One of the simplest ploys of political hacks to garner votes is the play on national aspirations to, at times elusive, greatness. Vicarious nationalism is simple. Quantifying and qualifying national value is less so. Since 2006, the Swiss government has been hard at work revising the old law defining what is “Swiss made,” and it seems to be raising questions.
When the going gets tough, it’s always good to find something comforting to hold on to, an island in the storm, a soothing cup of hot chocolate in the middle of a cold, sleepless night, a watch that tells the time accurately. Even more comforting is the presence on the product of a little white cross on a red background and the word “Swiss” somewhere. It will generally be considered more reliable, more efficient, of better quality, more trustworthy than products or services from other countries.
The item might be a knife, a massive CNC machine, a savings account, or a jar of cream promising to restore one’s face in a few easy smears. Replace all the Swiss iconography with country X – feathers are easily ruffled, hence the anonymity – and immediately, truly or falsely, one thinks of dull and shaky blades made of quickly recycled steel, machines that don’t work, vanishing money and creams that will make you blind or burn a hole in your cheek.
It’s all about branding, which bundles the hidden persuaders that drive advertising and to a large extent the consumer market. Nations and their flags are often used as brands or cobrands to reinforce or express a specific quality. Swissness, as it is known, is one of the more powerful national brands on the international roster, in particular for certain categories of goods, like food, cosmetics, precision engineering, including mechanical watches, and the like. It manifests itself in the use of the word Swiss and a variety of emblematic images, like the country’s flag or the unmistakable profile of the Matterhorn. Branding expert and designer Andreas Markessinis writes on the Nation-Branding. com website: “Because Switzerland is perceived to be a country where its inhabitants enjoy great economic wealth and a great quality of life, Swiss-branded goods are also regarded as expensive and high quality.” In a 2007 article, Marco Casanova from The Branding Institute in Luzern even went further, suggesting that the reliability and quality associated with “Swiss” things contributed to the build-up of the nation’s general state of wealth: “Due to a positive image radiating on to those products and services that was consciously associated with the values projected into the ‘Swiss’ brand, it was possible to kindle or reinforce the attitude of consumers, which resulted in purchases.” In fact, the value of Swissness can be computed, as confirmed in many studies, notably one by the University of St. Gallen suggesting that Swiss branding can increase the value of a product or service by 20 percent on average, with spikes of 50 percent for luxury items. For the watch, jewellery, chocolate and engineering together, the added real revenue from a few words and symbols is around CHF 6 billion per year.
Holes in the Swiss cheese
The downside of the high co-brand value – and one of the paradoxes of luxury – is overuse and in some cases abuse. Over the past ten years, the number of companies using Swiss imagery or terminology on their products has grown by 400 percent. Those companies are not necessarily Swiss, and naturally not everything marked Swiss is actually Swiss made. Anyone can walk down rue du Montblanc in Geneva, for instance, and find hundreds of items in tourist shops bearing bold and gaudy Swiss crosses, but “Made in China” printed in more discreet tones. And this applies not only to made-for-tourists dust collectors. Not surprisingly, consumer confidence in the little cross on a red background eroded, which led to a general weakening of the brand or co-brand’s value. For a nation in which about half the GDP is earned from exports, the situation was somewhat threatening.
The brand is in fact protected by laws. A watch that claims to be “Swiss made,” for instance, has to have 51 percent of the value of its movement created in Switzerland, and assembly and quality control must have been performed in the country as well. As for use of the flag for branding, it has been prohibited since 1931, but in language that left some leeway. The law “explicitly prohibits using the Swiss cross for economic purposes on products or their packaging … So it is not allowed to put the Swiss cross on foodstuffs even if they have been manufactured in Switzerland.” On the other hand, the Swiss cross could be used for services and advertising, as long as it did not offend taste and decency, including deception as to the “geographical origin, the value or other characteristics of the products or services, the nationality of the company…” Violators, if caught, would receive a warning from the Swiss Federal Institute of Intellectual Property, but enforcement, except in cases involving the flag, was hardly possible.
Je pense donc je suisse
In 2006, in light of growing concern about the cavalier use of the brand, the Federal Council proposed revitalising and strengthening the regulations governing how much Swiss had to be in “Swiss made” and the government and its institutions set about defining the criteria for carrying the label. The goal of the so-called “Swissness” project is to create a clear legal framework allowing for control and enforcement and re-charging the brand. Some provisions are cut and dry. No one disputes that products from within the country’s borders, like fish, venison, plants, and so on, are Swiss and are perfectly entitled to be labelled as such. Swiss service providers, being usually inside the country, will probably be unaffected. When it comes to processed natural products, however, like cheese, biscuits, ice cream, and the country’s famous export, chocolate, Swissness suddenly becomes a legal and political conundrum. The proposed criteria for Swissness is at least 80 percent of the weight of the raw materials available in Switzerland that compose the product must come from Switzerland, and the part of the process that gives a product its unique characteristics must take place in Switzerland, like the processing of milk into cheese. It sounds pretty clear-cut, but there are exceptions for natural products which are not found in Switzerland (cocoa, for example) or that are temporarily unavailable (due to crop failure following a storm, for example). Consumer groups and agricultural associations, who are fairly strict patriots when it comes to comestibles, are happy with the draft law as it stands. Mathieu Fleury, General Secretary of the Consumer Association of French-speaking Switzerland, puts it succinctly: “If it says Swiss on it, it should have Swiss inside it.”
The processing industry, however, feels it is too limiting, and there are other criteria that should be put on the table. The Federation of Swiss Food Industries (FIAL) proposed a separate 60-percent clause for heavily processed foods – sauces, candy, soups, etc – and “an indication of source for less processed raw foods reflecting the location where 80 percent of the raw materials come from”. Further, in a FIAL press release, Daniel Lutz, in charge of frozen foods at Nestlé, came out in support of using criteria like quality, knowledge, work input and innovation, otherwise some notoriously Swiss products, like Thomy mustard and the quintessentially Swiss paté in the tube, “Le Parfait,” could lose their Helvetic accolade. In his eminently quotable words: “Too much Swissness is killing Swissness.” Suffice to say, the 80-percent resolve has started to weaken given the pummelling by Switzerland’s heavyweights. The subcommittee of the National Council’s Committee for Legal Affairs, which is mandated with a detailed preliminary examination of the bill before it will go to Parliament, has started mulling over other factors that need to be considered, such as the origin of the idea. Experts are also discussing whether the relevant criteria for processed natural products should be the degree of the weight of the raw materials or manufacturing costs.
As for industrial goods, they are also the subject of fairly intense deliberations. “There are companies producing 100 percent in Switzerland, and they want a law focusing on production criteria,” says Felix Addor, Deputy Director of the IGE. “Other companies, like some pharmaceuticals, use raw materials from Switzerland but produce abroad. So if all the research and development is done in Switzerland and the drug is approved here, is it a Swiss drug?” The current draft foresees 60 percent of manufacturing costs including R&D being spent inside Switzerland. Naturally, the computation of those costs will exclude the materials used in manufacturing, such as gold, iron, aluminium and other raw materials not available inside the country.
The watch industry, one of the big promoters of a more stringent law, is not so happy. At an interview at Baselworld, Jean-Daniel Pasche, President of the Federation of the Swiss Watch Industry (FH) was enthusiastic about the fact that the government had apparently accepted the FH proposal for a 60-percent Swissness proportion for electronic (power-end) watches, and 80 percent for mechanical watches. “This is absolutely necessary to maintain the credibility of the label,” said the FH boss. In mid-June, however, the 80-percent criterion was rejected probably under pressure from the European watch industry and much to the dismay of the luxury watchmakers. It would have affected, among others, the small component manufacturers in the French Jura, which entertain close trading ties with its Swiss counterparts across the River Doubs.
On the other hand, watchmakers in the lower price range producing cheaper quartz timepieces are worried that even the 60-percent limit could actually have a negative effect, however: “In order to increase the Swiss percentage of manufacturing costs,” a press release from the lobbying group IG Swiss Made proclaims, “manufacturers will have to resort to cheaper and, hence, lower quality materials from abroad in order to maintain the higher Swiss percentage”. The decline in quality, the group suggests dramatically, could lead to loss of thousands of jobs. For Ronnie Bernheim, co-CEO of Mondaine Group, the change in the law only serves to increase the dominance of the high-price segment. “Swiss made means quality and reliability and any strengthening of the law must serve the consumer,” he points out. “I’d say, for example, an obligation that all Swiss-made watches should be waterproof and reparable in all regions of the world for at least ten years. That would be a real added value for the consumer rather than a complicated regulatory excluding law.”
Business is business
Felix Addor, for his part, believes that ultimately business sense will prevail. “Those who are interested in profiting from the added value of the brand Switzerland and the Swiss cross will simply change their production processes to comply with the regulations.” An understandable and transparent law will also support enforcement, he feels. “If the rules become complicated and disparate, then enforcement will be difficult, too.” Will the Swiss government’s “branded” ingenuity serve to develop loopholefree regulation of Swissness? The money is on yes, but introducing exceptions has the tendency of clouding issues, which could in turn restore the status quo ante. There are external elements that might also play a role, like the status of the ongoing agricultural free trade agreement being negotiated with the European Union. The very strong Swiss franc could also influence the deliberations. While it is a burden for an exporting country, it also means that raw materials purchased abroad are fairly cheap. At any rate, the current projection for a final decision is late 2012.
Whatever the outcome, though, Swiss will probably remain a mark of distinction for all sorts of products, from throat-cleaning candies to stockings, from bags made of recycled lorry canvases, to aluminium water bottles. Hence, no matter what the law says, there will always be companies and individuals in the market trying to make an extra rappen or two bamboozling the buyer. Even domestic businesses do that at times. The consumer rule of caveat emptor applies. If people wish to purchase products that are more expensive because they say “Swiss” on them, it would appear to be their problem. What makes real Swiss products so popular is the reliable functionality, unpretentious yet innovative design and robust manufacturing, very much like the Swiss flag itself, which might have been designed by one of the apostles of the Bauhaus movement. Unfortunately, simplicity is easily replicated, and even experts have trouble telling the difference between an original and a fake and no amount of ingenuity can correct that problem.
Article by Marton Radkai