Investigation: one in six Swiss exporting SMEs risks bankruptcy

news-single-imgcaption" style="width:240px">82% of the companies questioned declare having encountered difficulties in selling abroad because of the current situation. (Keystone)

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The decisions of the Federal Council to combat the COVID-19 pandemic have been in force for a month now. To measure the impact on Swiss exporting companies, the swiss export association carried out a survey of its 700 member companies, 147 of which participated.

The results of the survey conducted by swiss export show that 82% of the companies questioned said they had encountered difficulties in selling abroad due to the current situation.

In addition to the challenges of selling, one of the biggest burdens that entrepreneurs face turns out to be a disrupted supply chain.

Even after the easing of government regulations, Swiss SMEs will still face difficult months.

In addition to intermediate products from the European Union (EU), the supply of semiconductors and many other components from China is severely affected. In fact, a large part of these products is manufactured in Hubai, a region particularly affected by the health situation.

In many cases, it is also not possible to supply components for household appliances and cars.

High risk of bankruptcy

The swiss export survey shows that one in six SMEs classifies the risk of bankruptcy over the next twelve months as high or very high. Fears are more pronounced in the “economic services” sector and in the mechanical and electrical industry.

The survey also reveals to what extent the conditions of business activity are changing negatively. Not only are SMEs experiencing declining demand for their products and services, but their liquidity, which the majority of them considered good just a month ago, is also deteriorating significantly.

They also face a sharp decrease in the availability of raw materials and semi-finished products.

Swiss foreign trade nevertheless developed positively in 2019, albeit at a slower pace, reflecting the positive forecasts made on January 1, 2020 for the current financial year according to which companies expected average growth of 3 to 5%.

These challenges can hardly be overcome without the support measures of the Swiss authorities.

Even after a possible relaxation of the regulations of the Federal Council, Swiss SMEs still face a difficult situation.

In fact, around 52% of the companies that participated in the swiss export survey expect a negative trend of -7 to -30% in their main export markets for the next twelve months.

Strong dependence on the EU

These forecasts are considered alarming by swiss export in the context of a very strong dependence of Switzerland vis-à-vis the European Union (EU). “In order to avoid greater losses, it is necessary to guarantee the capacity of Swiss exporting companies to act as quickly as possible. Only in this way can confidence in the Swiss economy continue to grow. Switzerland is synonymous with quality and for many companies still, the “Swiss Made” label is seen as a real competitive advantage. The situation must be preserved by implementing measures as soon as possible in order to secure Switzerland’s position in international trade, “comments Claudia Moerker, director of swiss export.

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