- In spite of Europe's economic power and proximity, its slowing growth will change Switzerland's trade framework conditions. ASEAN's GDP will overtake the UK by 2021 and Germany's within 15 years. - While maintaining its share in sluggish European trade, Switzerland's participation in high-growth ASEAN has significantly eroded. Developing ASEAN trade intensity to Europe's level could unlock CHF47 billion in additional annual exports by 2024. - This requires shifting focus from Europe to new partners through cultural, economic and human ties, unlocking significant growth opportunities in emerging markets.

1. Embracing new growth marketsThought starterDavid Urbach, October 2014

2. Key messages
2
Geographical and historical proximity and the economic power of Europe (here we take the example of EU-15) have made it the main trade partner for Switzerland.
However, changing demographics and slowing of growth will soon change the framework conditions : taking ASEAN as an illustration : within 7 years, ASEAN’s GDP will overtake the UK’s and within 15 years (less than one generation) the one of Germany !
Whilst maintaining with considerable effort its share in the sluggish European trade, Switzerland’s participation in the high growth regions has been significantly eroding.
As a small country, Switzerland can show the agility to adapt the changing world order. For example : developing in 10 years trade intensity with ASEAN to the same level as with Europe today could unlock a potential of 47 bnadditional annual exports by 2024 versus the “continue-as-is” scenario.
This requires changing our focus from Europe to the world, developing cultural, scientific, economic and human ties with new countries and their inhabitants in an open spirit of respect and partnership.
The emerging regions, like ASEAN, will not substitute themselves to Europe as Switzerland’s main trade partner in the immediate future, but can become significant complements.
Whilst ASEAN has been taken as an example for the subsequent calculations, similar analyses could be undertaken with China, India, (South-) Africa or Latin America or other.

3. In spite of a lower population than ASEAN, economic power, geographical and
historical proximity have made Europe Switzerland’s main trade partner
3
111
67
92
98
250
131
61
63
64
83
Vietnam
618
other
Thailand
ASEAN-10
Philippines
Italy
EU-15
Germany
France
UK
402
other
Indonesia
Population
(million, 2013)
296.4
313.5
380.2
877
EU-15
Singapore
2404.4
Italy
537.3
UK
Thailand
Indonesia
Germany
France
ASEAN-10
Malaysia
other
other 4961.4
2117.3
2498.1
2764.5
16064
3722.7
GDP
(USD billion, 2013)
Total trade with Switzerland (Exports and
Imports)
(CHF billion, 2013)
8.0
9.1
10.7
10.9
12.1
24.7
40.2
45.8
Middle-East
ASEAN
Africa
Other Asia +
Oceania
Northeast Asia
North America
EU-15 237.2
Other Europe
Latin America
Sources : UN Population division, World Population prospects 2012 revision, medium scenario; International Monetary Fund, World Economic Outlook Database, April 2014; Swiss federal customs administration

4. Demographics and slowing of growth will soon change the framework : by 2021,
ASEAN’s GDP will overtake the UK, in 15 years (less than one generation) Germany
4
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
0
3,000
4,000
6,000
8,000
9,000
10,000
7,000
11,000
1,000
2,000
5,000
France
Germany
ASEAN
UK
GDP
(billion USD) CAGR1 14-34
(percent)
Population growth p.a.
(percent)
7.8
4.4
5.6
4.8
EU-15 4.7
0.9
-0.3
0.5
0.4
0.2
 As illustrated in many other studies (e.g.
McKinsey 600 cities) the growth in
emerging markets will show a very strong
urban development with the establishment
of a broad consumption-hungry middle-class
 This will lead to strong demand for
infrastructure, energy, healthcare,
education, consumer products, etc.
 The growth assumptions for Europe are
optimistic and to be achieved, require a
significant improvement in productivity of
the (shrinking) working population
Sources : UN Population division, World Population prospects 2012 revision, medium scenario; International Monetary Fund, World Economic Outlook Database, April 2014; Mc Kinsey global institute
Notes : 1. GDP per capita growth rates 14-19 from IMF, continued to 2034

5. Whilst maintaining share in the sluggish European trade, Switzerland’s
participation in the ASEAN high growth region has been significantly eroding
5
0
100
200
300
400
500
600
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
EU-15 imports
CH exports to EU-15
CH exports to ASEAN
ASEAN imports
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
ASEAN
EU-15
-40%
-16%
Trade
(indexed, 1993=100)
Proportion of Swiss products in the regions’ imports
(value, percent)
CAGR 93-13
(percent)
8.8
6.53
6.03
5.62
 Whilst the value of imports into ASEAN
has been multiplied by more than 5
over the last 20 years, Swiss exports
into ASEAN have only been multiplied
by 3.
 With a proportion of 0.6% in ASEAN’s
imports, Switzerland ranks behind
what could be its “fair share”1
 Neither with Europe nor with Asean
has Switzerland been able to
strengthen its position over the last 10
years when the ratios have remained
more or less constant.
Sources : WTO, Swiss federal customs administration, IMF
Notes : 1. Switzerland’s GDP is approximately 0.9% of the world GDP

6. Significant efforts are required to achieve with ASEAN the same ratios as with
Europe, unlocking an annual additional value of 47 bn USD (exports only) by 2024
6
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
70.0
60.0
50.0
40.0
20.0
0.0
10.0
30.0
47.4
Growth
As is
0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6
0.6
0.6
2.3
2.1
2.0
1.8
1.7
1.4 1.5
1.2
1.1
0.8 0.9
0.6
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
as is
growth
Swiss exports to ASEAN
(bn USD)
Proportion of Swiss products in ASEAN
imports
(percent)
 “Time is right”
 Switzerland (still) benefits from overall good
standing in the region, and reciprocally
 Political situation in most countries is stable /
stabilising with increasingly favourable
investment climate
 ASEAN specific developments (free trade, free
investment, open skies agreements) will boost
ASEAN growth
 It will require significant effort and engagement, but can
build on existing bases :
 Build commercial and economic relationships
with local companies, notably through Joint
Ventures
 Reinforce set of bilateral agreements between
Switzerland and the individual countries or
ASEAN as a group to favour trade and financial
flows
 Scientific and research cooperation, exchange of
students and faculty to be strengthened, for
example building on Swissnex in Singapore
 Strengthening of cultural and tourism ties
between the countries, for example with
exchange programs, destination marketing, etc
 Attract talented individuals and companies to
Switzerland (see for example McKinsey/OSEC
study on Asian headquarters)
 Whilst it might take more than 10 years, it is above all a
question of openness towards the other cultures and
populations and of readiness to take risk in an
entrepreneurial fashion.
Sources :Swiss federal customs administration, WTO, IMF, team analysis

7. Thank you
7
DAVIDURBACH
@DJUrbach
ch.linkedin.com/in/davidurbach/
Any additional thoughts or questions ?
Wonder how to participate in the opportunity with your business ?

8. Disclaimer
8
The topic presented would certainly benefit from significant additional research and analyses at various levels of granularity (e.g. regions, cities, industry sectors, time horizons, etc). The reader is encouraged to do his own research and reach his own conclusions.
The study’s purpose is illustrative and not demonstrative.
The analyses contained herein do not have the ambition of being neither comprehensive nor exhaustive.
Whilst ASEAN has been taken as an example for the calculations, similar analyses could be undertaken with China, India, (South-) Africa, Middle-East or Latin America or other, reaching similar or different conclusions.
Although care has been given to the choice of the sources and the treatment of data, the author cannot take any responsibility for the numbers presented nor shall the author be liable for damages arising out of any person’s reliance upon this information.
The results are based on a crude analysis with limited resources and based on publicly available data. Sources and methodologies can be shared upon request.
This Document may contain certain projections and forward-looking statements.Such projections and forward-looking statements reflect various current potential developments and assumptions, and are subject to significant business, economic and competitive uncertainties and contingencies. No representations or warranties are made as to the accuracy or reasonableness of such assumptions or the projections or forward-looking statements based thereon.
This Document is not an invitation to invest and shall not be taken as basis for investment decisions and the author does not take any liability for any decision influenced by this document.
The statements in this document represent personal thoughts by the author at a certain point in time in a certain context. They do not necessarily represent his opinions or position, they are not deemed to be valid at another point in time or in anothercontext. They have not been commissioned by any individual or organisation. They do not represent and shall not be put in relation with any of the author’s employers, business partners, etc. past, present or future.

9. BACKUP
9

10. Swiss trade with ASEAN countries - 2013
10
534.5
23.9
10.7
938.2
97.7
3.2
Singapore
Malaysia
Thailand
Myanmar
Vietnam
Laos
Philippines
1367.4
Brunei
Cambodia
Indonesia
5364.5
2276.0
1114.1
Total trade (imports +
exports)
(million USD, 2013)
-34.6
5.7
55.8
45.9
-23.1
20.4
11.4
32.0
-79.6
74.8
Swiss trade balance
(% of total trade, 2013)
0.28
0.48
1.12
0.60
0.08
0.40
0.20
0.33
0.08
0.08
Proportion of Swiss products in
Country’s imports
(% of value, 2013)
Sources : Swiss federal customs administration, WTO

11. Swiss trade with EU-15 countries - 2013
11
503.2
11179.3
3055.7
12174.7
UK
2228.4
19104.2
1532.9
1939.6
Belgium
France
Finland
Luxemburg
36470.5
1159.1
8518.2
Germany 98868.4
Greece
Ireland
Denmark
Italy
32854.7
15738.3
10578.4
Austria
Portugal
Sweden
Netherlands
Spain
Total trade (imports +
exports)
(million USD, 2013)
23.3
3.8
2.7
3.6
-5.0
12.4
-11.0
-78.7
68.7
-14.3
-2.0
8.2
10.0
9.0
-9.4
Swiss trade balance
(% of total trade, 2013)
1.80
0.99
1.69
1.53
0.98
1.06
3.40
1.38
1.57
3.56
2.36
1.07
1.10
1.28
3.91
Proportion of Swiss products in
Country’s imports
(% of value, 2013)
Sources : Swiss federal customs administration, WTO

12. Potential GDP evolution
(bn USD)
12
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
0
1,400
1,800
400
2,400
600
800
3,200
200
3,800
1,000
2,000
2,600
3,600
1,200
2,800
3,000
3,400
2,200
1,600
Austria
Philippines
Thailand
Singapore
Malaysia
Vietnam
Brunei
Indonesia
Cambodia
Laos
UK
Spain
Sweden
Switzerland
Finland
Germany
Ireland
Greece
Italy
Luxemburg
Netherlands
Portugal
Denmark
France
Belgium
Myanmar
Sources : UN Population division, World Population prospects 2012 revision, medium scenario; International Monetary Fund, World Economic Outlook Database, April 2014
Notes : GDP per capita growth rates 14-19 from IMF, continued to 2034