Trading for Deficiencies Management for Economic Development

By Ravi Mehta, Ph.D.

Peaceful and prosperous is Switzerland

The abundant natural scenery is the foreign tourist’s delight, the country’s income; however, the paucity of raw materials is the indigenous manufacturer’s plight – foreign seller’s delight

FINANCIAL SCENERY

The financial scenery is the trader’s hope, prospective banker’s opportunity, the country’s pride.

                Zurich, world's best city, is Switzerland's world-famous trade finance market

is Top Trade Finance Bank in Zurich’s Financial Market
(UBS not acronym now – it’s a brand company name)  

UBS' ADDRESS - BAHNHOFSTRASSE

The world's five countries are always in my mind: Switzerland, England, USA, France, and India. I acquired my LC knowledge from the publications of England's National Westminster Bank (NatWest), and Switzerland's Union Bank of Switzerland (UBS). I had an opportunity to visit the UBS at Zurich from London by train. At London I visited NatWest. From the UBS I got “Documentary Credits, Documentary Collections, Bank Guarantees” and from the NatWest UCP 500. I visited UBS’ most beautiful training center, Management Training Center “Wolfsberg”, near the Lake Constance (see photo), which tempted me to write “Pictorial Biography of a Most Beautiful Bank Training Center in Switzerland”. In the daily The Tribune in India I wrote “Swiss Banking: Myths and Facts”

Management Training Center “ Wolfsberg” near Lake Constance,
which the author visited from India to study its training
 arrangements and teaching methodology

I am tempted to write a series on world’s financial markets for LC VIEWS. My story on Switzerland’s financial market is a part of the tempting series.

TRADE SCENERY

Switzerland is famous for offshore banking because of its tradition of banking secrecy. It is also well known for trade financing. Where there is trade promotion strategy there is trade. Where there is trade there is trade financing. Where there is trade financing there is LC. Switzerland has trade strategy. It has trade friendly policies and regulations. Switzerland has created trade friendly environment for its trade strategy. Switzerland needs trade because it is not self-sufficient, not self-dependent. It lacks raw materials. This is the country’s deficiency. The country manages the deficiency with import. That is, it imports raw materials to use in the country’s economic development. It has to depend on import trade. Import what you lack or can’t substitute. The import is the necessity. It is catalyst for economic development.  The international dependence is the mother of international trade.  And to finance imports Switzerland exports finished goods. Everybody knows the items Switzerland exports – Swiss cheese, Swiss chocolate, Rolex watch, Swiss folding knife. To use export earnings for financing imports instead of borrowing funds from international agencies for this purpose is the best way because in this way the country does not become debt-ridden. The import must be backed by export. This is the Swiss lesson that developing economies must learn. Germany is Switzerland’s main trading partner. The trade links politically isolationist Switzerland with the trading world. Lack of self-sufficiency necessitates international trade and economic relations. Trade agreements facilitate trade. Trade financing promotes trade.  Nestle is Switzerland’s example of foreign trade and foreign investment. Every country I visited, Netherlands, UK, Canada, France, trades in Nestle products. My native country India does consume Nestle. So does USA, whose citizen I am now. The USA’s No. 1 retailer in the world, Wal-Mart, sells Nestle. Nestle is the indispensable constituent of the candy aisle. I used to use Nestle condensed milk in the hostel of a university in India where I studied for M.Litt.

FINANCIAL SCENERY 

To support its international trade Switzerland has well developed trade finance infrastructure. UBS is the famous landmark of the trade finance infrastructure. Its expertise and experience in trade financing are the country’s most valuable resources for fulfilling its trade objectives. The UBS publication that I mentioned before is an example, an evidence, of the UBS’ long-standing experience in the fields of documentary credits and guarantees. This publication is UBS’ trade finance marketing strategy. It is for its clients, to guide them step by step how to use LC for payment safety in foreign trade.

The country has well developed legal infrastructure to support trade and banking. It is well connected with the European Union markets, through well developed transportation and communication means that facilitate trade. Switzerland has indigenous insurance arrangements to cater to the country’s risk management needs.