, with its money-making potential, can provide all the solutions and create win-win solutions. This is the rallying cry of the business- as-usual advocates. Second, these conventional solutions allow politicians and business leaders to avoid addressing the difficult political solution of introducing rules that would change how people behave and consume.

The impacts of two centuries of industrialisation and unfettered access to global resources, otherwise known as colonialism, resulted in an entrenched but false sense of the nature of progress, in addition to fuelling rampant consumption using under-priced or even free resources. A key belief is that without visible developments in technology and innovations in finance to facilitate globalisation, the global economy will become stagnant and worse regress or become atrophied. Not factored into this is the fact Asia may have more than five billion people by 2050 and with economic growth rates averaging five percent, its GDP is projected to grow to USD 230 trillion from its current USD 30 trillion. Those who refuse to acknowledge that this will have very severe consequences for the world are strictly in denial.

Real competition

Research has shown that wealthy-world democracies are in general more likely to reach and sign international environmental agreements than developing countries. But they are also more resistant to change than Asia. Bringing US petrol taxes into line with those of Europe is politically unthinkable. A sharp fuel tax rise in China might result in protests, but at least it’s possible to envisage the government taking such a step. All of this points to the emergence of a new geopolitical reality that goes well beyond today’s concerns about resource competition and potential conflicts. The failure of the Copenhagen climate change conference in 2009 and the total lack of progress since the adoption of the Kyoto Protocol in 1997 point to this, and make it hard to see how the world will reach a consensus on global warming let alone other resource-related issues.

The current concerns and challenges around the global production and access to rare earth elements is another case in point. In recent years much of the blame for this impasse on international agreements has been laid at the feet of newly emerging economies, especially China. Many other Asian, African and Latin American countries find themselves at loggerheads with the West’s approach to international cooperation. Part of the problem is that many of these international frameworks are steeped in a relatively old world-view, whereby developed nations are accustomed to framing the parameters of such discussions. But expanding political and economic visibility of Asian countries on the world stage means this framework is beginning to produce a flurry of diminishing returns and only hinders diplomatic efforts to find solutions.

It is unlikely the West will give up its powers as easily as some commentators suggest – the recent selection of the new IMF chief being a case in point. Asia will need to challenge conventional thinking and vested interests that suggest international cooperation is the only route to resolving global challenges, and that poverty and unemployment will be inevitable if they embark on a new course.

Asia’s new responsibility

In light of this, Asian countries need to take action at home first and act unilaterally if needed. After all, many of these nations have a great deal of work to do in their own respective countries before they embark on being signatories to vast international schemes that often lay dormant after signing. Asia can start by setting limits on various forms of consumption through policy.

This means shaping policies around the following core principles:

• Resources are limited: economic activity must be subservient to maintaining the vitality of resources;
• Resource use must be equitable for current and future generations: collective welfare must take priority over individual rights;
• Resources must be re-priced and productivity efforts should be focused on reducing use of resources and not of people, i.e. using less material with more people working.

Two key mechanisms that governments in Asia must use are pricing and limits. Industry needs a reality check. By imposing taxes and fees and removing subsidies in all parts of the value chain, governments can include ecological and social externalities in the price of goods and put a real price on the goods and services provided by the environment, an area where industry has been given a free ride for the another key constraint on the impulse to burn up the planet’s resources, and imposing fees for use of critical resources such as water and minerals. Caps will also have to be placed on resources, even bans, where appropriate. Tough action must be taken on forests and fisheries, and the fight here will also be against corruption. Relying on the markets to do the hard work is a failed ideological premise promoted by the West.

These actions will have a direct impact on the most egregious forms of consumption. Setting limits will force companies to adapt to a new type of resource pricing and consumer reality. Most importantly, it will begin to change behaviours and expectations whilst allowing more people to have a fairer share of limited resources. Examples would include how land, water and biodiversity is distributed, used, priced in relation to promoting industrial agriculture and food production, so that the oil-palmbased cookie is no longer exaggeratedly under-priced.

Real co-operation

European governments can play a vital role as agents of change, but they must first and foremost be intellectually honest and bold and openly acknowledge that it will be impossible to support such demands for material consumption, because it will irreversibly modify the planet’s climate and resource pool, which in turn will create great suffering for many in Asia and even resource-rich Africa. Ultimately, it will have dire consequences for Europe not only in terms of its own resources, but also socially and politically. More honest forums involving Europe and Asia are necessary to address how to live within limits and constraints, rather than more trade-driven (though important) conferences and fairs that are essentially geared towards selling Asians technology and all sorts of goods to emulate European lifestyles, whilst allegedly also going “green”.

European leaders must understand that western-based solutions drawing on economic instruments such as emissions trading are not the panaceas they are made out to be. For Asia, the key instruments will have to be tough domestic policy choices that focus on strict resource management. This may include draconian regulations and even bans. Without such fundamental policy shifts to reflect the realities of resource under pricing in a crowded planet, shortages will push up commodity prices and cause many crises involving water, fisheries, forests, land use rights, housing and so forth. The next step, as history has showed us over and over again, will be social injustices and political upheavals.

Western intellectual domination has shaped Asian development and created a political and business culture in the region that now believes it is Asia’s right to have a giant share of the global resource cake. The mere thought is patently absurd. The West chose it’s course essentially as the path of least resistance in a different era and the results are not all as rosy as the Western media and in particular the advertising industry would like to portray it. Business and political leaders in Asia, and consumers as well, can avoid the same mistakes as their Western counterparts and redirect the trajectory of growth and prosperity to focus on excellence in the basic rights to food, water, sanitation and health. These must be placed right at the heart of public policy – as opposed to an outdated form of economic policy. Everything else is just a recipe for complete havoc in the 21st century.

Grand illusions

Chandran Nair

Sometimes, the hair of the dog system can work wonders. In the case of hangovers, it essentially means stay inebriated. Applied to an economic system already over-producing out of finite resources, it can lead to disaster. In this interview, Chandran Nair, author of Consumptionomics, invites us to rethink the consumer madness and what the term sustainability means.
Mr. Nair, the Western form of consumption-based capitalism is deeply rooted in the doom-fated, Christianity-induced rational of world domination. So most likely there will be literally no stopping until the last supper. Consequently you place your hopes on Asia. Do you see a point of contact between the perception of the ecological catastrophe and the ethos of Asian societies that gives meaning to the term ‘hope’?

Chandran Nair: Whether the extreme consumption-based capitalism we have seen take control of the world is based on a rationality of world domination by the West is correct or not, the challenge today is to look at the evidence as a global community and reject it. But rejection alone is not enough as we need to find ways to still address the needs of the disenfranchised majority who will not be living in the West and whose numbers could swell to 4–5 billion by 2050 when the global population is predicted to peak at around 9 billion. However, there is something we just have to understand: If we continue down the current path, which is based on an economic model of consumption- led growth thriving on under-pricing resources and externalising true costs, we will only make the goal of addressing inequalities and disparities much more difficult and leave behind the majority. This will be a recipe for social discord on a massive scale. So Asian governments will need to take dramatic action and the West, which has a greater interest in maintaining the status quo, should not seek to undermine these initiatives, even though some of them will fly in the face of western norms and interests. The West should be careful about using its disproportional influence on the global stage and in global institutions, which it dominates, to stop Asian governments from making these hard choices.

There is not much evidence today to suggest governments in Asia are drawing upon traditional values and ethos of societies in the region to create prosperity that is mindful of limits and ecological constraints. The sad truth is that over the last two to three centuries, due to intellectual subservience many societies have lost their traditional values and have been cajoled into aping the West. What is seen as Asian traditional values in the West in this regard is quite superficial and found only in isolated pockets. But that does not mean that some of it cannot be rekindled whilst avoiding misplaced notions about superior Asian values or nationalism.

Western politicians seem convinced that the way out of the current economic crisis is by creating countless consumption incentives. This has led to a partners-in-crime relationship between politics and industry. Is there any hope of dissolving this fatal union, and if so, how?

This is at the heart of the problem in the West and perhaps best exemplified by the US political system where together with campaign finance, the political process, its leaders and thus the government have all been usurped by private interests despite all the supposed checks and balances in a democratic system. This is to be found in varying degrees across Europe even if one accepts that the role of money in electing the political leaders is less insidious. Of course, this is also extant in Asia, though Asia’s political deficiencies are of a different nature.

How this is to be dismantled in democratic systems is perhaps the biggest politically charged question of our times. The answers lie in changing the systems – which allow for so much influence by vested interests – in strengthening the role of the executive so they do not have to pander to those same interests when called upon to make tough decisions; and perhaps even changing the electoral cycle such that elected officials have longer terms and do not become prisoners to the next election. But it will also require an urgent and more open conversation – which is taboo now – within societies about the limitations of the democratic system and the need for radical overhaul on the understanding that the current crisis needs longterm solutions and the current processes and institutions are incapable of doing so for all the reasons pointed out. Some sacred cows will need to be slain. Civil society in democracies will have to understand that strong governments are needed and they cannot be strong in the true sense of the word if they are undermined by vested interest – and civil society groups, too – and the argument that there is the option to change every four to five years is not really a good one.

“Green solutions” and, let us be frank, “sustainability” are the fig leaves on the West’s disingenuousness. The me-first-society-later behaviour continues to be cultivated as the path to more consumption. Will Asian societies be able to resist this sort of indifference towards society and the environment?

I argue in my book that much of the greening and sustainability arguments are superficial and rooted in a denial of the political nature of the challenges. It is no mystery why so much of the discourse about greening and sustainability is led by western experts and very much focuses on what companies can do and in the process continue to grow and supposedly even become “better”. There is a great reluctance to talk about limits, restricting certain forms of consumption, imposing bans where needed, re-pricing the use of resources and making polices around collective welfare rather than individual rights. Whether Asian societies will resist this sort of denial is to be seen, but what is clear is that people in the region are now all too aware – because they live with it all the time – that there is a very high price being paid for the growth-at-all-cost model the region has sadly embraced.

The next step is for them to reject this model and ask as well as encourage their political leaders to start to define a different future of human progress that is more equitable because it makes economic activity subservient to preserving the vitality of natural systems and the resource base which ultimately is the foundation upon which all human activity is dependent on. This will require Asian societies to also understand the vital role of the state and its institutions in protecting the commons and that in a very crowded region there will be the need to reject the almost religious belief in the West that a combination of technology, free markets and finance operating in a free wheeling manner in a democratic system is the cure-all for all the world’s ills.

I sincerely hope your plea for radical and urgent changes in global policy will not remain unheard. How do you personally cope with the Sisyphean challenge of your work?

Without wanting to overstate the importance of the book or my work, I can say that I take strength from the positive response it has received from many quarters. When I wrote the book, my one hope was to start a fresh conversation that would challenge the orthodoxy of the economic Brahmins and embolden those who know we were on the wrong path but felt it could not be challenged. I feel I have in a small way helped mainstream a taboo of an idea and that gives me great strength.

As I speak around the world it has become very clear that although the message creates great discomfort in some circles I have rarely seen serious arguments to counter what I am trying to say. As I am at pains to point out I do not claim to have all the answers but I hope I have made it respectable to talk about limits – and not be accused of being Malthusian –, the need for restraint through political intervention, the critical role of the state and for Asia to take the lead and not hope for the West to show the way. Having said that I must admit it is at times very lonely and I am very grateful for a prestigious magazine such as Swiss Style to give me an opportunity to share some of these unconventional views with its readers.

As told to O. Kaiser

 
Article by Chandran Nair

Kirsten Hangarter knows the industry like the back of her hand

Poets, philosophers, gurus and other thinkers have always suggested that the best way to combat age is to accept it, be yourself, enjoy the moment. But given the chance and the required cash, human nature, stimulated by advertising, will reach for an arsenal of wizard oils and surgical procedures to keep the grapes of youth from turning into raisins. Kirsten Hangarter from La Prairie holds some of that ammunition.

The cosmetics industry is fickle and highly competitive. Manufacturers have quite a task maintaining the popularity of their potions and oils, which may not be doing the job fast enough for impatient agers, well enough, or at all, for that matter. Beiersdorf’s luxury skincare brand La Prairie originated in 1978 at the Clinique La Prairie in Montreux, Switzerland, a Mecca for the globe’s VIPs and wealthy for now over 80 years.

Beiersdorf incorporated La Prairie Laboratories in 1991 and later formed the La Prairie Group, which also includes SBT Skin Biology Therapy. It is ironic, but not surprising, that Beiersdorf’s executive board is solely comprised of male directors in this multi-billion dollar industry, traditionally driven by female demand. The company’s middle management, however, includes a sizable number of women, including Kirsten Hangarter, La Prairie’s general manager for Switzerland.

In the loop

The best way to sell a product most likely is to be a living example for the benefits of the product. Blond, blue-eyed, with a voice and personality that seems to wrap itself around her interlocutors, Kirsten Hangarter is ageless and as such the perfect poster child for the brands she represents. She is completely at home in the world of cosmetics, having begun her career hands-on as an apprentice beautician. “Beauty and cosmetics have always been my subjects,” she recalls.

Her determination as well as her vast and hands-on experience propelled her career, which now spans more than 20 years. She managed Prada’s European skin care operations, for example. Then, at Beiersdorf, she held a number of different posts, including International Retail Director for the Juvena and Marlies Möller brands. More recently, she worked as the International Brand Director for SBT Skin Biology Therapy, where she was in charge of establishing the brand in Europe.

Conundrums

Another advantage Kirsten Hangarter brought with her is her Swiss-German origins, which give her a deeper understanding of Switzerland’s regional differences and their effects on business operations. “Whatever you are doing, the Swiss in the Romandie approach things differently than the Swiss- Germans, from retailers to consumers,” she points out. In the end, however, it is the bottom line that counts. And thanks to the relatively high level of disposable income, Switzerland boasts a top percapita consumption of luxury cosmetics, almost twice the European average.

In the recent economic uncertainty, luxury skincare demonstrated high resilience in comparison to the overall skincare market. One reason is the increasing perception of high-end, anti-aging products as an effective alternative to more aggressive and at times expensive cosmetic procedures. Another reason may be the high correlation between advertising and cosmetics consumption: in good times advertise, and in hard times make sure you advertise, goes the old saw. Indeed, with the general social mood barometer in a low-pressure zone, what better way to perk up one’s mood than applying a scented cream designed to take the wrinkles out of time?

Careful spread

One of the toughest challenges faced by luxury cosmetics – besides the presence of strong competitors – is to ensure an appropriate distribution, while simultaneously maintaining the exclusivity of the product. A mass distribution would quickly downgrade the value of the brand, while on the other hand, too much exclusivity restricts the distribution efficiency. But luxury will also gravitate towards the money, and the world right now is spiking with opportunities.

The BRIC nations are one possibility for market expansion and product diversification. Eager to capitalise on Asia’s powerhouse, for instance, La Prairie Group already tested the waters of the Chinese market at the end of 2005 by establishing a shop-in-shop system in department stores in Beijing, Guangzhou and Shanghai.

The brand’s international expansion to more than 90 national markets, is the product of a clear strategy. For one, says Hangarter, the company does have an “unparalleled commitment to luxury”. In other words, no mixing with lowerclass products. La Prairie maintains its aura of exclusivity through a “targeted marketing strategy and selective distribution channels”. The strategy penetrates all the way to the choice of the company partners from suppliers, to distributors and sales personnel. “When everyone speaks the same language, has the same philosophy and communicates this to the end consumer,” she says, “you have a strong position in the market that makes a strong brand”.

Test tube wonders

What is at the source of all the exclusivity? Hangarter is ready with an answer: “Use of best ingredients and best technologies is the guiding principle for our research.” The research itself is performed at the La Prairie laboratories situated in the company’s Zurich headquarters. As for the components, they are even more unusual than those employed by Cleopatra back in ancient Egypt: Some La Prairie products have included the use of caviar and precious metals as ingredients, an odd cocktail that is intriguing enough to warrant a try. Of course, Hangarter is quick to highlight the importance of being open about the benefits of its products. But the company’s explicit open information policy is a challenge, especially in light of the “bio” trend that consumers have hopped onto and public reluctance when it comes to using chemicals and animal testing. “We talk about the technology and the ingredients that we are using, even though we do not talk about quantities or the way they are produced,” Hangarter says, adding: “I think La Prairie has always been able to explain the advantage of what they can offer.”

Future age

As long as there is a market, scientific breakthroughs and product innovation will continue to drive the skincare sector. And the future is looking good as wealth begins to emerge in faraway markets. A new target group is also growing: while La Prairie has traditionally specialised in skincare solutions for women, the company also provides a range of the unisex anti-aging products to appeal to affluent males. In the end, nothing will stop the inexorable lathe of time. But for many, even slowing it down is enough. As for Cleopatra, her modern beauty kit would no doubt include several of La Prairie’s technologically advanced solutions. Ultimately, the secrets of eternal youth are probably as personal as each person’s DNA.

Turbo skin

Most recently, the firm introduced its new Cellular Power Infusion designed to awaken the skin on a cellular level. It promises to prevent the process of aging by targeting the weakened quality of skin tissue and excessive energy loss. Hangarter simply describes Cellular Power Infusion as “the process of recharging your mobile phone battery overnight”.

The scientists at La Prairie go a little further and attribute the results to four main components: a special skin renewal peptide, Swiss snow algae, a “tissue guidance matrix,” and a stem-cell extract from plants.

La Prairie has resolutely taken the technological road for its approach to innovation. “We will always make sure that we can prove to our consumer that the technology behind is the best that you can find in the world of cosmetics,” she affirms.

Article by Irina Pavlova

Rising healthcare costs: that old chestnut of most countries’ political debate, which gets its fair share of recurrent press coverage – this one among them – has seen legions of politicians and citizens alike moan over extortionate insurance premiums and increasing public spending on healthcare. Mostly it seems, to zero effect, at least in Switzerland, which boasts the somewhat unsavoury honour of having the second most expensive healthcare system in the world,
right after the USA. And things are about to change in the system.

While most of us still struggle to understand the TARMED system introduced a couple of years ago to reform ambulatory care financing, Switzerland is about to be injected with a new reform that was voted into existence some four years ago: DRGs (Diagnosis Related Groups) are a way of financing hospital care and it’s bound to work, or at least that is what everyone hopes.

DRGs were in fact invented in the 70s in the USA – one can only wonder here why so many countries still insist on implementing ideas that originate from the most expensive healthcare system in the world – where they went national in the 80s before, unsurprisingly, making their way to most European countries in the 90s, and finally, a good decade later, to Switzerland. So what does this acronym mean exactly? Developed in the 70s at Yale University to standardise hospital costs and clientele in an effort to control costs and quality, DRGs represented at the time an alternative, and allegedly a cheaper way of financing hospital care: instead of the traditional fee-forservice payment, DRGs are fees-per-case. It essentially means that medical cases are broken down by categories – based on diagnostics – and that each category has a pre-agreed cost attached to it. For a given medical case, the attached bills are thus known beforehand. To take into account the complexities and uncertainties of hospital cases, DRGs are structured around one main diagnostic with related costs attached, and secondary diagnostics that aim to take into account the possible complications and co-morbidities of each case. A patient case can thus be “upgraded” or “downgraded” to a more or less serious case level.

The whole point of DRGs is to define groups that are coherent from a medical but also financial point of view; a hip replacement case has a certain budget attached to it, based on prior agreements between involved parties, and is completed by subgroups that allow for possible complications (hip replacement with infection, for example). DRGs are thus part diagnostics (the diagnostic group), and part resource consumption (the costs attached to it).

Doctor cost

DRGs have for long become the mechanism of choice for reimbursement of care in the US and in Europe because they seek to reimburse providers fairly for their work while encouraging efficient delivery and discouraging the provision of unnecessary services. Health economics theory suggests that costs start spiralling once patients fully enter the care system (i.e., hospital or other care facilities) because providers start making decisions for them; hence a long-felt need in many countries is to try making providers aware of healthcare costs by setting prospective forms of payment, of which DRGs are the most used form. Many studies had shown the downsides of more traditional forms of financing mechanisms, with global budgets for hospitals leading to undertreatment and fees-for-service leading to over-treatment. These shortcomings have pushed countries to adopt DRGs in a hope to get a common “currency” of hospital production leading to more transparency, better performance, better budget allocation and better planning, by enabling comparisons between hospitals.

DRGs, however, naturally came with a price tag: on the administrative side, the break-down into multiple categories means a complex and very demanding coding system that essentially requires hospital administrators to morph into full-fledge managers; on the quality side, the pre-defined budget for any given diagnosis means a very real risk of patient selection to attract “best candidates” only, cost-shifting to other types of care facilities such as rehabilitation facilities and early discharge, since the payment for a particular case is the same whether the length of stay amounts to three or, say, 19 days.

The price of health

Indeed, as Philippe Cassegrain, DG of Geneva’s Clinique Générale-Beaulieu observes, right now in Switzerland “hospitals and other care facilities do not feel concerned about the final healthcare bill attached to a given patient since it does not really have an internal impact on the running of a hospital or a clinic.” It was a situation that was bound to be halted sooner or later by Switzerland’s powerful health insurers conglomerate and by cantons exasperated with having to pick up a large share of the healthcare bills. This seems only natural to Cassegrain, who seems upbeat about the future. “The DRG system will push us to better negotiate the costs with our providers,” he points out, adding with a tinge of doubt, “but it could prove detrimental to the patient and to the whole system if it really ends up meaning that you choose medical devices of a lesser quality – such as in the cases of prostheses – or courses of treatment less resource-intensive to make sure you fit into the pre-agreed cost envelope.”

Even if to the outsider, Switzerland might be hopping into the caboose of the DRG train, many practitioners, as well as clinic and hospital managers in the country have in fact been familiar with the DRG system for a long time, and have long been sensitive to the issue of resource management and cost containment.

Cassegrain notes that his clinic has been working for a very long time on its cost issues. “We started negotiating prices with our providers years ago to maintain an acceptable cost level and make sure our relationships with healthcare insurers remained a good one.” For the introduction of DRG will mark a shift of power away from care providers to health insurers, a move that might worry citizens who already pay very high premiums by international comparisons – some health insurers have already announced that the introduction of the DRG system will mean a slight premium increase to account for the “administrative costs” of the reform.

But for Cassegrain and many other hospital and clinic managers, this change was in the works for a long time. DRGs started to make their way into the country’s hospital system as of the mid-90s, in a few cantons such as Vaud and Valais. It is actually the globally positive assessment of the experience in those cantons that paved the way for a national introduction of DRGs. Reports show that these early DRG experiences have translated into a better work allocation for doctors, and higher competency level for practitioners, but also in a decline in the number of beds such as in Valais. If the experience is globally positive, all parties remain adamant that maintaining a high level of quality is the number one priority, and the Swiss Medical Association (FMH) warns that “a mercantile vision of health should not prevail over quality of care”.

Providers’ dilemmas

Cassegrain and most of those who have had experience with DRG until now note that this is not a miracle solution to fix long-standing healthcaresystem weaknesses. DRGs are merely a tool to help better financing and better planning, but as Cassegrain remarks, “it is no magic potion, and the high hopes set for it may only lead to disappointment.” Particularly if it is not applied the appropriate way.

For once, Switzerland’s slowness in implementing a tool that has been around for some 30 years might prove an advantage, as its shortcomings and downfalls, as well as ways to counteract them, have been fairly documented and studied in neighbour countries. Most of them have put in place incentives to guarantee the quality of care, ranging from deductions for not submitting quality data or if quality standards are not met, to supplementary payments for specific high-cost services such as chemotherapy and radiotherapy.

It is reassuring to see that SwissDRG, the organisation responsible for coming up with the new DRG coding, has already developed quality incentives that will be introduced along with the new system, such as reduction in reimbursement in case of abnormal length of stays, refusal of new payment in case of early readmission, and demands for regular quality reports. SwissDRG is also thinking about “how to integrate training costs into the coding,” an aspect that proved problematic already in European countries and that worries Philippe Cassegrain. “It is a shame that the DRG system yet does not take into account training costs,” he said, “it might lead to hospitals diminishing the resources allocated to training whereas it is a crucial aspect of care quality”.

Cassegrain also underlines that DRGs “do not take at all the prevention aspect of the healthcare system,” and that preventive care and treatment costs are not at all taken into account in the DRG calculation, a not very surprising feature given that historically DRGs focus on hospital care – and thus de facto on disease and emergency care rather than preventive care – but it could nonetheless prove counter-productive in the long run. The negotiating nature that has marked the DRG introduction in Switzerland, a somewhat typical aspect of the country’s political scene, will nevertheless give some wiggle room to the parties involved to voice their concerns, and thus improve the system as it evolves.

At present, negotiations are going on at full speed, as is the case each time the LAMal2 system is about to take a new turn. All parties involved have placed high hopes in DRGs cost-wise; DRGs are also eagerly anticipated for what they have to say about cantonal, regional and national hospital care needs and consumption, in a country where hospital planning ritually means very tense discussions, to say the least, between health insurers and cantons. It is therefore hardly surprising that DRG negotiations are taking place at the same time as hospital-planning discussions between cantons and health insurers. Each canton is about to come up with a list of agreed care facilities that will treat patients under the same financial conditions as public hospitals to make sure cantonal care needs are met, meaning, as of January 2012, that private clinics that would have agreed to being on the list will have to factor in DRGs – this only concerns compulsory insurance. If some clinics have already made clear that they are not interested, for those already used to working on their costs, such as Beaulieu, it will be a natural, almost easy, process. One can only hope that it also remains a painless one for the one party that will not be seated at the negotiating table, the patient.

The DRG experience

The payment for a particular case is the same whether the length of stay amounts to three or, say, 19 days. This aspect was the one most fretted about when DRGs were first introduced in Europe, as it leads to potentially more complications down the line and thus runs the very concrete risk of lowering quality of care. Did any of these fears materialise in Europe? As the Internal Health Economics Association puts it, “experience with various European models over the years has shown that DRG systems present their own unique challenges. Which methods best capture the true costs of treatment? What level of reimbursement is necessary to guarantee highquality care while keeping costs in line? And which incentives can be built into the system to promote efficient care? These and similar questions have been the subject of ongoing debate among physicians, researchers, health insurers, and the general public”. Globally speaking, most European countries have witnessed a decrease in their hospital lengths of stay following the DRG introduction, but often also better cooperation between hospitals, leading, as in Germany, to mergers and better planning, and thus, arguably, to better and more efficient care, an aspect that Switzerland hopes to emulate when it launches its very own DRG system in January 2012.

Article by Lauriane Zonco

Recovery or not, 2010 was a tense year for everyone. The penny-pinching set off by the recession affected suppliers to big companies as well. And yet for the catering company DSR, the year was one of its best on record. It may have to do with CEO Andrew Gordon, the man responsible for the future of this company born almost a century ago with a very different mission. Swiss Style’s roving reporter Lauriane Zonco went to find out what were the magic spices in DSR’s business recipe.

Even in mass catering, the details count

You might not have heard of Andrew Gordon, but there is a good chance you have been his guest over the past few years, whether you have had a drink while wandering in the Palexpo halls, grabbed a bite at MacSorley, the Geneva Hockey Club restaurant, right before a nocturnal hockey game, visited a client or relation for lunch in the hushed salons of some of Geneva’s most prestigious companies, or had a meal on one of Lake Geneva’s steam boats. What’s more, this man, whose name seems unknown to you, might also be feeding your kids on a daily basis. Everything Andrew Gordon does revolves around that essential element of our lives, food.

As the CEO of DSR, one of the main companies active in the field of mass catering in Switzerland, and the predominant one in the French speaking part of the country, Andrew Gordon has overseen the production of more than 12 million meals all over the territory in 2010 alone. So while you might not know who Andrew Gordon is, there is a good chance he knows how you like your meat cooked. He is also an effective CEO, who leads a successful enterprise and manages to get picked up as a regular interviewee in most of French-speaking Switzerland’s publications, from the Agefi to Le Matin. DSR, as few now still remember it, stands for Département Social Romand, or Department of Social Affairs of Romandie. It was initially set up as a not-for-profit foundation in 1919 to cater for Swiss soldiers by offering them food and a warm place to meet. Over time, the DSR mandate evolved to cater for large Swiss public entities such as the Swiss Railways and the Post Office. The foundation kept on in the field of corporate catering with a not-for-profit mindset, de facto becoming the sole operator in the field in Switzerland’s French speaking regions.

Entrance of the gladiators

It all changed in 1978 when capitalism swept into the country’s mass catering scene in the form of EUREST, a joint venture between Nestlé and Carlson Wagon Lits and one that had the clear objective of conquering the market in Switzerland and Europe – while making good profits along the way. The new kid on the block forced all existing players, including DSR, to rethink the way they operated. The company decided to go for-profit in 1978. But, as Gordon puts it, it was above all an effort to become “more business-oriented, more professional” rather than a mercantile decision. “We remain a foundation at heart, but we operate in the same way any other business operates with regards to human resources, managerial organisation or productivity goals; what sets us apart is that we still have this vision for quality at the core of our company.”

Gordon’s business model is, in essence, quite straightforward: quality service at a reasonable price produces loyal customers and increased profits. It may sound like wishful thinking but DSR’s figures make a good job at dispelling any doubts: 2010 was a record year for the company, with a turnover of CHF 263 million, well above the CHF 240 million objective Gordon had set according to his interview with Le Temps last year. It represents an 11.7% increase from the 2009 figures. “This is an extremely encouraging result,” enthuses Gordon, “it a true reward for the managerial efforts of the DSR team.” All the subsidiaries of the group – ten in total – performed better in 2010 than in 2009, and all display positive financial results for 2010. These figures are not simply the result of some random lucky streak: 2010 was also a year that saw DSR invest massively in its own group, from brand new headquarters in Rolle (VD), to re-designed collective restaurants. The idea is to ensure a sound foundation for years to come. The investments naturally mean increased amortisation costs, which reached record level in 2010. Nevertheless, DSR also managed profits of CHF 3.7 million in the same year, which translates as 12.2 million meals – an increase of some 700,000 meals – in its 240 restaurants spread all over Switzerland; it created 173 new jobs, mostly in the Canton of Geneva, bringing the group workforce to 1706 employees. And finally, true to its founding spirit, DSR managed to redistribute 20% of its profits to charities.

Good works

The tale of the expanding group that manages to hire, enjoy growing profits, and give back to the community seems almost too good to be true in these times of economic hardship. The usual approach to surviving in hard times – and increasing profits in good times – is to skimp on quality and good corporate behaviour, reduce wages, fire staff, browbeat suppliers and create a cloud of euphemisms to hide what’s going on. This is not the Andrew Gordon approach: “The board is still very much at heart a not-for-profit organisation type of board, and they were concerned that these good figures were the results of some kind of hardcore business methods.” A board that does not go by the rule “the end justifies the means” sounds intriguing, almost unorthodox. Actually, speaking with Andrew Gordon, one comes to realise that this success is rooted in a healthy corporate mindset, coupled with an acute understanding of the market they operate within.

Andrew Gordon is above all a sharp manager who has mastered the specificities of his field and of the country he is based in. “Switzerland is the country in Europe, if not the world, with the highest standards of quality in catering services. Like many things in Switzerland, the quality of food and service is really valued and appreciated.” He remarked long ago that in Switzerland “providing a quality meal at lunch in nice surroundings is seen as an asset for the company, be it from a reputation standpoint or as motivation for the employees. Here, people still want to give the best to their employees, which is a very different picture than in the rest of Europe where the battle centres around cost at the detriment of quality”. And DSR has clearly used this Swiss particularity to the company’s advantage: “I think that in Switzerland people are ready to pay a little bit more for top quality products and service,” Gordon explains, “so what we offer is high quality and the freedom for a company to design its own catering solution according to its needs”.

This tailor-made offering contrasts sharply with the standardised solutions practiced all around Europe in the mass catering business, but in Switzerland, this proves to actually be a winning formula. “Companies come to us because we provide them with custom- made catering solutions that may seem a little bit more expensive at first, but provide good return on investment quite rapidly.” This is such a specificity of the Swiss market that Andrew Gordon has seen quite a few “big global catering companies” come to prospect in the country and leave rapidly once they had realised the quality standards of the local market. Meanwhile, DSR and Andrew Gordon have stuck to this mantra in good and bad times, and the company is now enjoying a high-quality image that is gaining new corporate clients on a regular basis: last year’s success is largely due to multiple new collective catering contracts.

Many cooks are needed to serve many stews

On growth course

If high quality and customisation is the motto of the company, a resolute expansion strategy has also helped DSR remain one of the most important players in the field in Switzerland. It started soon after Andrew Gordon became CEO. DSR became a holding in 2002 numbering five subsidiaries. Now it numbers ten, each addition representing a new territory for DSR to conquer, from fine cuisine service to exhibition halls catering, usually with great success. While expanding its portfolio of services, the company also moved into German-speaking Switzerland, more specifically Zurich, an area untouched before for this historically very romande entity.

Gordon has been in a privileged position to observe the very real differences that exist between the French and German speaking parts of the country. “The Swiss Germans are less concerned with the food, and in that sense they are easier to feed,” he points out with a congenial smile, “especially since DSR benefits from a kind of French gastronomy aura. On the other hand, they are much more attuned to their surroundings and the environment they eat in – the light, the furniture, the atmosphere are decisive for them”. The move became another feather in a well-furnished cap. DSR captured the all-important Credit Suisse and UBS contracts in Zurich, which means that DSR is now truly acknowledged as a national player. And as any good corporation, DSR has also worked on its costs, negotiating a fixed price for a range of 1500 basic food commodities with its suppliers in exchange of a guaranteed long-term business relationship.

Andrew Gordon likes his business the way some might like a gourmet meal, enjoying the dish on the table and by the same token having appetising visions of the next course and the next, and the next. He has the knack to sustain the company in the face of competitive wannabes. His focus has been on finding the right interlocutors in Switzerland, companies where serving up good food to employees is considered good corporate behaviour, and where fine cuisine enjoyed within the plush surroundings of the private salons of some well-known Swiss corporations is a strategic element in key client management. There is serious money in titillating the palate. Nestlé shelled out a cool CHF 30 million to come up with a new “wellness” and eating area at its Vevey headquarters. So what is the asset? “Our job is emotions,” says Gordon, “because everybody has an idea of what good food is or should be.”

Food and service quality are obviously paramount considerations. Companies are not averse to hunting chefs in well-known local restaurants. Other factors play a role as well: some companies have offices located outside city centres attracting more employees to any near-by restaurants for lack of alternative offers. This problem affects Geneva in particular, where finding office space within the town centre is becoming near impossible. Businesses therefore seek space on the fringe of the city where there is often zero solution for employees to eat outside.

Economic crises also play a significant role, since company restaurants are almost guaranteed to be a cheaper alternative to eating outside the office. Finally, as Gordon points out, the weather also comes into play, with sunny days seeing more employees eating outside their company premises. The challenge is therefore to make sure eating at the corporate restaurant becomes more than a choice by default, but rather is seen as a real advantage by the employees. If the quality of the food plays a key role here, turning a corporate restaurant into a strategic element requires some real thinking whatever the size of the company.

This is an aspect that DSR has turned into an opportunity. An in-house engineering department was created to design the layout of a corporate restaurant. A fine illustration of this is the impressive Merck Serono eating area in Geneva, where DSR is not only responsible for the catering but also participated in the design of the restaurant. This “engineering” feature nicely complements the tailor-made approach put forward by DSR, enabling them to keep longterm clients while attracting new ones. A few years ago, DSR came up with the “Flexi Self” concept aimed at small and medium businesses that have neither the means nor the space to come up with something as grand as the Merck Serono meeting place but still want to offer their employees healthy and good food within a very simple structure. It gained DSR new clients instantaneously, the Loterie Romande among them.

The next course

As banal as it might sound, the focus on high quality, service-oriented and personalised approach, and a dose of creativity are the ingredients in DSR’s success. What remains to be seen now is if – and how – the company can maintain this fine balance within the context of an aggressive market. The land of mass catering is not a picnic. Until now, the Swiss market has been spared the less than civilised battles waged in the rest of Europe between global mass catering corporations. But Switzerland is a geographically extremely limited market that can only accommodate so many players. It’s a matter of time before they start devouring – or absorbing – each other. Another looming reef could be the assault by corporate bean-counters on the “high prices for high quality”. By Andrew Gordon’s own admission, the “market is getting very tight, and each call for tenders brings out lots of players.” This could, in the medium term, result in a full-fledged price war. It is already forcing margins down, and Andrew Gordon acknowledges that “this is a business in which you earn little when things are good, but you lose a lot when things go bad”. The inherent limits of the Swiss market means that the major catering companies, among them DSR, carefully observe their competitors’ every move to make sure they do not miss out on any new potential client. An encouraging feature of Switzerland and in particular of the Geneva region is that it does welcome new companies on a regular basis – and, more crucially, their existing clients are not tempted to try out another catering company.

And so, with bold moves, the business struggle continues. DSR’s move into German-speaking Switzerland might have been the right one strategically, but it did raise eyebrows among its competitors, especially the ones that considered the region as their prerogative. SV, the Swiss leader in the catering field and the predominant force in the German-speaking area, retaliated by launching services in the French-speaking regions of the country. And then there are the newcomers backed by heavy money: Migros, the historical Swiss corporation, made a big entrance on the mass catering scene when it secured the FC Lucerne contract with its considerable 17,000 stadium seats. The other catering companies might for now officially consider Migros as an outsider that still has to prove itself, but the “orange giant” benefits from a huge purchasing power that might affect the way other catering companies operate.

Andrew Gordon is well aware of the battles that lie ahead and is ready to put his invention cap back on. “We are going to keep expanding at the fringe of the catering business, in order to become less dependent on corporate catering contracts.”

He has already clearly devoted some thinking to it, mentioning the possibility of renting catering equipment, expanding the temporary staff agency DSR has launched recently, developing a professional cleaning business, and, more crucially, expanding abroad, thus de facto circumventing the small market issue. “Cooking needs a clear head, a generous spirit and a big heart,” the DSR website quotes Marcel Proust. It looks like Andrew Gordon is doing business the exact same way. His next venture will take place on the ski slopes of Villars, as DSR prepares itself to launch a joint venture with the Villars ski lifts company to cater for ski slopes restaurants, an interesting move for DSR which has a seasonal workforce on hand from its Lake Geneva venture, that becomes under-employed comes winter. “It makes perfect business sense,” smiles Andrew Gordon.

Swiss catering: the figures

Andrew Gordon, the head of DSR

The Swiss catering business is rather hushhush, with only very few of the players willing to share their yearly figures. In fact, only the major companies do so, having joined forces under the umbrella of the “Swiss Catering Association,” mainly as a way to speak with one voice in negotiations with the Swiss government regarding hospitality or food quality standards and national laws.
The association is a grouping of the country catering giants: DSR, Compass Group, SV Group and ZVF.

They are giants, however, only by Switzerland’s standards: between the four, they have a collective workforce of 10,000 and generate sales revenues of close to CHF 1 billion, whereas Compass Europe’s revenue reached almost CHF 5 billion in 2010.

Christian Weyer

Geneva is known for its wealth management industry, its hundreds of banks and independent asset managers, some large, some small, all huddled around the Rue du Rhône. Less well known are the commodity trading and the commodity financing businesses, which mean an enormous amount to the local and even national economy. But it’s a relatively new industry, as Dominique de la Barre found out.

The derrick closest to Geneva is probably one of those solitary pumpers in Alsace sucking up a few barrels of oil per year, mostly for show it seems. Yet the city is full of oil, having gradually crawled up to third place as an oil-trading market, pushing London off the rung.

And oil is only one of the many commodities traded in the city, which is either home to, or houses offices of, some of the world’s top commodity traders, like Glencore, Trafigura, Louis- Dreyfus, Cargill, and the lesser-known Gunvor, Addax or Vitol.

Their business is essentially quite simple: To buy physical commodities, such as oil, coal, iron ore as well as sugar, cotton and fertilisers, match them with buyers, and engineer the sale. Meanwhile, specialised banks, BNP Paribas, Crédit Agricole and ING among them, are involved in financing those purchases. It is a very profitable business, one that made up over half of the Swiss growth in 2010, and while it does generate lots of cash, it is noted for not creating too many jobs.

Christian Weyer, a retired banker, now in his late eighties but still active, was around at about the time the machine got going in the 1970s and actively participated in fuelling it. The original trigger for this economic development, he suggests, was actually an event in a faraway land decades earlier. In 1952, namely, King Farouk of Egypt was toppled in a coup that ultimately brought Gamal Abdul Nasser to power. Nasser, after some ideological soul-searching, decided to go with Arab nationalism. In Alexandria, a city founded in 331 BC, one thousand years before the Arab conquest of Egypt, the Jewish community, which had been present there since Antiquity, “took fright and took flight.” Among the refugees was Nessim Gaon, who was born in the Sudan, then an Anglo-Egyptian protectorate. “He hardly spoke any French,” Weyer remarks with a hint of admiration for the man’s survival skills. “But he knew how to trade groundnuts and sesame seeds.” He was not alone, nor was it the only commodity being traded by these immigrants. Others were active in cotton trading, a staple crop in the Nile valley, in the days when affluence in the West was pushing demand for blue jeans and T-shirts and other easy-to-wear clothes.

Plus ça change…

To this day historians debate whether trading is the oldest profession on earth or merely the second oldest; what is well established is that trading appeared in Mesopotamia around 4500 BC. The economic role of a trader is to deliver goods purchased from a producer to a consumer or user, thereby creating value; for instance oil in the ground in Arabia is worth less than when delivered to Northern Europe in the winter. A trader also allows the producer to concentrate on what he does best, producing, by taking on price and delivery risks and providing related services such as transportation, logistics, storage and arranging financing. Much later, around 1800, David Ricardo, a Scottish economist, would develop the theoretical framework to justify the value of trade: countries that trade with each other are better off than those who do not. And mercantilism as a system has flourished for millennia creating wealth, poverty, knowledge, wisdom, war and peace all at the same time, and pushing the discovery of the planet humans live on.

But back to Geneva in the fifties… Gaon, from his humble start, went on to become the leading, the best known and most active property developer in Geneva, leaving his imprint on the city with such landmarks as the Ports Francs, the elegant building of the Chase Manhattan bank and, of course, the Grand Hotel Kempinski, previously known as the Noga Hilton, where Noga is an anagram of Gaon. There are a number of reasons why these Egyptian traders settled in or around Geneva in the 1950s. Some had followed King Farouk who had bought a house in Lausanne, where they found a number of established trading houses, such as André & Cie, often supplying the huge demand for agricultural foodstuff from nearby Nestlé. More importantly, perhaps, in those early days, Switzerland was one of a handful among European countries not to control capital flows and able to boast an infrastructure undamaged by war, not least a functioning telephone system. In the 1960s, a second wave of trading companies set up shop in Geneva, Cargill International, Alcoa International, Continental Grain among them, as well as some smaller British and French traders concerned by political instability at home.

… plus c’est la même chose

The real turning point in the history of Geneva as a trading centre came with the Yom Kippur war in 1973, triggering the first oil shock. The price of a gallon of crude oil rose fourfold from USD 3 to USD 12, and caused a revolution in the way oil was sold throughout the world. Before the war, oil-producing countries would sell exclusively to the Seven Sisters, as the major oil companies were then called, within the framework of a very rigid and inefficient system. With oil now a scarce commodity worth USD 12 a barrel, transportation of oil was set to become a lucrative business for intermediaries. A new generation of traders emerged, whose business it was to find the best buyer for a cargo at the best price, in the process creating a market which the majors, accustomed only to dealing exclusively among themselves or with sovereign states, were ill-equipped to serve.

There are other reasons why Geneva, specifically, and not some other city became the leading commodity trading centre it is today. Some of these are well known and apply to the country as a whole: excellent infrastructure, a stable legal and tax system, and an educated, multilingual workforce. Two other factors are worth mentioning, the first of which is the presence of the United Nations. In a business where deal making, securing contracts and negotiating (or breaching) economic embargoes is essential, the ability to meet a foreign ambassador over drinks in a hotel lobby counts for much. The second is the need for money, which is why so many banks are also involved in the business. Because someone has to guarantee the financing for moving of goods across great distances, and usually that will be a bank. In Switzerland, getting a hold of large sums of money quickly and without bureaucratic fetters was a lot easier than, say, in France. Banks, however, are generally reluctant to taking risks – unless the profits appear to be astounding, at which point they will drop their guard, as the 2008 recession showed. In Geneva, they rely on the SGS, formerly known as Société Générale de Surveillance, the world leader in inspection, verification and certification. In a nutshell, a Genevan trader having closed a deal say on a load of crude to be taken from Angola to Rotterdam will have the money put up as a security by a bank. The SGS will be on hand in the port of departure and arrival to ensure that the right quality material is being loaded and unloaded. SGS will also ensure that the cargo arrives within the defined time frame.

All the controls and checks, however, cannot prevent the plain reality that in the face of really big money, ethical and legal standards often take a beating. One of the more famous cases was that of Marc Rich, the founder of the predecessor company to Glencore. He is credited on the one hand with having created the spot market in oil while on the other hand he was indicted by a grand jury in the United States in 1983 for having breached the Iranian embargo. He was famously pardoned by President Clinton in 2001, hours before leaving office. Closer to home, Trafigura, a leading oil and commodity trader with operations in Geneva, was embroiled in a serious incident when in September 2006 a ship chartered by the company offloaded waste at the port of Abidjan in the Ivory Coast through a local contractor which illegally dumped the waste at sites across the city. Many thousand residents started suffering from various illnesses shortly thereafter and a dispute erupted regarding the nature of the waste, the cause of the illnesses and the determination of liability for the illegal dumping. Later that month, two senior Trafigura executives who had flown to Abidjan were jailed by the government until, on February 14th 2007, Trafigura concluded a settlement agreement with the Ivorian government, which included a USD 198 million payment, securing exoneration from further legal proceedings and the release of the two executives. Investigations and court cases into this series of events have been conducted in the Ivory Coast, the UK and the Netherlands.

On the carousel

Christian Weyer became involved in trading in days that might seem gentler in retrospect. He arrived from Paris in 1970 to work at the Geneva office of the Banque de Paris et des Pays-Bas, today BNP Paribas. Weyer recalls finding a solid bank, ably managed, which concentrated on private banking, a business requiring very little capital. Paribas Suisse had a strong balance sheet. It was Weyer who came up with the idea of using it to finance trade, chiefly in oil. “The bank in France was run by engineers, who had an intuitive understanding of the role of oil in the economy, as opposed to maize or corn,” Weyer recalls. “When I first talked to them about financing the oil trade, they listened.” By the early 1970s, the bank had opened branches in the Gulf as well as in New York, competing head on with the large US banks on their home turf, by offering a new type of service to their very best customers.

The instrument Weyer chose to use to finance those oil shipments was the letter of credit. While it had been developed in the late Middle Ages by Lombard bankers, it had since fallen in disuse. Under a letter of credit, the issuing bank undertakes to provide payment to a seller of goods on behalf of a buyer. Since a bank like Paribas would know the buyer – for instance an oil trader located in Geneva or elsewhere in Europe – better than the seller, it would feel comfortable taking on a credit risk on the buyer that the seller would be unwilling to take.

Oiling the rails

Leading bankers such as Weyer played a key role in financing these traders. The oil traders, smart though they were, were often little more than bucket shops, three to four strong, backed by capital of perhaps USD 1 to 2 million. By the early 1970s, oil was selling for USD 14 a barrel, and so a the cargo of a small ship, carrying 100,000 tons or one million barrels, would be worth USD 14 million, far beyond the financing means of these traders.

In early 1982, the Mitterrand government nationalised most of the French banking sector, though Paribas Suisse, having managed to escape the government’s clutches, gained a freedom of action denied to its parent in France. “Take the following example,” says Weyer. “An oil trader wanted to buy a shipment worth between USD 100–200 million to be delivered to a refinery in Sicily. The oil exporter would be loath to grant payment terms to such a small trader and so would require the benefit of a letter of credit issued by a well-known bank. The exporter was now happy but the bank in turn was bearing the credit risk, the ultimate source of which was the ability of the Italian refiner to pay. To minimise that risk, the bank might demand that the oil refiner produce a second letter of credit, issued by an Italian bank, of which it would be the beneficiary – a so called back-to-back transaction. This was all new then. Sometimes,” carries on Weyer, “we would cause the regulators some cold sweat. If for instance the back-to-back letter of credit did not cover the full amount, then we would ask the refiner to pledge stocks of refined goods such as petrol or heating oil as collateral. This came as a surprise to the regulators, who were unused to a bank owning physical rather than financial assets on its balance sheet.” In fact, the regulators’ concerns were not totally unfounded as Paribas was now bearing the price risks
on those stocks, the risk that they would not be able to be sold at high enough a price to cover the liability under the letter of credit, should the refiner not honour its commitment.

Following the break-up of the Soviet Union, Russian traders became big players in oil. Initially the Russian traders would buy for cash – therefore at a discount – the oil at the well head as opposed to the delivery point stipulated in the oil future contracts. For instance, a contract on West Texas Intermediate, a particular classification of a variety of crude oil, stipulates that the shipment has to be delivered to Cushing, Oklahoma. However, Russia is a continental power that needs to deliver its oil to a loading point for export. “We at Paribas then entered this new business, of financing the transport from the well to a loading port, where it could be sold into international markets. Since the Russians were buying at a discount, they quickly became very rich,” recalls Weyer.

Banks in Geneva, and men like Weyer deserve a large part of the credit in the development of Geneva as a trading hub. In the 1970s, they developed new techniques of secured financing, where the cargo acts as collateral, which allowed them to finance trading operations with little or no equity. However, trading was never an easy business. The sums involved have always been high and so there is a lot of room for risk and a great deal of temptation to somehow pad or cook books, and of course for outright stealing. But the days of Gaon and men like Weyer seem halcyon in comparison to the business today, which has grown to enormous proportions (see box Trading figures). Indeed, sesame seeds, dates and dried figs cannot compare to loads of cobalt ore, bauxite, iron and, of course, the most lucrative darling, oil. New, ever more complex techniques, called structured trade finance and prefinancing have been developed, and they are not entirely uncontroversial. Oil prefinancing allows a country, usually a poor one, like Angola or the Republic of Congo, to borrow against future oil revenues; the technique has drawn criticism from NGOs such as Global Witness for being expensive, opaque and prone to misuses by politicians.

Furthermore, the speculation around soft commodities, which grew recently as an alternative to toxic mortgages is putting the world’s less fortunate at risk and fuelling unrest. Still, as the traders will say, someone has to do the job, and the profits involved do make it well worth having the occasional blind spot. Their job is just to connect the dots, and, to paraphrase Orson Welles as Harry Lime, if one of those dots stops moving, does anyone really care?

Trading figures

Nowadays, Geneva ranks as the second most important trading centre in commodities, behind London but, quite possibly, as the most important centre for the financing of commodities trading. Perhaps 500 companies, employing between 9000 and 10,000 people are now active in commodity trading in Geneva, with 2010 turnover pegged at an estimated CHF 17 billion. Oil and gas dominate the business in Geneva but hard commodities such as metals and soft commodities such as sugar, cotton and grain also play an important role. It is estimated that 10% of world cotton, 20% of sugar and 30% of grain are handled in Geneva, a huge proportion. Furthermore, Geneva traders handle a staggering one-third of the oil in the free market globally. This so-called “transit trade” is a major growth factor for the Swiss economy, one that is also very dependent on the state of the world economy and hence rather fickle. It is also one of the reasons for the extremely high rents in Geneva, where apartments are rare, in particular quality dwellings.

Thus, traders in Switzerland, whether located in Geneva or in Zug, play a major role in the world and Swiss economy. Glencore is a case in point. The world’s largest commodity trading company, located in Zug, was listed on the London Stock Exchange in May of this year and is now valued at over GBP 27 billion, to the point where it is no longer dependent on the banks that financed its operations when it was founded in 1974. Other large trading companies, such as Mercuria or Trafigura, started with humble beginnings. Mercuria, for example, founded as recently as 2004, now ranks as the fifth largest independent oil trader, employing 800 personnel, of which 200 are in Geneva. The Russian presence remains strong with large Russian oil-producing companies such as Rosneft, Lukoil and TNK-BP having established their own trading company in Geneva, to which one might add independent traders such as Gunvor, with its strong links to Russian oil companies. Altogether, up to 75% of all Russian oil exports are handled through Geneva.

Christian Weyer is a well-known international banker and financier with over 50 years of experience. He began his career with Chase Manhattan Bank as a senior credit officer in Paris and Geneva and subsequently worked as an executive at Banque Paribas until becoming President of Banque Paribas (Suisse) in 1984. During his career, Weyer has been credited with innovating new forms of trade finance and lines of credit and was instrumental in the growth of several large oil trading firms some of which have now reached worldwide stature. From 1988–1992, he was special advisor to Banque Indosuez (now Crédit Agricole) in energy matters. Since 1992, he has been President of Enerfin in Geneva, an advisory firm providing investmentbanking services to junior oil and gas companies. Weyer is a shareholder, founding member and Director of Geopark, a London listed (AIM) oil and gas exploration and production company active in Latin America.

Article by Dominique de la Barre

François Carrard accompanied the IOC through some of its toughest times

As a youth, François Carrard used to practice breast stroke, but he did not become a swimmer. Instead, he followed in the family tradition and became a lawyer in 1967.
He is currently a senior partner with Carrard & Associés, which specialises in commercial and corporate law as well as the legal aspects of sports and media. One day, in 1979, a new client appeared on his doorstep, as it were: the International Olympic Committee, the IOC…

Lord Kilanin was still chairman of the IOC at the time, and the People’s Republic of China was seeking admission to the Olympic Games, in the face of the opposition of the so-called Republic of China, the name used by Taiwan,” recalls Carrard.

The court that was to hear the case was in Lausanne, and Carrard had been designated as an outside counsel. “That was my first encounter with the IOC,” he says. “Eventually we were able to conclude an agreement allowing both countries to be recognised by the IOC, with Taiwan sitting on the IOC as Chinese Taipei.”

In 1980, Juan Antonio Samaranch, later marquis Samaranch and Grande de España, was elected chairman of the IOC. A former member of the Cortes, the Spanish parliament under Franco, Samaranch was Zeus on the Olympus, king of gods and men alike, brooking no opposition, no other power than his own, striking his then Director General, Monique Berlioux with his lightning bolts, forcing her resignation, much as Zeus had vanquished the Titans. “Ça m’arrange” wrote the French press. And, what was the name of the man who negotiated the terms of the termination agreement between the IOC and Berlioux? François Carrard. Samaranch would be the man who would introduce two radical novelties to the IOC. First of all, in 1984, he opened the door, wide open many say, to eleven corporate sponsors, called TOP, The Olympic Partners, who would come to contribute up to 30 percent of the IOC’s revenues; second he secured utter control over the television rights to the games. Money, a lot of money, would flow, and the games would never again be the same. In 1989, Samaranch appointed Carrard as Director General, a position he held until 2003, or rather as part time Director General as Carrard was allowed to remain a partner in his law firm. Samaranch did need a Director General to do the job but there can only be one Zeus on Mount Olympus. After all, Greek mythology had its demigods, so part-time it would be. Let the opening ceremony unfold.

First lap

1989, the year of Carrard’s appointment, is when the Wall fell. The scene is Moscow, where Samaranch had been Spanish ambassador from 1977 to 1980 and had retained many connections, and the time is mid-October 1989, the grey autumn air filled with the stink of two stroke engines puffing yellow smoke through the dangling exhaust pipes. Carrard was attending a dinner at which the Chinese, the Soviet and the East German sports ministers were all present, wearing polyester shirts and ill cut suits. “What is wrong with your country, what is it with so many East Germans leaving via Czechoslovakia and Hungary?” Carrard asked the East German minister. “Oh, nothing serious,” came the answer, “it is just that our youth is bored, you see, we, in East Germany, do not provide them with many opportunities to express their creativity”. Three weeks later, the Wall had fallen; they had not seen it coming, but nor had the western media.

By 1991, even ahead of the break-up of the Soviet Union, the Baltic States were asserting their rights to their pre-war seats. “Where is the letter formally notifying my country of its expulsion from the IOC?” thundered one Baltic minister. The three Baltic republics were eventually restored, as opposed to admitted, to the IOC in September 1991; Latvia, for instance, had taken part in three Olympiads between the wars winning three medals at the 1932 Los Angeles and 1936 Berlin games. That still left the other Soviet republics, notably the Central Asian stans, for which new national Olympic committees had to be created from scratch. Carrard was often in Moscow in 1990 and 1991 to assist in the process at a time of fast and fluid political developments, which culminated in the eventual formal dissolution of the Soviet Union on December 26th 1991.

When the winter games opened in Albertville on February 8th 1992, barely six weeks later, the fourteen republics, other than Russia, were light years away from being ready to participate as individual nations. On behalf of the IOC, Carrard developed the concept of the Unified Team, a joint team consisting of six of the fifteen former Soviet republics: Russia, Ukraine, Kazakhstan, Belarus, Uzbekistan and Armenia. The Unified Team paraded under the Olympic flag and competed under the IOC country code EUN, which stood for Equipe Unifiée in French; it would appear on only one other occasion, at the Barcelona Olympics, later that year. At the Albertville games, the Unified Team won a total of 23 medals, second only to Germany, with the medals won in individual events being awarded to its constituent states.

As the year progressed, the IOC found itself confronted to a far thornier problem, begat by the civil war in Yugoslavia. Early in 1992, Slovenia and Croatia, soon followed by Bosnia and Herzegovina, had gained recognition as independent states, having left the former socialist Federal Republic of Yugoslavia, including Montenegro. In the spring of 1992, for the first time ever, the United Nations adopted political sanctions against sport, forbidding its member states to accept any team from Yugoslavia, a position clearly unacceptable to Samaranch and the IOC. Carrard flew to New York where he met the Brazilian ambassador, then chairing the UN Security Council. The ambassador expressed his understanding for the IOC’s view, which was that the sanctions were penalising the athletes, not the states. And so it came to be that, after the invention of the Unified Team concept, along came the notion of “independent athletes,” which allowed athletes from the Federal Republic of Yugoslavia and from the Republic of Macedonia to compete individually as Independent Olympic Participants, again under the Olympic flag and under the country code IOP. The sanctions led to comical situations: for instance Spain was barred from granting access to the games to the Yugoslav sports minister while on the other hand the Spanish government was arguing that it had no right to refuse him access as he was a member of a government that Spain still recognised at the time. To solve this dilemma, the minister was allowed to fly into Spain, though not as a member of the Yugoslav delegation at the Games, and was issued with a succession of daily passes to the games.

Second lap

The end of the East Bloc and the disintegration of Yugoslavia were not the only big events that marked the early nineties. South Africa had begun the dismantling of apartheid, a process culminating in the election of Nelson Mandela as president in 1994. Upon the occasion of a visit by Mandela to the IOC in Lausanne, Carrard suggested taking him on a visit to the Château de Chillon on Lake Geneva, home, as it were, to Byron’s famous Prisoner of Chillon. “Oh yes, I am an expert on the subject,” Carrard recalls Mandela saying. “He was an extraordinary man, humble and yet strong, determined and yet forgiving,” Carrard says. Even ahead of the full dismantlement of apartheid and the 1994 election, Carrard coordinated a delegation to South Africa, of which he, on the sensible insistence of Samaranch, was one of the only two white members.

On a shelf behind Carrard stood his collection of West African statuettes from the 1920s and 1930s, grotesque figures called colons, some donned with pith helmets, meant to symbolise opposition to colonialism; guardian deities of African culture, it seemed they had been waiting all along for Mandela’s visit and the return of the Republic of South Africa to the fold of the IOC.

First hurdle

By the time the 2002 winter games had been awarded to Salt Lake City in 1996, the value of the television rights had soared to some 900 million dollars, up from a puny 100 million in 1980. Where there is money, there is temptation. In November 1998, the Olympic torch set fire to the house of Samaranch when an American TV channel published a letter revealing that favours had been bestowed on IOC members or on their own relatives, plane tickets, a weekend for two in a luxury hotel, even college fees and other hospitality services, best left to the reader’s imagination. It quickly became clear that the Salt Lake City organising committee had tried to buy the votes of some IOC members in order to secure the games. Quod vult perdere Jupiter dementat: following an investigation, ten IOC members, out of a total of 112, were suspended, investigated or tendered their resignation.

Never far from the Director General, Carrard the lawyer observes: “Actually, to sell one’s vote was not an offence in the criminal sense of the word,” though he does concede that it raises some ethical issues. Was Samaranch – and perhaps Carrard as well – negligent? Did he turn a blind eye, pretending not to see, Cyclopes instead of Zeus? Carrard thinks that the vote buying arose from the combination of the sudden inflow of hundreds of millions of dollars, while the IOC was run like a 19th century St. James’s club, where gentlemen ensconced in leather arm chairs chat over a gin and tonic. In the wake of the Salt Lake City scandal, an ethics committee was set up. Its task was to draft a Code of Ethics containing a specific section dedicated to the rules to be observed by cities wishing to organise the Olympic Games.

The harvest of decades in the field: wisdom and statuettes

Second hurdle

Nowadays, not only is sport supported by a legal framework but it is often marked by litigation and the need for arbitration. The Taiwan vs. IOC dispute had been heard before a civil judge who, of course, was not a specialist in sports matters. Carrard, then still acting as counsel to the IOC, suggested to Samaranch the creation of a sports arbitration court that would hear and rule on cases, much as the International Chamber of Commerce operates a court of arbitration to settle disputes in the field of commerce. Today the Court of Arbitration for Sports (CAS), which came into force in 2004, sits in Lausanne and hears about four to five hundred cases a year; it typically rules either over disputes relating to the execution of contracts or over disciplinary cases, of which a large number are relating to doping, the scourge of sports in the modern age. Themis had entered the stadium.

One trend of concern to both the IOC and the CAS, is the rapid development of litigation, itself part of an even bigger trend, the professionalisation of sports and its emergence as a multi-billion-dollar business. In one famous case, going back to 1999, two EU swimmers were charged with doping and sentenced to a four-year suspension by FINA, the swimming federation. They appealed to the CAS and, on appeal, their sentence was reduced to two years. Still not satisfied, the two swimmers appealed yet again, this time to the EU Commission, arguing that since they were professional swimmers, that sentence effectively prevented them from earning a living, to which the EU sensibly answered that it was not competent to rule on doping matters. The two swimmers now turned their case to the EU Court of Justice, which ruled that the Commission had a duty to pass a judgement not on whether two years or four years was the appropriate sentence for doping but on whether that sentence infringed upon the swimmers’ labour rights and their free access to work. In this instance the EU took the view that the two-year suspension was a fair sentence but a new precedent had been set: intervention by the EU in sports disputes.

Closing ceremony

Carrard left the IOC in 2003, after Jacques Rogge had succeeded Samaranch in 2001. His memories are still intense. Carrard presided over and witnessed rather remarkable times, an era of enormous political and social upheaval. “What struck me at the IOC is the way in which sport, with its many networks, can overcome political and social difficulties, between the two Chinas, between the two Koreas, for example,” he remembers. “Even politicians could not solve them,” he adds pensively.

Today, Carrard is back with his law firm and acts as a director on a number of boards. Over thirty years after having facilitated the admission of the People’s Republic to the IOC, he sits on the board of Bank of China (Suisse), which opened a subsidiary in Geneva in 1998. A renown gourmet, he is also chairman of the board of the Beau Rivage in Lausanne, the Belle-Epoque Palace, with its commanding view over the French Alps across the lake. Finally, there is the jazz piano player, the man he perhaps would have liked to be, to indulge the skill he acquired and perfected during a school year in South California when he was just 17 in 1955. Still as chairman of the Montreux Jazz Festival Foundation, every year he drives through the golden terraced vineyards of Lavaux to listen to jazz music and, on occasion, play the piano in Montreux, the place where the world comes to Switzerland.

François Carrard was born in 1938 into a family of lawyers to Jean, a lawyer and Erika, a consumer rights activist. He graduated with a PhD in Law from the University of Lausanne and was admitted to the bar. In the early 1960s he began his career as an attorney in law firms in Stockholm and Lausanne. Since 1967, he has been a partner at the law firm now named Carrard & Associés, specialising in sports and media law as well as in international arbitration and alternative dispute resolution. From 1979 onwards Carrard undertook various missions and counsel assignments on behalf of the International Olympic Committee until he became its Director General, a position he held from 1989 to 2003 while retaining the partnership in his law firm. He currently serves on the board of a number of corporations and institutions including Bank of China (Suisse), Beau-Rivage Palace, Brugg group, an industrial holding company, Fondation du Montreux Jazz Festival, IOC Television and Marketing Services, Olympic Broadcasting Services (OBS) and PCL group, which operates in the printing and publishing industry. Carrard is married with two daughters and lives near Lausanne.

Article by Dominique de la Barre

The British-Swiss Chamber of Commerce Business Awards

The British-Swiss Chamber of Commerce (BSCC) this year launched its new Business Awards, advancing its mission to promote trade relations between Switzerland and the UK. At its inaugural ceremony on November 30, the BSCC identified and put into the forefront those actors who have played an active role in business relationships between the two countries. As the official media partner of these awards, Swiss Style Magazine partook in this project, which aims to become the number one business award within the British-Swiss business community.

Recent developments in Europe have illustrated the importance of dialogue within a world economy increasingly challenged by protectionist tendencies, and international commerce is itself perhaps the only dialogue uninhibited by the unpredictable tides of political posturing.

Whether or not one attributes such postures to sentries of sovereignty, it is generally agreed that seclusion can prove a terminal diagnosis in contemporary economics. The British-Swiss Business Awards emphasise that through our business relations we can circumvent our mutual isolation. In this vein, winners were considered to have contributed significantly to both the apparatus of the market and the transmission of international discourse that it facilitates. Where better than Geneva, the home of the World Trade Organisation, to pay such a tribute?

The ceremony was attended by Great Britain’s Ambassador to Switzerland, Sarah Gillett, who joined over 150 business leaders and guests in their celebration of business innovation in the British-Swiss arena. The awards were sponsored by Lloyds TSB Private Banking, the first British bank in Switzerland and member of the 92-year-old BSCC since 1954. A committee oversaw nominations and ultimately ranked successful finalists in terms of their outstanding contribution towards bilateral trade and investment between the UK and Switzerland.

The three judges were distinguished. Professor Victoria Curzon-Price is Associate Fellow to the International Security Programme, Professor Emerita of the University of Geneva, and former Professor of Economics and Director of the European Institute of the University of Geneva. Daniel Loeffler earned his degree in Economics before building a prominent career in business consultancy. He is currently Director of the Geneva Economic Development Office. Philippe Meyer is Director of the International Affairs Department, and studied for degrees in Economics and Business Administration, most recently at Berkley. The three deliberated upon the granting of awards across five separate areas of commendation.

The ‘Company of the Year’ award went to prestigious law firm Withers LLP. The firm has been dedicated to social responsibility for much of its 100+ year history, and has shaped the legislative development of the UK accordingly. This award was recognition for what is considered to be the largest commitment to enhancing bilateral trade relations between Switzerland and the UK. Aside from direct community involvement, all nominees were judged upon growth, overall performance, and innovation in strategy.

HSBC Private Bank, noted for the environmental and social impact of its strategic corporate governance, received the ‘Corporate Social Responsibility Award’ by Swiss Style’s Co-Chair, Anne Claire Béguin-Lotti. The extent of staff development and the application of workplace practices were also factors on which the nominees were considered. Addressing the attendees at the ceremony, Ms. Béguin-Lotti said: “Our magazine has been a platform for the expression of diverse points of view from the economic and financial leaders of Switzerland. As such, it has given us a bird’s-eye view of strategies and policies created and implemented by many of our readers in their business environments. Over the past few years, the term Corporate Social Responsibility has been ringing through our ears, but, as keen observers, we have often been saddened and frustrated by what we had grown to feel as ‘lip service’, driven more by marketing and PR concerns rather that active compliance with the spirit of CSR.

Tonight’s event now gives us renewed hope. The BSCC and the esteemed judges of the British Swiss Business Awards have, after considerable effort, identified those companies that have gone far past the any notion of ‘lip service’ to the important concept of CSR”.

Meanwhile, the ‘Unsung Hero’ award proved a competitive title. It was reserved for an individual who has made a substantive and underappreciated contribution to the business community. The award demanded the talent of a champion and the conduct of a modest leader. Journalist Ellen Wallance was rewarded for her selfless, ‘behind the scenes’ work for the British- Swiss community.

Overwhelmed with impressive submissions, the category of ‘Most Promising New Business / Entrepreneur’ was reserved for businesses or organisations that have been in operation for three years or less. Avaloq UK took the title, demonstrating excellence in research, development, innovation and overall solid business practices.

Finally, La Cote International School in gland were recognised for ‘Excellence in Customer Service’. Facilitating the mobility of professional families between Switzerland and the UK, the school was deemed to have offered customer service that is both exemplary and dedicated to exceeding expectations.

Article by Kyle Packer

David Benett, philosopher and auctioneer at Sotheby’s

At first glance, the auctioning of diamonds might seem unimportant, and record-breaking proceeds just the price ultra-high-net-worth individuals are willing to pay to dump excess cash. But Swiss Style’s Lauriane Zonco spoke with David Bennett and discovered a few gems.

Apacked room in a plush Geneva hotel salon, crammed with chairs and standing people. TV cameras in every corner, mobile phones held high up in the hope of getting a picture of what is actually happening at the front of the room. The sense of anticipation is palpable and the never-ending whispers clearly signal that something big is about to happen. Yet, deceptively, all eyes are set on a man in a suit standing in front of this eager audience. He is calm, collected, his speech is even. Yet what is happening at this very moment is, in the words of Christie’s chief auctioneer, Christopher Burge, “a real coliseum waiting for the thumbs. They want a total disaster, lots of blood – or they want great excitement, lots of laughs, a happy night at the theatre.”

The man in the suit looks back and forth at the audience, and rattles off numbers, each bigger than the previous one. As his pace accelerates, the whispers in the room turn into loud chattering of amazement, nervous giggles are heard, and then suddenly everybody freezes as the pleasant man in the suit bangs down his gavel with a sharp, almost violent gesture. He utters one last figure, and the packed room breaks into applause. This show had a very happy ending indeed, and not a single drop of blood was shed. But victory has its price and on that night it came with a tag of USD 46.2 million. Welcome to a not-so-unusual evening in the life of David Bennett, chairman of the Jewellery Department for Europe and the Middle East at the famed auction house Sotheby’s.

Rock of ages

On that night, 16 November 2010, Bennett and his team obtained a record sum in the titillating world of auctions. In a few hours, the Sotheby’s Magnificent Jewels sale brought in an unprecedented sum of USD 105 million, almost half of which was raised by a single item, a 24.78 carat fancy intense pink diamond that will now be known as the “Graff Pink”. Its buyer, London-based jeweller Lawrence Graff, was indeed granted the privilege of naming the fabulous stone, one of the perks that comes with purchasing a USD 46.2 million item. As dizzying as they may be, these sales figures are becoming less and less exceptional in the world of high jewellery auctions. Beyond media-pleasing stories such as the one that saw Georges Marciano, founder of the Guess jeans empire, pay a cool USD 16 million for a white diamond for his 12-year old daughter Chloe at Sotheby’s Geneva in 2007, high-powered jewellery sales are indeed thriving. This is not frivolous business. Rather, it is now seen in expert circles as an interesting investment opportunity in the face of a volatile stock market. For Bennett, it is no surprise. For this Englishman, who originally studied philosophy – a subject he still holds dear to his heart – jewels and gemstones are much more than just aesthetically pleasing decorations. An encounter with him helps shed some light on the enduring and growing appeal of high end jewellery.

A touch of gold

One does not sell stones whose age is counted in millennia in the same way used cars are sold. For this delicate task, Sotheby’s deploys David Bennett, who joined the company in 1974 and has since been intimately involved with all the famous collections of jewellery sold by the famous auction house over the years, such as the Jewels of the Duchess of Windsor, the Ava Gardner Collection, and the jewels of the Begum Aga Khan. An internationally recognised authority in the field of precious stones and jewellery, Bennett has been nicknamed the “100-carat man” ever since he managed the sale of the only three 100-carat perfect white diamonds ever sold at an auction. And last November, he added the all-time record jewellery sale to his already well-garnished CV. These remarkable achievements are all the more impressive since Bennett never even thought of a career in the jewellery business, but rather came to it “almost by accident,” as he likes to put it, through one of his father’s friends who was working for Sotheby’s at the time and encouraged him, then a young graduate in philosophy, to “give it a try”.

The jewellery sales have been thriving under his leadership. Even the recent 2008 financial crisis could not stop the momentum. On the contrary, as the crisis deepened in May 2009, Sotheby’s achieved record prices for coloured diamonds. Bennett has a few explanations for this apparent contradiction. Emerging markets account a lot for growth in sales at auctions houses such as Sotheby’s. As Bennett points out, “the last ten years have seen a huge diversification in the geographical origins of high jewellery buyers.” This horizontal expansion means that at the November sale, the pink diamond went to British jeweller Lawrence Graff, but “the rest of the lots went to buyers originating from over 30 countries,” he explains. “The internet has been a catalyst in giving access to the auction house’s catalogue to those new buyers,” he says, while a rapid increase in the size and purchasing power of the middle and upper classes in countries such as India mean they can actually buy what they see – and keep pushing the prices upwards. As a consequence, Sotheby’s, which used to have offices in “classic” locations such as London or New York, is now organising exhibitions around the world, in new jewellery markets such as the Middle East and Asia.

The Graff Pink, worth over USD 46 million for the new investor

And whereas the famous auction house prime target used to be knowledgeable jewellery dealers, its stones now attract individual buyers worldwide. In particular, Bennett sees India as a market full of potential, “thanks to the size of its middle class and its firmly rooted affection for fine jewellery and precious stones. Russia has also been a healthy market for Sotheby’s for some years now, while South East Asia continues to grow. Japan and China, which used to be niche markets for jade and Chinese art, and with no tradition of fine jewellery, are fast becoming exceptional markets through wealthy individual buyers,” he says. All good news for Sotheby’s, whose 2010 jewellery sales totalled a record USD 405 million.As for 2011, the prospects are exciting as the economy lurches along.

Collector’s items

David Bennett also sees the rarity of the pieces brought before the eyes of the potential buyers as a reason for this market’s success: whether newly mined or part of often fascinating legacies, the top stones put up for auction by Sotheby’s are truly one of a kind. “When you look at those stones,” enthuses Bennett, “you really look at one of the oldest and most inaccessible things on the planet”. Gemstones, especially the exceptional ones sold by Sotheby’s, take millions of years to form, and their mining and extraction is a long, costly, and in a lot of cases, random business. As The Gemological Institute of America (GIA) points out, of the millions of diamonds mined each year, only 0.001% can qualify as fancy colours and only a handful can achieve the top grades of Intense and Vivid. An even smaller percent are larger than one carat, let alone five carats. Sotheby’s really deals with “true rarities,” says Bennett, which explains their investment appeal. He feels “extremely privileged to sell such exceptional stones”. In the case of the 100-carat stones that made him famous, “each had been mined six or seven months before, got polished and then came straight to us.”

Bennett’s task, as he sees it, is also to shed the best light on stones that have risen from complete obscurity to worldwide fame almost overnight. “From the catalogue, visits by the potential buyers, all the way to the stone’s presentation, you really want to make the process special.” The excitement is always present in Bennett’s voice. In fact, he is such a passionate character that, in a bold move, he even left Sotheby’s in 2000 to pursue his other passions, philosophy and hermetic astrology. He came back to the company in 2004, only to break record after record during auctions: “Auctions of stones like this are always exciting and a personal favourite. The Graff Pink is one of the most, if not the most, exceptional stone I have seen in my life, and I had been after it for some time.” When the stone, last seen 60 years ago when it was bought from famous jeweller Harry Winston, finally made it to Bennett’s desk, he knew he had a record-breaker in his hands.

Heart of stone

Bennett offers a third explanation for the growing success of fine jewellery sales: “Fine jewellery has universal appeal because of the emotional aspects tied to it.” As the co-author of the bestselling reference work Understanding Jewellery, which has been in print since 1989, Bennett knows what he is talking about. “People all over the world are fascinated by gemstones, whether they have a tradition of jewellery, such as in India, or only recently came to it, as it is the case in Japan and China.” Jewels hold more than just monetary value: gemstones often have fascinating stories, either because they are a natural rarity, or because they are part of extraordinary estates, or a mix of both.

Bennett, who was been in charge of the sale of world famous jewel collections such as the Ava Gardner collection, sees this emotional component in jewellery as a driving force behind the success of those extraordinary sales: buyers are purchasing a slice of history, and add their own personal family legacy to the course of a stone’s life. And it is not only aesthetically pleasing, it is also financially rewarding, a combination, according to Bennett, guaranteed to conquer all markets. In 2007, an emerald and diamond bracelet, gift to the Duchess of Windsor in 1935 from Edward, Prince of Wales, sold for CHF 1,141,000, which was well above its estimated going price of CHF 720,000–850,000. This was three times the price it had fetched when it was last seen in 1987, when Sotheby’s sold it as part of the Jewels of the Duchess of Windsor sale. This sounds like a very nice tale indeed – beautiful, exceptional stones and pieces of fine jewellery attaining record prices because they are seen as a sound investment when the stock market can crash anytime. All the better if the investment adds some sparkle to your portfolio. But, as the price of gold reaches unprecedented highs, there may be yet another story behind this seemingly unstoppable love story between buyers and fine jewellery.

Real weight

The market for commodities is currently on a bullish trend, and this is particularly true for gold and silver alike. As the French newspaper Le Monde pointed out a few days after gold had reached an alltime high in April, “investors are going old-fashioned these days. They are turning their backs on highly sophisticated financial products and are instead flocking towards one of the oldest product one could find.” The gold stock market value increased by 29% over the course of 2010, each time breaking a new record, and has recently gone over the symbolic USD 1,500 limit. Silver – the value has never been so high in the past 30 years – is witnessing the same trend. Considered as a safe and sound investment, gold is often overlooked in knowledgeable circles as it lacks the strange appeal of complex financial investments. However, in times of economic hardship, gold has an interesting competitive advantage: it is a very tangible, very real asset, a definite plus now that the 2008 financial crisis has reduced many sophisticated financial products to a large pile of nothing.

The inflationist policies put in place by numerous central banks in the aftermath of the 2008 financial meltdown have pushed investors towards gold as most currencies became weaker and weaker. In times of an unprecedented weak US dollar, gold is proving attractive as a protection against fluctuating currencies. In the words of a trader based in Geneva, “gold is almost becoming a currency itself,” albeit one that will not simply be worth nothing if the economy goes belly up. Investing in something very real and very tangible is seen today as a good strategic move, but this goes beyond sound financial strategy. As Le Monde put it, the rise in gold value is also the result of a “spreading distrust for key elements of the global economy,” starting with states and central banks themselves: states obligations do not appear as a safe investment anymore since the bankruptcy of middle- and high-income countries became a very real scenario. Gold looks much more trustworthy to investors: you cannot print it to pump liquidity into the economy, you cannot play with it the way some states have played with their currencies to alleviate the financial crisis. Even central banks themselves, in the face of an ever depreciating dollar, are trying to diversify their reserves by buying gold. For the first time since 1988, central banks bought more gold in 2010 than they sold. It was only a matter of time before this pull towards gold and tangible assets was going to spread to the public. And since the 2008 financial crisis showed that real estate can be risky as well, gold is fast becoming the ultimate value for connoisseurs and the public alike. The frenzy is spreading fast and everywhere, and particularly to the rich in developing economies: Le Monde reports that gold imports in China multiplied sixfold in 2010.

Fine jewellery and the auction houses that bring them to the world are certainly gaining from the benefits of the current pull towards commodities and gold. As for diamonds and gemstones, their stock value does not fluctuate as much as the value of gold, as the Antwerp-based trading diamond house Baunat explains in their online FAQs: “If you look at the price of diamonds over 100 years, you’ll notice it increases by the index value. This means that, on average, diamonds aren’t the best investment, but that they keep their value. There are exceptions for certain categories and certain periods. The value of naturally coloured diamonds rose spectacularly at some times, because they are becoming true natural rarities. All big mining companies continuously weigh the costs of their exploitation and the expected demand from the consumer. If they expect a lower demand, they’ll anticipate by reducing the amount of diamonds they dig up, avoiding digging in the most difficult places where costs are higher… And one doesn’t even talk of mining explorations anymore. The mid-term effect will be a substantial decrease in the offer, causing a small shortage of raw diamonds and leading to an increase in price.” All of which looks very promising for successful gemstones and fine jewellery auction sales.

A market for raw materials

A Geneva-based jeweller and owner of a well-known brand, who requested anonymity, offers another explanation for the appeal of jewellery auction sales: “Auctions let buyers buy at much more interesting prices than retail. It is still very attractive for dealers who can get good to exceptional stones at a still attractive price. They can then recut them the way they want to, or are requested to do so by specific customers, since tailormade pieces are what actually gets most cash back for retailers. Obviously during an auction, you do not benefit from the negotiation power that you have if you buy gold or stones at fairs, but the prices are still lower than at fairs, and the stones can be exceptional.”

And what is the advantage of buying at auctions for individual buyers, since this category of buyers was absent from auctions only a few years ago and are now buying exceptional lots? One art-dealer who frequently buys at auctions explained that “for individuals with sizeable means but limited knowledge of gemstones or jewellery, big auction names like Christie’s or Sotheby’s offer a quality guarantee that is at the same time reassuring and pushes potential buyers’ excitement level up and up.” Buying at Sotheby’s or Christie’s has “the same aura now than buying at Cartier or Van Cleef”. For the individual buyer who wants to venture into tangible asset territory, well-known auction houses are becoming the first stop on the road to investment diversification.

So the future of jewellery and precious stone auctions is looking rosy, as it were. The sales involve good to exceptional quality pieces, they are attracting strong investors and the attention of a public in search of concrete assets that will retain their resale value long after stock markets have crashed. And there is the general defiance for complex investment schemes. Tales of fine jewellery pieces being transferred from generation to generation, and of fantastic stones that are the stuff of museums are certainly spawning enthusiastic media coverage. It is tempting to assume from these dizzying sales figures that the world economy is recovering very fast from its last financial crash. Those figures, however, may also be a sign of the persisting defiance and mistrust of the usual financial instruments that push investors and the public alike towards new investments that are perceived as safer and more transparent. Investors, individual buyers and dealers alike may well feel safer with assets in the form of exquisite pieces of fine jewellery and giant diamonds. And that, in turn, might be a sign of the emotional instability of the world economy. Either way, the atmosphere at David Bennett’s Sotheby’s office is the one thing bound to remain cheerful for some time.

Rocky highs

Confirming David Bennett’s insight, potential investors seized the opportunity to get their hands on very real assets when the famous auctioneer chaired another major Sotheby’s fine jewellery sale on May 17. The auction house sold the most valuable emerald and diamond tiara to have appeared at auction in over 30 years. The tiara, estimated to go between USD 5 to 10 million, was commissioned around 1900, possibly from the renowned jewellers Chaumet, by Guido Count von Henckel, Prince von Donnersmarck, for his second wife Princess Katharina. The jewellery collection of the Donnersmarcks was known to be on a par with, or even to have exceeded, those of many of the crowned heads of Europe. Six bidders competed for the tiara, which ultimately went for USD 12,736,927, the highest price ever achieved for a tiara at auction. The price it fetched also represented an auction record for a piece of emerald jewellery. The entire sale totalled USD 89,121,687, well above the estimated USD 47.3–77.9 million. It was a Tuesday night like any other at Sotheby’s…

Bennett in seven dates

• 1973 – Graduates in philosophy from Nottingham University
• 1974 – Joins Sotheby’s jewellery department
• 1995 – Earns the nickname of “100-carat man” after spearheading the sale of the only three 100-carat perfect white diamonds to have been sold at auction
• 1997 -  Becomes Deputy Chairman for Sotheby’s Europe
• 2000 – Leaves Sotheby’s to continue his philosophy studies
• 2004 – Comes back to the auction house as consultant
• 2006 – Appointed Chairman of Sotheby’s Jewellery Department for Europe and the Middle East
• 2010 – Breaks a new record for Sotheby’s through the auction and sale of a pink 24.78 carats diamond for over USD 45 million

Article by Lauriane Zonco

The benefits of progress are measurable, or so it seems. At times, however, the costs are high, human costs in particular, which is frequently ignored in the bottom line. Even high-power executives and other heavy-hitters occasionally need to push the reset button. Some find their way to the Lanserhof in Austria. Swiss Style took a look.

Modern facilities where Tyrolean cows once roamed

Hippocrates and your mother knew best: “If we could give every individual the right amount of nourishment and exercise, not too little and not too much, we would have found the safest way to health.” Great advice in an ideal world, but the world is not ideal. The wear and tear that the current economic system exacts on natural resources is reflected in the erosion of human resources, from underpaid seamstresses in Asian sweat shops, to the big guns under constant pressure to perform and make the right decisions. They, too, have to pamper themselves not just by purchasing a few expensive baubles now and then, but by visiting a service and maintenance centre on occasion. The life of high finance and ease can be difficult, with rich foods, cocktails, long days shuttling from office to office by plane often with tobacco as the only companion, and the permanent threat of making a mistake and falling fast down the ladder of success.

For what it’s worth, regaining a sense of normalcy and proportion is often all it takes to find one’s way back to health and high-performance. How one does that is very personal and can range from singing in a choir, jogging, bungee jumping or even work in a soup kitchen. The other option, given a certain level of income, is seeking regeneration and rejuvenation at a place like the Lanserhof, a stylishly appointed hotel-cum-spa in the village of Lans in Tyrol, Austria, which has developed its own therapeutic programme for its guests. Owner and manager Andreas Wieser did not originally think he would become so deeply involved in healthcare – which he likes to contrast with the idea of “sickcare,” i.e., regular medicine – when he opened for business in 1984. But those were the 80s, after all, an era unencumbered by the frenetic atmosphere of globalisation and instant and ubiquitous communication. Today, he operates with a host of doctors, therapists and professional coach-types and offers at times tough cures to stressed-out C-title bearers, high net worth individuals and men and women who have chosen careers that have the same effect on the soul as lowgrit sandpaper on balsawood.

Wieser calls his system “Lans Med Concept”. It combines state-of-the-art medical treatment with less standard approaches from various traditions. The idea is not only immediate healing, but also and long-term physical and mental wellbeing. The patient – client, customer, in more contemporary terms – should go back to his or her daily grind feeling fresh, young and beautiful. Wieser’s basic idea at Lanserhof consisted in “converting the mind of regular medical doctors, who always seek problems to heal, to service-focused people, who do more for prevention and for improving the quality of life”. As he puts it, Lanserhof’s medical staff look forward, they seek the resources of the body, its balance and its potential.

A mix of diet, fresh air and therapy are required to repair civilisation’s damage

Wellville in Tyrol

Wieser’s health resort is a modern, sleek building, whose lines would stand out somewhat from the local, traditional Alpine architecture, were it not for the generous use of wood along the walls. Inside those walls, the guest benefits from a wide spectrum of services, from detoxification and personalised fitness programmes, to dermatological treatments. The health resort has also developed unique innovative programmes to boost the patients’ health in a holistic manner. One of them is called Vital Aging, a technique that allows individuals to counteract the effect of time by fully activating their ”energetic and physical potential” rather than denying ageing or covering up its aesthetic manifestations.

Particular attention is also given to nutrition. Over the years, Andreas Wieser together with Lanserhof’s topnotch kitchen brigade, have developed what Wieser calls “Energy Cuisine,” the backbone of a diet designed to support the detox process. It is based on organically- grown, fresh ingredients (which have absorbed the sunlight, as opposed to processed and frozen produce) and is adapted to the individual consumer’s constitution, which can be hot, cold, and so forth. These Chinese classifications go back over 2,000 years and are still applied today. The idea is to avoid hard fasting and work “with nature,” as Wieser puts it.

Health straight up

The Lanserhof is by no means the only establishment that offers in-depth overhauls. The market is quite crowded, and many of these enterprises are founded and run by self-styled visionaries peddling allegedly revolutionary ideas. When it comes to our bodies, we are often willing to go to any length to restore the feel-good feeling of younger days. “This is not esoteric, this is not religion,” Wieser is quick to point out, stressing the scientific basis of his concept, which is rooted in naturopathy (see box). Most professionals working for him are trained medical doctors and professional therapists, he points out. In fact, some of his earlier customers tended to be “alternatives, new-age types,” but they have now been replaced by more pragmatic businesspeople who demand and obtain results from the therapies at Lanserhof.

If there is some influence from the Orient or from the alternative side of the medical fence, it is well disguised. The Lanserhof and its staff try to sustain a culture of empiricism, rigour and care. Wieser’s own biography is permeated by the same values. Austrian- born, he trained at the prestigious école hôtelière de Lausanne. He went on to work for a German holiday resort operator for several years, during which he developed a very service-oriented attitude. His knowledge of the human body comes from his parallel life as a competitive runner. Wieser managed to run a marathon in 2:47, “a very fast time for that period,” he likes to remark not without pride. His passion for running and performance opened new horizons to him: “It truly raised my awareness of fitness,” he recalls. “I understood very well how the human body functions, but also how the human mind functions and how emotions affect everything.” Wieser gradually discovered the world of nutrition, the role of meditation and all the interconnections between the physical and intellectual universes. After all, even a pragmatic people like the Romans used to say “mens sana in corpore sano”. The spirit of business All stories have a watershed and in Wieser’s case it happened in 1984. It all started in a rather ordinary fashion. After opening a winter resort in Carinthia, he decided to take a few months’ sabbatical and went back to his home in the Tyrolian Alps. There, he got in touch for the first time with Lanserhof, which was a large, four-star hotel built right after the 1976 Winter Olympic Games in Innsbruck. The only problem was that the owners had been somewhat too optimistic: “Everybody thought that after the Olympics Tyrol would enjoy a Golden Age, but the infrastructure was too large and was never successful,” Wieser recalls. It was a bit of serendipity: management hired him as a consultant to develop a new concept.

At first, it was just a way to take a brief break from his regular work. But then, in his own words, a very strange thing happened: “I used to speak a lot with the local people in Lans and I gradually developed a sense of familiarity with the place. I started to feel very comfortable there and ultimately decided to stay.” So, he took over the organisation and built up a small company. His funds, by no means large amounts, he threw into advertisement and PR. The advantage of Lans is its relatively central location near Innsbruck, which has an airport. Italy is just to the south over the Brenner Pass, Germany to the north, and more importantly perhaps, Switzerland is just a few hours away by car as well. “Within a few weeks, the first executives started to come and everything began,” he remembers enthusiastically.

Genius loci

It all comes back to location, location, location. The village of Lans itself (pop. 1,000) is enough to begin any healing process. Lying at nearly 900 metres to the south-east of Innsbruck, it radiates idyllic, picture-postcard charm and seems to trigger a need for deep, cleansing breathing. Its most famous and popular sight is Lans Lake, a large pond really, with a boggy bottom, whose origins go back to the Ice Age. It serves as a convenient swimming hole for Innsbruckers and travellers. “For people who are not used to the Alps, Lanserhof’s privileged position is already wellness,” Wieser points our. “It is a cure of its own, the environment itself is very energetic and the quality of minerals in these mountains, mainly composed of chalk and quartz, makes it a special place.” The pleasant environment of the nearby village and his friendly people, who impressed him so much thirty years ago.

Wieser says that Lanserhof is “rightfully seen as a pit-stop, a quick stop-over at the box for managers and entrepreneurs to maintain in good shape and go back to their top performances right after”. Its customers now include people from business, fashion, media and the film industry. The clientele has evolved through time, Lanserhof is no longer regarded as a place for overweight individuals or those with problems with their bodies, “now we have people who know what they should do, who live very healthy and come here to learn, get analysed and motivate themselves. Current customers know a lot about their body and their health,” he says.

A world of opportunities

Potential customers for Lanserhof’s services have grown significantly over time. Wieser attributes this to some of the bare facts of modern “life” styles and work habits: “People are now mostly sitting in the office and working at their computer. This is the problem: the body does not follow the mind!” he laments. Medical research proves his point, if not his vitalist explanation. The correlation between low physical activities and pathologies such as obesity, musculoskeletal and cardiovascular diseases is widely acknowledged and has been amply demonstrated. These problems have become the biggest cause of mortality in all industrialised societies and preventive medicine, fitness and a careful diet are considered the most effective ways to combat the problem. And the need is growing. Lanserhof will even have to enlarge in 2014, but it will add only new facilities and no new rooms as space is a major constraint in the current location. As globalisation brings a homogenisation of lifestyle and needs, especially at the top-tier segment of business executives, the demand for health and wellness services has expanded to regions previously unaffected by this phenomenon: “Countries like Italy, Spain or the entire Latin American continent have little or no solutions in this field,” observes Wieser. It’s no wonder, that investors have been asking him to replicate the concept elsewhere, something he is thinking about for the future. However, Lanserhofs will not be mushrooming on the sunny hills of Tuscany or on the rocky beaches of a Greek island any time soon. Location is a fully integral part of Lans Med Concept and franchising is “very difficult to organise as it requires very deep coordination,” Wieser argues. “It is not like opening a fast food restaurant,” he adds ironically. However, joint-ventures and management cooperation with other structures are part of his long-term vision and will surely contribute to spread new concepts of health and wellbeing.

Naturopathy

Andreas Wieser

Andreas Wieser based his Lans Med Concept on the work of the naturopath Franz Xaver Mayr (1875–1965). Naturopathy, or Naturopathic Medicine, is a form of alternative medicine based on the vitalism which posits the existence of a special energy called vital energy not explicable by the laws of physics and chemistry.

Naturopathic philosophy favours a holistic approach to health issues, seeing physical, social and mental as inextricably linked. Most naturopathic physicians employ the principles of naturopathy within the context of conventional medical practices. Even though Lanserhof defines it as the “medicine of the future,” its origins are rather old.

Modern naturopathy was founded in Germany and the United States at the end of the nineteenth century and, after a period of rapid growth, went into decline after the 1930s. Beginning in the 1970s, interest for naturopathy revamped, especially in the United States and Canada.

Although naturopathy is increasingly accepted by the general public, members of the medical community show a critical view of naturopathy, especially due to its unproven vitalistic underpinnings. However, collaborative efforts between naturopaths and medical doctors, such as the one taking place at Lanserhof, are growing and have proven effective in the prevention and management of a broad range of common ailments.

Lans, Tyrol

The people who enchanted Andreas Wieser and made him take the bald step of taking over Lanserhof and transforming it in what it is now are the 900-odd inhabitants of Lans, situated 8 kilometres south of Innsbruck, in Tyrol. The village is located along an old salt road and was first mentioned in a document of AD 1180. Along with Lanserhof, its main attraction is a glacial-origin lake named Lanser See, which offers wonderful ice-skating in the winter.

Article by Andrea Bonzanni

Aude Jacquet Patry, head of Jacquet SA

New generations of leaders in a family enterprise can make or break the business. The job of balancing legacy products and services with the needs of a fickle market can be challenging. Even more so when a new CEO is younger than some of the workers and a woman on top of it. Swiss Style’s Matt Hamilton found a case study.

As I pulled into the Jacquet nursery in Satigny, the sun shone brightly between the clouds daubed onto blue skies. Passing what looked like a chicken coop, I am greeted by the crowing of roosters. I rounded a small house, parking just behind a freshly unearthed tree. Had it not been for passing Geneva International Airport just moments ago, I would have sworn I was on the back roads of Texas.

In a city that tends to spare no cost on lavishness, the Jacquet nursery is something of an oddity, an almost proverbial diamond in the rough. Just a short drive from the centre of Geneva, it is the showcase of Jacquet SA, one of Switzerland’s most comprehensive landscaping businesses. At over 30 hectares, the nursery is an impressive melange of flora and fauna. It’s more than just the density of beautiful plants that makes it special. Jacquet is a solid family business where a century of expertise has been collected from techniques handed down through several generations.

Flourishing business

Aude Jacquet Patry, blond, smiling, is draped in a deep fuchsia scarf and sporting floral-patterned footwear. She makes no attempt to mask her bubbly femininity. Her style is friendly, inviting and business-like all at once: “Would you like a coffee?” she offers, while ushering me into the nursery’s office, a very functional space for the head of such a solid company. As the fourth-generation manager of her family’s enterprise, she is the first woman to hold the position. This is not as common in Switzerland as one might imagine: Women currently make up only four percent of executive management in the country. Nevertheless, Aude Jacquet Patry is upbeat about the situation of women here: “It’s moving a lot now. It’s good to have all of these international people. It’s bringing some new blood to the country.” Her estimation is supported by the WEF Gender Gap Study 2010, which saw Switzerland climb three rungs to the 10th rank. The country is also one of the few to be officially led by a female majority (like Cape Verde, Finland, Norway and Spain), which accounts for the good results. The private sector still needs some tweaking, and equal pay is still a bit of a dream. At Jacquet SA, of around 170 employees, there are ten women working for the company, including herself. In a business that requires heavy lifting and literally getting dirty, a less than equitable female-to-male ratio might not come as a surprise. But Jacquet suggests that these associations are perhaps misguided at best, harmful at worst.

“It’s interesting to be a woman in my field,” she notes. “In a way, having a female boss is sometimes easier for men. They can relate more to me emotionally,” she adds. At this point, as if on cue, the espresso machine gets stuck while she is trying to liberate a capsule. After a few desperate tugs, she rolls her eyes and says: “This is a man’s job!” With the flash of a smile, she gets a nearby colleague to help, not so much for gender-related reasons but more because someone else apparently is better at this particular job.

Falling apple

Aude Jacquet Patry knows her own job. When she took over, this industry was largely dominated by men, so like many women in her position, she faced two choices: play like the boys or stay herself and change the game. Perhaps crucial, too, for anyone in her position, was acquiring the proper background and expertise. All too often, family enterprises are taken over by rote rather than merit, and it was a mistake she wanted to avoid. Aude Jacquet Patry earned her spurs by simply being at the company since birth. Still, working in a family business where fellow co-workers – and now subordinates – have known her since she was a little girl hasn’t always been easy, she admits. Her father, who at 65 is still active in the company, has been giving her more and more responsibility. As her profile evolves, she must work hard to assert her new place at the head of the company. As time went by, she has learned how to be persuasive and lead with respect for the staff and yet driving change.

Her approach to her task was to know as much as possible and have hands-on experience. She realised early on that in addition to learning business skills, experience abroad was crucial if she were too keep her family’s company surfing the waves of innovation that wash through every sector of the economy. She set off to complete her studies in the UK, earning a degree in landscape design in London. Likewise, she gained working experience at a nursery in Canada, in addition to extensive stays in France and Belgium. With fresh ideas and new air under her wings, she returned to Geneva to discover the ins and outs of the Jacquet nursery at her father’s side.

Full-service and more

Using Nature’s power to filter a pool…

Jacquet SA is not just a purveyor of nice little seedlings. Much of its revenue comes from large projects, including several in collaboration with governments and the local and canton level, such as the recent renovations of the huge “plain” of Plainpalais in the middle of Geneva, a diamond-shaped space mostly tarred with a few shaded lanes where the flee market is held twice a week. Sports complexes, including pools, tennis courts, football pitches, the middle of roundabouts, fences… Nothing is “safe” from the broad portfolio of Jacquet SA’s green fingers.

Horticulture is always changing, and to stay competitive, a company like Jacquet SA must look for trends and be willing to change tracks. For the past twelve years, Aude Jacquet has overseen a number of changes at the nursery, most notably in terms of eco-friendly services. Concern for the environment actually stretches back 30 years at the company, giving it a reputation as one of the most respected landscaping firms in Geneva. They are also a partner with La Charte des Jardins, an initiative to encourage better home gardening practices, like making parcels or full-blown gardens more amenable to local wildlife – hedgehogs, for example, who feast on slugs –, switching off the lights at night, and using indigenous plants.

With over a century in business, a company like Jacquet SA has undoubtedly seen many changes over the years. The role Aude Jacquet Patry will play in its new direction represents an important part in the story of her family’s business. The statistical issue of gender balance may appear to be in the foreground. But it is more complex, more detailed than just a matter of chromosomes. Gender differences are social and political in nature, and if Aude Jacquet Patry is able to carry the company into the future, it is not because she is not a man, but rather because she professionally will have to go the extra mile to achieve recognition and authority. Perhaps that is what gives her the inspiration to find new positions to occupy in the horticultural segment.

Pure gardening

The nursery where Jacquet’s plants are grown is opened to the public. The space has been listed as a Parc Naturel by the Fondation Nature & Economie since 2006 (managed ecologically since 1985). The company’s commitment to ecological principals means that the use of chemical pesticides and fertilisers is to be kept at an absolute minimum, while irrigation is sourced from a rainwater collection system on site. As Daniel Dobbs, the company’s manager of natural landscaping, explained, local flora has the benefit of being naturally adapted to both pests and climates. As such, they require less maintenance, both in terms of water and the need for pesticides. The result of including such plants in any design is more environmentally friendly than conventional ones.

Jacquet SA is a green enterprise in other ways as well, not just in the colour of their plants. Since 1992, the company has been building natural swimming pools for a variety of clients across Switzerland, in addition to traditional ones. Unlike conventional designs, natural pools do not require chemicals, but rather depend on an intricate orchestra of plants for filtration. Having built the first private pool in Geneva back in 1947, the company is well positioned to be at the forefront of new trends in aquatic entertainment. Other eco-friendly services and designs include internationally certified bio-composting, heat-reducing roof gardens, and natural paving and surfacing to name a few. While the company stands by its environmental ideals, both Aude Jacquet Patry and Daniel Dobbs acknowledge that going 100 percent is not really practicable. Clients are encouraged to “go green” when possible, but it is not always easy to convince them.

For more information, visit their website at www.jacquet.ch

Article by Matt Hamilton