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www.indoswissbusiness.comINDOSWISSBUSINESSVol. 5 Issue 1 Jan-Feb 2008Tourism:NEWMEDIAconnecting global business

Issuen This122233EventNewsCover StoryFace-To-FaceInteractionAlliance06Tourism:A Powerful Engine of GrowthFlying HighOn Quality & ServiceKuoni Group’s CompetitiveStrategy & VisionRetaining A Place of PrideIn Travel & Tourism SectorAnnual Meeting 2008Innovative Collaboration,The Only Global OptionRTAs: Gateways toGlobal TradeSwiss Politics UndergoAn UnusualPhase of Turbulence1528Founder ChairmanLate Shri R.K. PrasadDistributed by:New Media Communication Pvt. Ltd.in association withSwiss Business Hub, IndiaManaging Editor: Satya SwaroopDirector: B.K. SinhaGroup Editor: Dev VaramConsulting Editors:Prabhuu Sinha, Rajiv Tewari,Mohd. Shabbir Nishat & Archana SinhaAsst. Editors: Tripti Chakravorty &Susheela SinghProject Co-ordinator: Himadri DekaStrategic Advisor: Vinaya ShettyHead-Busi. Dev.: Veerendra BhargavaManager: Sunil KumarManager Mktg. Services: K. BiswasAccount Asst.: Vrunda GuravCirculation: Madhavi, JawaharlalSantosh Gangurde & Vijay WangadeArt Director: Santosh NawarVisualizers: Maya Vichare & Sagar BanawalikarDTP: Nilima Kadam & Mohammad IsmailPhotographer: Bilal KhanBRANCHES:Kolkata:Anurag Sinha, Branch Manager, A-7/1,Satyam Park, 2nd Lane, Near 3A Bus Stand,Thakurpukur Kolkata- 700 104Tel: 098300 15667, 033-24537708Email:anurag@newmediacomm.bizPune:Jagdish Khaladkar, Regional Director,Tel: 098230 38315Geeta K., Regional Head,Sahyog Apartments 508, Narayan Peth,Patrya Maruti Chowk, Pune 411 030.Telefax: 020 2445 1574Email: pune@newmediacomm.bizjagdishk@vsnl.comAustralia Office:Bandhana Kumari Prasad, 129 Camboon Road,Noranda, Perth, W.A. 6062 Tel: 0061 892757447Email: bandhana@newmediacomm.bizNew Media Communication Pvt. Ltd.,B/302, Twin Arcade, Military Road, Marol,Andheri (E), Mumbai - 400 059 IndiaTel: +91-22-2925 0690 Telefax: +91-22-2925 5279E-mail: enquiry@newmediacomm.bizwww.newmediacomm.comRelevant Internet site address- Embassy of Switzerland http://www.eda.admin.ch/newdelhi- Osec Business Network Switzerland http://www.osec.ch- Switzerland Tourism http://www.myswitzerland.com- General Information on Switzerland http://www.switzerland-in-sight.ch- Investment in Switzerland http://www.locationswitzerland.chOffice of the Consulate General of Switzerland102, Maker Chamber IV, 222,Jamnalal Bajaj Road, Nariman Point,Mumbai-400 021 Tel: +91-22-2288 4563Fax:+91-22-2285 6566.Printed & Published bySatya Swaroop and printed at M/s Young Printers,A-2/237, Shah & Nahar Industrial Estate, Lower Parel,Mumbai - 400 013 and published from 101, Shivam,Military Road, Marol, Andheri (E), Mumbai - 400 059.Editor: Manisha SaxenaThe news items and information published herein havebeen collected from various sources, which are consideredto be reliable. Readers are however requested to verify thefacts before making business decisions using the same.04 INDO-SWISS BUSINESS + JAN-FEB 2008

EditorialDear Reader,Greetings. In a world that has shrunk drastically, thanks to a revolution incommunications and transportation, the travel and tourism industry has emerged as abig winner. Today, more and more people are on the move, crisscrossing the world astourists, than ever before. For most countries, the travel and tourism industry is a bigforeign-exchange earning business. More so for Switzerland, a country nestling in thesnow-clad Alpine mountains, that has some thing spectacular to offer round the year.For the Swiss economy, tourism is as important a sector as banking and finance servicesor the watch industry. It is a powerful engine of growth because, it generates income.Hence, both domestic and international tourism are crucial to the Swiss economy. So,tourism has been an invisible export of immense potential for the country. Spending byforeign guests in Switzerland has the same effect on the Swiss balance of payments asthe export of goods. Tourism has a multiple effect on the Swiss economy as it triggersexpenditure in various sectors. The cover story of the current issue of Indo-SwissBusiness takes an in-depth look at the travel and tourism industry of Switzerland, whichhas topped the list of countries in a recently released global report on this vital sector.Travel is among the most competitive businesses in the world. The Swiss InternationalAirlines has “Quality” as its trade mark service. We carry an interview with Jean-Philippe Benoit, General Manager, Swiss International Air Lines, (India, Sri Lanka,Nepal & Bangladesh), who talks about the factors that helped Swiss fly high. The issuealso features India's Kuoni Travel Group, whose strategic vision has helped maintain itspride of place in the highly competitive global travel and tourism industry. The WorldEconomic Forum (WEF) has over the years emerged as a powerful platform fordebating issues of global concern. Hence, the annual meeting of the Forum hasbecome a landmark event in global affairs. The 2008 WEF meeting is significant for itsoutcome that the “Power of Collaborative Innovation” is the best remedy to the stressesof intense globalization.” We carry a detailed report. Then we have a feature on thenail-biting final of the FIFA World Cup held in Berne on July 4, 1954, titled Revisiting theMiracle of Berne”. Besides all these, the issue carries plenty of news and regularfeatures. Finally, we take this opportunity to once again wish all our readers a Happyand Prosperous New Year.Wish you happy readingSatya SwaroopManaging Editorsatya@newmediacomm.biz05INDO-SWISS BUSINESS + JAN-FEB 2008

Cover StoryTourism:A Powerful Engine of GrowthTourism is an important sector of the Swiss economy. It is apowerful engine of growth because, it generates income.Domestic and international tourism are crucial factors in theSwiss economy. Of the total revenue of CHF 21.6 billion in 2004,9.7 billion (or 44%) came from domestic tourism. Expenditure byforeign visitors in Switzerland added some CHF 11.9 billion (3% ofthe Gross Domestic Product).Tourism has been an invisible export of immense account, i.e. intermediate consumption of tourismpotential.businesses (purchases of goods and equipment, rental,transport and energy costs, maintenance and repairSpending by foreign guests in Switzerland has the samecosts, advertising, etc.) as well as investments (variationseffect on the Swiss balance of payments as the export ofin capital) by tourism providers, or even tourismgoods. As much as 6.0 percent of Switzerland's exportmultipliers (revenue obtained in tourism which triggersrevenue comes from tourism. The tourism balance ofconsumption expenditure).payments shows the revenue from foreign tourists inSwitzerland and the expenditure of Swiss tourists abroad. Added value - LodgingTourism has a multiple effect on the Swiss economy. It has Accounting for 31 percent of tourism's added value, thetriggered expenditure in various sectors. Expenditure lodging sector is the main economic contributor to thetotalling 30.6 billion francs was directly attributable to tourism industry. The lodging and food and beveragetourism in 1998.serving services together account for 45 percent ofThe tourism satellite account (TSA) provides vital data on tourism's added value. Over half of tourism's added valuetourism's role in the Swiss economy, particularly tourism's comes from other economic sectors.contribution to Switzerland's overall economy in terms ofgross added value and jobs, and the economicimportance of the various categories of visitor.Provider of jobsThe tourism sector is an important provider of jobs. It isestimated that, overall, one person in every 12 is involvedThe first Swiss TSA covers reference year 1998. In line within it directly or indirectly. In mountain areas, thecurrent international standards in this field, the results ofproportionthe satellite account expressed in terms of added valuemeasure only the direct effects of tourism). To evaluate the is much higher than in urban areas. The Swiss TSA forglobal economic impact of tourism in Switzerland, the 1998 provides exact figures for the number of jobsindirect effects of tourism should also be taken into directly generated by tourism.06INDO-SWISS BUSINESS + JAN-FEB 2008

Cover StoryTravel & overnight staysJourneys with one or more overnight stays are on average the longest tripsand hence account for a significant share of annual mobility. Distancefigures are based on round trips and distances at the destination. Thetotal distance amounts to approximately 4600 km per person and year.As much as 55% of those surveyed have taken at least one trip with anovernight stay over the past four months. This corresponds to an averageof 2.7 journeys per year, with approximately one in nine as a business trip.Senior citizens take significantly fewer trips with overnight stays than therest of the population. People in the 2645 year age bracket cover thelongest distances. Income as a key factor is even stronger for journeyswith overnight stays than for day trips: For example, the group with amonthly income of between 8000 and 12 000Swiss Francs travels about twice as much and almost three times as far asthose with incomes below 4000 Swiss Francs.Objectives, purposes & choice of transportAround half of all journeys with overnight stays are taken abroad.Naturally, this share is higher for business trips as longer domesticbusiness trips often do not require an overnight stay.Among domestic destinations the classic holiday regions are mostpopular, namely Eastern Switzerland (with Graubünden), SchweizerMittelland (including Berne and others) and the Lake Geneva Region(including Valais). However, Ticino and Central Switzerland are also oftenchosen as destinations, given the fact that these regions are notablysmaller than the other major regions.The hotel and catering industryIn 2006, the number of catering businesses once again increased by over600. Some 30,000 businesses provide hotel and catering services. Forthe guest, this extensive choice means luxury for the branch the glut ofestablishments means tough competition. There is one cateringestablishment for every 250 inhabitants (around 30 000 businesses for 7507 300 inhabitants). In 2006, the total turnover of the hotel andcatering industry should again reach around CHF 22.5 billion. Thus thehotel and catering industry makes a significant contribution to VATrevenue. According to the VAT statistics for 2003, 25 607 taxpayersgenerated a total turnover of CHF 22.7 billion, with taxable income ofCHF 21.507 billion. Tax on income was CHF 1.293 billion, net, on CHF823 million.With 8.2 percent of taxpayers and a 1.3 percent share of overall turnover,the hotel and catering industry contributed 10.1 percent to the overall nettax demand of CHF 8.124 billion.As a key tourism industry, the hotel and catering segment is one of themost important sectors of Swiss economy and is also an importantpurchaser of domestic products (both agricultural and industrial). Itemploys more than 200,000 people and is also a major indirectemployer as a client of the building industry, banks, local service07INDO-SWISS BUSINESS + JAN-FEB 2008

Cover Storyproviders andspecialized trades.and supplementaryaccommodation.These also include sanatoria which are not subsidized bythe Canton and convalescent homes with medicalmanagement or support, Alpine health establishments,altitude clinics, rheumatic clinics, public spasSupplementary accommodationPrivate rooms (vacation homes and apartments): Theseare properties which are offered for rental to third parties.They exclude properties which are solely occupied by theowners or long-term tenants, or their family members.Camp and caravan sitesDemarcated sites which are accessible to everyone for thetemporary parking of caravans and motor homes in whichthey travel, and for the temporary erection of tents. One“parking place” is equivalent to three “sleeping places”on average (four in the Ticino).Group accommodationAccommodationsectorThese include dormitories for tourists and groups, cluband association houses, mountain refuges and huts andyouth hostels.Hotels & Health EstablishmentsThe 34.8 million overnight stays in hotels and healthSwiss tourismestablishments for 2006 (+5.8%) involved 14.8 millionstatistics break arrivals (+7.3%). Just as in the previous year one hotelaccommodation stay lasted an average of 2.4 nights per visitor. Last yearoptions down the longest stays in Swiss hotels were recorded for visitorsi n t o h o t e l from the Gulf States (3.9 nights per stay).accommodation, The shortest stays were observed for visitors from Asia (1.4health establishments to 1.9 nights).Important CountriesIn 2006 the most important countries of residence ofvisitors were Switzerland, Germany, United Kingdom,United States, France and Italy each with between 1million and 15 million overnight stays. Together thesecountries accounted for 78 percent of total demand(compared to 79 percent for the previous year). Inaddition to the United States with 1.7 million overnightstays, Japan also represented an important non-European market with 600 000 units. The abovementioned seven countries achieved growth rates ofbetween 11 percent (United States) and 1.7 percent(Japan).Compared to the previous year, development of demandwas positive for most countries of residence. The Republicof Ireland registered the strongest increase, up 34percent, along with some Eastern European countries(Romania: +33%, Poland: +30%, Baltic States: +27%,Croatia: +26%).The most visited tourist regions in 2006 were08INDO-SWISS BUSINESS + JAN-FEB 2008

Cover StoryGraubünden, Zurich, Valais, Bernese Oberland andCentral Switzerland.The Swiss Hotel Credit Association (SGH) annuallypublishes average figures for hotels and, in the year2005, 368 hotels were assessed.Swiss VisitorsSwiss visitors constitute by far the most important segmentof the demand for camp sites, accounting for 54.3percent of overnight stays (2005: 56.0%). Another 31.6percent was generated by German and Dutch visitors(2005: 29.7%).The summer demand peak for camp sites was verydistinct: 61.4 percent of all overnight stays weregenerated in July and August (2005: 62.9%).Nevertheless, 11 percent of the overnight stays weregenerated in the months from January to April and fromOctober to December despite the fact that winter monthsgenerally show somewhat weaker lodging figures.Youth hostelsSwiss travellers accounted for 57.9 percent or almost twothirds of overnight stays in youth hostels(2005: 59.5%). Second place in thecountries' ranking list goes to Germany with13.9 percent (2005: 14.5%). The otherEuropean countries taken togetheraccounted for about the same number ofnights. At 5.3 percent, demand from Asia wasrather greater than from America (4.6%).09Approximately 40 percent of all overnight stays wererequested during the summer months of June, July andAugust. With 873 000 overnight stays and 428 000arrivals the average duration of stay was 2.0 nights pervisitor. However, this duration varies during the course ofthe year.The longest average stays occurred in January (3 nights),February (2.7) and March (2.3) and the shortest in May(1.8), June (1.8) and September (1.9).Around one-third (32%) of all gastronomicestablishments generate an annual turnover of less thanCHF 350 000. Of those surveyed, 80 percent generateless than CHF 1 100 000. A look at turnover also clearlyshows the dominance of small and medium businesses. Inrecent years the percentage of businesses with an annualturnover exceeding CHF 2 000 000 has fallen slightly.While in 2004, 9 percent still earned more than CHF2000 000, in 2005 the figure was 8 percent and in 2006only 7 percent.TransportationMore than half of all travel activities for vacation andbusiness purposes with at least one overnight stay, madeINDO-SWISS BUSINESS + JAN-FEB 2008

Cover Storyby Swiss residents within Switzerland orabroad, is done by private cars. About onefifth of the tourists travel by train, 18percent travel by plane, and 4 percent goby bus, postbus, tram or metro.Public transportThe public transport route network onrailways, roads, lakes and rivers adds upto a total of 28 112 km. 27 300 stoppingpoints are served. A total of 430 millionrailway and vehicle km are available. In2006, 2.05 million passengers made useof a half-fare season ticket, 316 000persons held a general season ticket validthroughout the country and around 906000 persons obtained a combined seasonticket in one of the 24 regional tariffnetworks.Dense railway networkThe length of the Swiss railway network is5270 km. This is made up of 3587 km ofnormal gauge lines of which 3123 km arepart of the Swiss Federal Railways networkand 1683 km of narrow gauge lines.Swiss Federal Railways runs around 5600train services or 344 000 train kilometerseach day. Around half of this consists oflong distance services (Eurocity, Intercityand express trains), the other half ofregional and suburban railway services. In2006, Swiss Federal Railways carried 285million passengers. The average journeydistance amounted to 50 km per day.In addition to Swiss Federal ailways, afurther 42 railway companies operate inthe public transport sector.Navigation on Swiss lakesAs many as 26 shipping companies on a total of 22 lakes and riverspublish schedules in the official timetable 2006.Mountain railwaysMountain railways are important in terms of regional economics.Mountain regions within the Alps are largely dependent on the incomegenerated from tourism. The mountain railways occupy a key position inthe tourism value creation chain. They are often the driving force intourist destinations.The mountain railways provide over 4700 full-time posts made up ofmore than 11 000 jobs (full-time and part-time jobs).More than 40 000 other jobs (full-time positions) in the hotel andsupplementary accommodation industries, the retail trade, cateringtrade and ski schools also depend indirectly on the existence of themountain railways.The mountain railways generate a direct gross value added ofapproximately CHF 380 million / year. If the indirect value-addedThe bus, car & Post-Bus networkThe 820 PostBus routes operate a routenetwork of 12 268 km. 100 PostBusdrivers with 1989 postal buses (75 000seats) conveyed 106 million passengers.In the course of this, the vehicles covered adistance of 95 million km, or theequivalent of six times the circumferenceof the earth each day. In addition, around1400 drivers are employed by PostBuscompanies.10INDO-SWISS BUSINESS + JAN-FEB 2008

Cover StoryVocational education & trainingeffects of the mountain railways is added to this figure, the gross valueadded per year rises to approx. CHF 2 billion.The productivity of the mountain railways is high in comparison to othertourist sectors. With an added value per full-time job of 80 900 SwissFrancs, the mountain railway sector lies in second place in the tourismindustry behind the travel agents and tourist office sector.Thanks to the increase in day-trippers, the Swiss mountain railways havereported a growing number of passengers since 1990. A reduction inovernight stays has been observed in the same period.Swiss Ski and Snowboard SchoolsThe “Quality Label for Swiss Tourism” issupported by all major Swiss tourismassociations. The aim of this program is toencourage touristic establishments toenhance and safeguard the quality ofservice in Switzerland. Level I concentrateson quality development and is aimedespecially at service quality. Theestablishments are subject to random spotchecks on site. Level II focuses on qualityassurance. All businesses holding Q II areregularly checked by independent“Mystery Persons”. Level III is awarded tobusinesses which have implemented acomprehensive, internationally-recognized Quality Management System.In around 180 Swiss ski and snowboard schools, approximately 4000ski, snowboard, telemark and nordic instructors are engaged. Duringthe high season, as many as 7500 teach in these schools that offerskiing, snowboard, nordic and telemark lessons for both children andadults. On request, there are also a number of other sportive andcomprehensive activities available to guests. Due to a lack of snow sixski schools in the lowlands remained closed in 06/07. More snow-sureski resorts reported another winter with record results.Five new basic training courses wereintroduced in the hotel and cateringindustry. Catering specialists replace theexisting specialised service employeesand hotel specialists replace the existingspecialist hotel assistants. Specialistcatering assistants will no longer betrained in the future. Another new featureconsists of the three two-year basictraining courses for kitchen employees,catering employees and hotel employees,which lead to the Basic federal certificate.About 10 000 trainees are beingeducated in the tourism sector at present.Quality LabelGlobal FactorsTerrorism, natural disasters, healththreats, increases in the price of oil,fluctuating exchange rates and economicas well as political uncertaintiesinfluenced international tourism in 2005.Despite these negative effects, the figuressurpassed expectations throughout theworld; for the first time ever, there was arecord number of more than 800 millionarrivals, and frequencies increased by 5.5percent. This result confirms last year'srecovery on the global tourism market,and is still 1.5 percent ahead of the longtermannual average of 4.1 percent. 11INDO-SWISS BUSINESS + JAN-FEB 2008

Face-To-FaceFl yi n g HighON QUALITY & SERVICESwiss International Air Lines, or Swiss in short, is trulyflying high in terms of quality and services offeredonboard. In an interview with Indo-Swiss Business,Jean-Philippe Benoit, General Manager, SwissInternational Air Lines - India, Sri Lanka, Nepal &Bangladesh, talks about the airlines' expansion plans,improved competitiveness in the global market.Excerpts.How did Swiss International Airlines fare in 2007and what are the prospects for 2008?190 million (prior-year period: CHF 101 million).“SWISS is flying at a stable black-ink cruising altitude,”Swiss International Air Lines (Group) raised its earnings says CEO Christoph Franz, commenting on the results.before interest and taxes (EBIT) to CHF 475 million for the “Our clear positioning as a quality airline, our consistentfirst nine months of 2007 (prior-year period: CHF 199 strengthening of our Zurich hub and our gradual andmillion). EBIT for the third-quarter period stood at CHF sustainable expansion of our aircraft fleet and our route190 million (prior year period: CHF 101 million). The network are the foundations of our present success. Weconsolidated total income of SWISS from operating are very satisfied with the way our results are developing,activities for the period from January to September 2007 on both the passenger and the cargo transport front. Androse to CHF 3 590 million (prior-year period: CHF 3 074 together with Lufthansa and within Star Alliance, SWISSmillion). The nine-month EBIT result amounted to CHF now has a strong competitive position, both in475 million (prior-year period: CHF 199 million). In a Switzerland and in Europe.”buoyant economic environment, SWISS maintained itsSwiss International Airlines introduced new servicesencouraging revenue and earnings performance of theto Delhi and Mumbai connecting the USfirst six months throughout the third-quarter period. Totaldestinations via Europe. Are there any additionalincome from operating activities for July to Septemberflights to connect other metros as well in the offing?increased to CHF 1 286 million (prior-year period: CHF 1098 million), and third-quarter EBIT was raised to CHF SWISS presently serves 41 European destinations. Most12INDO-SWISS BUSINESS + JAN-FEB 2008

Face-To-Faceof them are well connected to our two Indian destinations,Mumbai and Delhi. Further three points in Europe will beadded to the network with the introduction of the Summer2008 schedule on March 30. Those are Florence, Sofiaand St-Petersburg, whereas only Florence will offer asame day connection in both directions with our Indiandestinations. Other metros in India was your question?Let us first prove ourselves on the recently introducedDelhi operation, before thinking of further deployments.But yes, we are satisfied with the way Delhi figures havedeveloped in just two months of operation, so optimism iscertainly on the agenda. The entire SWISS team, in Indiabut not in India alone, whether engaged in sales,marketing, airport operations, cargo, and more, aregiving their best to prove the viability of the route. We arevery happy with what was reached so far, we look withconfidence into the future.As a general remark, it can be said that SWISS' policy is tofocus on destinations that have some good share ofnatural traffic between Switzerland and the country ofdestination. So, as you see, we attach importance topotential that is of particular importance for thecustomers on both sides of the route, whether they fly forprofessional, leisurely purpose, or simply visiting friendsand relatives. In actual fact, and with a few exceptions, weobserve a combination of those various traffic types. Asthe international airline of Switzerland, we see it as ourmission to concentrate primarily on markets that haveclearly identified needs to & from Switzerland. Tocomplete the array of destinations and give access tofurther, additional markets, network expansion throughcode-share operations with partners, mainly within STAR-Alliance, is continuously looked at, and wheneversuitable introduced.In combination with a cluster of selected code-sharepartners and in combination with Lufthansa and its hugenetwork, a vast portfolio of connections can be proposedto our customers. The combinability of fares between thetwo carriers enables, for example, to fly SWISS in one'soutbound portion of the journey and Lufthansa on thereturn, or vice versa naturally. On the longhaul sector andwith Lufthansa alone, code-share flights with optimalconnections are offered to US points, to South America(Sao Paulo, and Santiago de Chile), Africa and theMiddle-East (Johannesburg, Douala, Malabo, Yaoundé,Nairobi, Dar es Salaam, Tripoli, Cairo), as well as Israel.Needless to say: all routes between Switzerland andGermany are operated on code-share basis.As an international carrier, you are currently flyingto 70 destinations worldwide. We would like to knowwhat are your expansion plans, both short term andlong-term? Could you also touch upon StarAlliance, of which you are a member, and talk aboutits operations?13As outlined above, SWISS is about to introduce Florence,St. Petersburg and Sofia as new European destinationsOn the long-haul front, Shanghai will feature the latestaddition to the intercontinental network starting 9 May2008.SWISS is an intercontinental carrier and has its main hubin Zurich. Other airports served in Switzerland areGeneva, Basel and Lugano, what on a world-wide scalerepresents a middle-size market, dynamic growingmarket with good yields. SWISS wants to identify withthose basics, adopt a policy that corresponds to thoseparameters. This being said, even if we connectSwitzerland with the most important cities in Europe andbeyond, the sheer size of the carrier and of its baseairports and their capture areas, can not be extendedendlessly with a goal to cover the whole world. Whichthen brings enormous advantages in participating in aworld airline alliance, which is in our specific case theSTAR-Alliance, the largest of all. The STAR-Alliance ideallyenables to stretch our arms further, to fundamentallyenlarge the network reach to all corners of the world.Think that the combined routes of the STAR-Alliancecarrier members cover a total of 897 destinations in 160countries. This represents over 17'000 flights each andevery day. Flights on which SWISS clients can collect andredeem miles, or have access to services of partnerairlines such as lounges and other privileged airportfacilities, advantages directly or indirectly visible to thepassenger. The SWISS frequent flyer program, Miles &More, with its size, links to many partners, airlines or else,with its many assets for customers, is one among manytools that has helped us consolidate our position andsuccess on the market place of late.INDO-SWISS BUSINESS + JAN-FEB 2008

Face-To-FaceHow successful has been your Miles and Moreprogramme in terms of global response in takingadvantage of the added tourist services that youhave offered?Miles & More is the frequent flyer program shared bySWISS, Lufthansa, and 7 more partner airlines. Miles &More has more than 14 million members worldwide witha portfolio of more than 200 earn & spend partners. Intotal, customers can choose from a combined routenetwork in which 40 airlines serve more than 1,000destinations. As the leading FFP Program in Europe, Miles& More influences customer attitude and behaviour tosupport profitable growth of SWISS.For the third year in a row, “Business Traveller“magazine has rated SWISS the best airline in theindividual categories as well as in the Overallcategory for flights to North and South America.What is your comment and how to you propose tosustain such reputation year after year?Swiss has recently announced plans to invest morethan CHF 1 billion in its long-haul aircraft fleet.Could you give us the details and how thisinvestment is going to help you in enlarging yourmarket share?thinking behind the decisions.Swiss International Airlines has announced a steeprise of CHF 475 million in its earnings before interestand taxes for the period January-September 2007from CHF 199 million in the previous year. Couldyou give us the financial results for the whole of2007 and tell us what factors have contributed tothis sharp increase in EBIT earnings?The financial results for the year 2007 will be publishedon forthcoming March 12th, a date before which we arenot in a position to comment on the issue. Latest to day,the results for the 3rd quarter were communicated,together with the cumulatives January-September, asalready mentioned earlier in this interview.How has the airlines' culinary concept of “SWISSTaste of Switzerland” caught up with its travelersworldwide? Could you name a couple of thesedelicious dishes?We are delighted to have won these awards. It shows that The SWISS “Taste of Switzerland” concept has met highthe efforts we are making to further improve the customer marks with customers worldwide, and continues to do so.experience are paying off. To sustain the performance, it We also notice some curiosity and enjoyment goingis vital that we keep on closely listening to our customers, along with the surprise element of guessing which canton,their expectations and requirements, and value their which restaurant, which chef, will next be on board withinputs for the development process. We also need to us, with them. Clients seem to speak about it, so the ideaconstantly keep a sharp eye on our competitors clients certainly appeals and has found appraisal. In essence, itnowadays have a vast choice, products are substitutable reflects Switzerland in some of its many facets, does goodall the more you do not watch on keeping an edge. to the image promotion of the culinary Switzerland,Competition moves, so must we, the faster and the something the international passenger might not besmarter the better. And lastly, we need to stay true to our acquainted with. The concept gives them the opportunitybrand positioning, ensuring consistent delivery of high to learn more about the exposed regions, throughquality standards, products, services, once again in line regional specialties, or maybe wines as well. For surewith customer expectations, by doing this ensuring a something most of our guests on board are not exposedsystematic positive travel experience from A to Z. Happy to in their daily customs. Now, to open your appetite, letcustomers are local customers, this much we have in our us see what were examples of those delightful disheshands, up to us to keep it going, fly high also in the future. proposed on SWISS flights during 2007:• Marinated and pine tree smoked salmon trout on fenneland chanterelle salad (Created by Manfred Roth,Executive Chef, Victoria-Jungfrau Hotel, Interlaken)served in Business Class Longhaul from March-May2007Here we simply talk bigger gauge. The replacement ofA330-200 series by the newest, longer, modern-technology A330-300 model enables SWISS to raise itsseat offer by operating bigger average gauge. Details onseat numbers, cabin configuration and features as well asfacilities were not released yet, our specialists arepresently working on those sensitive issues. One singleremark: quality and comfort build an essential part of the• Lamb fillet mignon with autumn vegetables incremolata sauce and sage gnocchi (Created by DidierSchneiter, Executive Chef Beau-Rivage Palace, Lausanne)served in First Class from August-November 2007• Palace chocolate truffle cake (Created by FrédéricBreuil, Executive Chef Badrutt's Palace, St. Moritz) servedin First Class from November 2007 to March 2008. 14INDO-SWISS BUSINESS + JAN-FEB 2008

InteractionKuoni Group’s Competitive Strategy & VisionRetaining A Place of PrideIn Travel & Tourism Sector15In the fast growing traveland tourism industry,India’s Kuoni Travel Grouphas carved a niche foritself. The Indian venture, a100 percent subsidiary ofthe globally reputed KuoniTravel Holding,Switzerland, has manyinnovative schemes to offerin order to maintain itspride of place in the highlycompetitive travel andtourism industry. ZubinKarkaria, Chief ExecutiveOfficer & ManagingDirector, India & South Asiashares the Kuoni Group’sstrategy and vision in aninterview to Indo-SwissBusiness. Excerpts.Please give a brief overview of the world travel andtourism industry for the just concluded year, 2007.What are the prospects for both Outbound andInbound travel businesses for the year that has juststarted? Views on 2007.The Indian outbound has undergone a very promising phase ascompared to other international markets. A buoyant economy andgrowing purchasing power coupled with high awareness generationhas lead to new customers entering the category of holidays. A holidayis becoming one of the options to beat the stress of a rapidly globalizingeconomy. In addition to leisure holidays, DINKS, Visiting Friends andRelatives (VFR) travelers are also opting for niche products likeadventure tours, luxury travel, exotic honeymoon packages, cruisesand the Meetings Incentives Conventions and Exhibitions (MICE)segment is also coming up as a potential market for Indian tourists.Outbound travel for conventions, incentives and business has alsoseen a rise.Prospects of growth (Outbound & Inbound) 2008.OutboundThe travel industry is growing rapidly and thus contributing to anexpanding and evolving customer base. In future we can see twosegments that would be emerging namely the customer segment andthe product segment. In the case of the customer segment we will havevarious categories like the youth, senior citizens, students etc. In termsof products we will have packages like adventure sports, medicaltourism, premium holiday packages that would be preferred bytravelers. Specialized tours will also gain importance and one will seemore and more travellers opting for health holidays, spiritual getaways,adventure, wildlife vacations amongst others. Today their numbersmight not be so substantial, but these specialized and short haulholidays will drive the Indian tourism industry in the future.Recognition of shifting realities and the ability to fine-tune operations tohone in on the emerging opportunities are of critical importance. Thussuccess will be found through innovation and customer focus. Theindustry must become accustomed to creating products for nichemarkets and at the same time cater to the populace through focus onall markets separately.The World Travel and Tourism Council (WTTC) estimates a 4.5 per centper annum increase in the total amount of travel and tourism economicINDO-SWISS BUSINESS + JAN-FEB 2008

Interactionactivity between 2002 and 2012. This is largely attributed to a rise Following is a note on organicin global wealth, liberalization of international airspace, cheaper expansion of our Outboundflights and the use of the Internet as a travel tool.business.InboundCurrent market trends indicate that:Inbound tourism has flourished in the past few years thanks in a • Long haul travel will grow faster than intralargeway due to the pro-active and strong approach of the regional travel. A growth of 24 percent isTourism Ministry. The Incredible India campaign was brilliantly expected by 2020.conceived and carried-out and that has gone a long way inpromoting India as a superior & unique tourism destination.• People with less time for leisure are likely totake more frequent but shorter trips nearerAll segments of the Inbound business have been doing well. We home, opening up opportunities forexpect the good times to roll-on – especially once the ‘neighbouring country’ tourism.infrastructure enhancement initiatives of the government and theprivate sector (e.g. additional hotel capacities) are completed and • The experienced traveller wants authentic,start kicking-in.off-the-beaten-track vacations in remote andless well-known places as against luxuriousSegments which could see the highest growth are niche segments five-star vacations, leading to an interest insuch as adventure tourism, pilgrimage tourism, incentives tourism, rural and ethnic tourism.medical tourism etc.• The increase in the number of people withWhat are your present and future expansion lots of money but little leisure time hasplans?resulted in a growing emphasis on rest andrelaxation, and ‘wellness’ and ‘health’Kuoni India has grown in leaps and bounds since it washolidays.established in 1997 and a significant share of this growth hascome through inorganic means and through innovations.• Emergence of niche products likeadventure sports, premium holidayIn general we expect to continue our strong growth trend and willpackages, wellness holidays, spiritualstick to the winning formula, of achieving this growth throughgetaways, wildlife vacations amongst others.organic and inorganic means. We will also continuously look forToday their numbers might not be sonew business opportunities.substantial, but these specialized and shortWe will also focus on growing the Kuoni Holidays brand – India’s haul holidays will drive the Indian tourismfirst & only travel brand focused exclusively on the luxury segment. industry in the future.Kuoni Holidays was launched just a couple of years back and weKuoni Holidays launched Romancing thehave already had great success with it. We will be investing more inPeninsula, a coffee table book combined withthis brand over the next few years to make it India’s strongest travela brochure wherein The Wanderer describesbrand.the real, everlasting beautiful country of Italy.Kuoni Holidays to Italy are superior andexotic and ensured a memorable experienceof this fascinating country. In 2008 KuoniHolidays launched its Private luxury Europeanholiday. These holidays provide the ultimateway to experience Europe - in a chauffeureddriven luxury van. This specially designedholiday is a unique concept that lets familiesand friends drive around Europe in a private,chauffeur driven luxury van, exploring thecontinent at ones own pace. Kuoni Holidayspacks a host of special features andexperiences into its Private Luxury Holidays toEurope. Some of these include:• A gourmet lunch on the third level of theEiffel tower16INDO-SWISS BUSINESS + JAN-FEB 2008

Interaction• A wine tasting session in the beautifulregion of Tuscany• A romantic horse carriage ride with wineand a folk show in Innsbruck• Beer tasting at the Heineken brewery inAmsterdam• Enjoy a traditional Scottish night and a visitto Scotland’s oldest whiskey distillery Irishsupper and a cabaret in Dublin amongstmany other experiences.SOTC has been the first to realize theimportance of value led offers for adistinctive Indian traveler. We have alwaysbelieved that our packages and holidaydeals should offer the best value in themarket. Recently SOTC launched:• 3 nights on the Mediterranean Cruise toGreece and Turkey plus 1 night in Athensworth Rs. 46,000 per person FREE when youbook a 15-day Grand Tour of Europe. Ourexciting Mediterranean Cruise aboard theLouis Cruise takes you to the most famousGreek Islands• Get a bonus offer of 2 additional nights inHelsinki (Finland) including meals andsightseeing absolutely free when you bookon the 19-day Magnificent Europe.• Get a 4 nights Royal Caribbean Cruise toBahamas for just $99 when you bookyourself on 15 days All of USA package.• European Royale’ - a unique holidayexperience created to set extraordinarystandards in group holidaying. To make yourEurope holiday a once-in-a-lifetimeexperience, we have carved out SpecialMoments throughout Europe.After the successful launch of the abovementioned innovative offers and deals SOTCplans to offer many more attractive deals tovarious other exotic destinations. Thecompany will also be introducing packagesto new destinations.SOTC Special Interest Tours Division (SIT)combines the experience of being India’slargest outbound tour operator and India’sleading business Travel Company to offerunmatched tours for any MICE related travel.Trade Fairs being an important segmentSOTC has introduced packages for Drupa,Interpack, ITMA Asia, Wire & Tube, Cebit amongst many others.In other words, what other segments do youpropose to add in the near future to your business,being a leader in Leisure segment, Business Travelsegment, Incoming Services segment and the Visaservices segment?As I have mentioned above we are continuously looking to enternew businesses – not only within the 4 segments mentioned by youabove but also outside these 4 segments. Our aim has alwaysbeen to become the No.1 company in all major travel marketsrelated to travel from, to & within India.Kuoni Travel Group anticipated turnover for theyear has been estimated at $442 million. What isthe target for 2008? Do you have any long term ormedium term targets set for the turnover? If youhave, give us an outline of the bright picture.I am sorry I cant share specific turnover targets of future years withyou as our Group communication policy – however let me just saythat they are daunting, but yet I am confident of achieving the samethanks to our people.How is India’s Kuoni Travel Group, a 100 percentsubsidiary of Kuoni Travel Holding, Switzerland, isbenefiting from the globally reputed parentcompany in terms of specialized expertise, interms of offering travel-related services such asVisa, etc?Kuoni Group globally focuses solely on Tour Operating (Outboundleisure travel) and on Destination Management Services (Inboundtravel). It is only in India that the Group is also active in Business17INDO-SWISS BUSINESS + JAN-FEB 2008

InteractionTravel and Visa Services.The Kuoni Group is a 101 year old company – one of the oldest & mostsuccessful travel companies in the world today. The Kuoni brand is one ofthe most famous travel brands in the world today. In 2007 we won one ofthe most prestigious travel awards in the world – the “World’s Best TourOperator” Award at the World Travel Mart – for the ninth year.Of course Kuoni India relies a great deal on the strength of the Kuoni brand,rich experience, and global presence of the Kuoni Group. This is especiallyso for our Outbound (Tour Operating) and our Inbound (DestinationManagement Services) businesses. However these same attributes havealso helped us to succeed in our Business Travel and our Visa Servicesbusinesses.Exactly two years ago, that is in January 2006, you hadlaunched a premium travel brand Kuoni Holidays. Howhas this brand been faring?India, today ranks eighth in the world in terms of the number of billionairesand has over 1.6 Mn households that earn over Rs. 45 lacs (USD 100,000)per year, who spend about Rs. 4 lacs (USD 9,000) on “luxury/ verypremium” goods & services. Thus it is a market potential of about Rs.65,000 crores (USD 14.4 billion). And the number of such households isgrowing at 14%. The above facts clearly supported the need for launching apremium holiday brand that caters to the travel needs of the elite Indians.With each holiday presenting a unique experience, Kuoni Holidays offerpremium, customised holidays. Taking holidaying to an all-new level,‘Kuoni Holidays’ offers enhanced and distinctive holiday experiences -complete with expert suggestions from a panel of Kuoni CertifiedCounsellors. To promote its holidays, Kuoni Holidays launched exclusivebrochures - each offering a breathtaking collection of spa facilities, beachresorts, honeymoon destinations, adventure holidays, wild-life safaris,luxury cruises etc.Honeymoon is also one such occasion, wherein no individual wouldcompromise on the holiday experience. With over 15 Million weddings inIndia each year and the weddingmarket valued at over Rs. 85,000crore, Kuoni Holidays has launchedthe exclusive Kuoni Honeymoonsbrochure. Kuoni Honeymoonbrochure offers intimate & romanticgetaways around the world, with aspecial value add such as limousinetransfers, candle-lit dinners, privatebutlers, ski lessons, etc.In the last two years the brand hasalready surpassed the businessobjective that was set. Apart fromachieving the quantitative goals, wehave also managed to attractpremium clientele for the brand.Customers who have availed aKuoni Holiday include celebrities,leading businessmen & corporatehead honchos.Destination Managementand MICE (Meetings,Incentives, Conferences &Exhibitions) have alsobecome two areas of yourunquestioned expertise.Considering India’semergence as aneconomic powerhouse,how do you look at thegrowth potential andprospects in both theseareas?MICE has become a very importantsegment. Today 80% of the businesstravel for MICE activities goes to FarEast destinations. Europe, Egypt,Turkey, Greece, China, andAustralia have caught the fancy ofthe corporate traveler, and haveseen a rise in corporate travelers.The growth potential of theDestination Management business Ihave touched upon in one of theearlier questions – but in a nutshell,once the supply side constraints areremoved we will definitely see thisbusiness suddenly shifting gears to ahigher growth trajectory. 18INDO-SWISS BUSINESS + JAN-FEB 2008

TourismPutting up with the antics of the rich and famous inSt MoritzMax Keller was the director of the PalaceHotel in the Swiss resort of St Moritzplayground of the rich and beautiful forten years. He has just written a booktelling of his time among the "snowciety"in the 1980s, which included former Fiatboss Gianni Agnelli and the GreekNiarchos dynasty."Via St Moritz to Hong Kong and Back" isa collection of stories and anecdotesgathered during Keller's time as directorof several top class luxury hotels aroundthe globe.Keller believes these "glorious good olddays" are worth recording. "People forgetvery fast," Keller, now 64, said.The Swiss was born near LakeConstance. As a child he was fascinatedby his mother's stories of being agoverness to the managing director ofthe luxury Brown's hotel in London.However, Keller's father was not soenamoured of his son's plans to go intothe hotel industry, so Keller junior had toagree to train for three years as a chefbefore he could join the renowned HotelSchool in Lausanne.Upon graduating he immediately set hissights high the Baur au Lac hotel inZurich. He worked his way further up theladder with stints at the Palace Hotel inGstaad, the Palace Hotel in St Moritz,and the exclusive Hôtel du Cap d'AntibesEdec Roc on the French Riviera.His first big break was the vice director'spost at the Peninsula Hotel in colonialeraHong Kong.Imelda MarcosOne special visitor to the hotel in the1970s was Imelda Marcos. The wife ofthe then Philippines president may be19famed for her enormous shoe collection, but Keller reveals that she liked totravel in big style as well. No fewer than 25 Blue Ladies, or ladies inwaiting, as well as countless bodyguards were needed to accompany theIron Butterfly on her shopping trips. She would often reserve entire hotelfloors often at the last minute."Looking back it was so preposterous and crazy," Keller said. "When shestayed I usually had three hours sleep a day because she always got up atthe end of my working day between eight and ten, then it would start withwhatever she wanted."After three years Keller got a call offering him the directorship of the PalaceHotel in St Moritz. "An Englishman, a very good friend in the trade, said tome about my appointment, 'Max I'm very happy for you, but you have toknow that from now on you can only go sideways or down'".The 1980s were still a time of glitz, glamour and parties the Aga Khan,Alfred Hitchcock and King Juan Carlos of Spain were all guestsduring this era.War generation"What fascinated me was that I was dealing with the war generation.Nowadays you have a generation of people who have never seen anythingbut prosperity and wellbeing and that doesn't make characters," Kellerexplained.Keller said sometimes toughness was needed towards rich guests whocould be arrogant, snobby and pushy. He tells of how he plucked up thecourage to bar one of the rowdy sons of Stavros Niarchos, of the superwealthyGreek shipping dynasty. This was accepted by the family, earninghim respect in St Moritz society.But it was important not to get carried away. "You are always with thescene, but you are never part of it as a director," said Keller, adding that thisgave him the necessary distance to write the book.After resigning from the palace job, he had a disappointing experience atan establishment in Vienna, "what my friend said, sideways or down",before leaving the industry altogether.Nowadays he divides his time between Denmark his wife is Danish - andWinterthur, where he is treasurer in his brother's company. Being awayfrom the hotel industry has made him realise there are other sides to life, hesays."I'm happy to be out of the hotel business," Keller said. "It was fun but it wasall absorbing.”INDO-SWISS BUSINESS + JAN-FEB 2008

PersonalityCharlie Chaplin- The Eternal TrampOversized shoes, baggy trousers, bowler hat, moustache and cane thecharacter of a bumbling but well-mannered vagrant made CharlieChaplin immortal.Exactly 30 years ago the comedy giant died aged 88 in Vevey, westernSwitzerland, where he had lived since 1952.As the Tramp, he bewitched women, protected the weak, got one overon the authorities, fought tyranny and created cinema history.The creator of this inimitable figure was born Charles Spencer Chaplinin London on April 16, 1889. His parents, both music hall entertainers,separated before he was three. His father died from alcohol abuse in1901 and his mentally ill mother put him and his brother into a home.Chaplin made his stage debut at the age of five and at 12 he got his firstlead role, with tours following.On a 1913 tour of the United States, Chaplin was spotted by filmproducer Mack Sennett, who hired him for his studio, the Keystone FilmCompany.AmbitionThe original plan was for the slight Englishman to build up a little-andlargeslapstick routine with Fatty Arbuckle, but instead Chaplindeveloped his tramp character and quickly learned the art and craft offilmmaking.His success was astonishing: his first salary under Sennett was $150 aweek, two years later he was on $1,250, the following year $10,000,and by 1918 he was being paid a million dollars a year and was themost popular comedian in the world.In 1919 Chaplin co-founded the United Artists film distributioncompany with Mary Pickford, Douglas Fairbanks and DW Griffith, all ofwhom were seeking to escape the growing power consolidation of filmdistributors and financiers in the developing Hollywood studio system.Ambitious full-length films followed, and Chaplin's perfectionism andcourage ensured that films such as The Kid (1921), Gold Rush (1925),City Lights (1931) and Modern Times (1936) became cinema classics.Witch huntChaplin's silent films made before the Great Depression in 1929 did notusually contain overt political themes ormessages, apart from the Tramp's plightin poverty and his run-ins with the law,but his later films were more openlypolitical.Modern Times depicts workers and poorpeople in dismal conditions. The finaldramatic speech in The Great Dictator(1940) was critical of following patriotic20INDO-SWISS BUSINESS + JAN-FEB 2008

Personalitynationalism without question.in 1973. He was knighted by Queen Elizabeth II two yearsChaplin's political views might seem tame by modernlater.standards, but in the 1940s his views were seen by many He was buried in Corsier-Sur-Vevey cemetery, but inas communist.March 1978 his corpse was stolen by a Polish-Bulgariangang in an attempt to extort money from his family. TheDuring the McCarthyism witch hunts of the 1950s,plot failed, the robbers were captured, and the corpseChaplin was accused of "un-American activities" as awas recovered 11 weeks later near Lake Geneva.suspected communist sympathizer. Head of the FBI J.Chaplin's body was reburied under two metres ofEdgar Hoover instructed the FBI to keep extensive files onconcrete to prevent further theft attempts.him and tried to end his US residency (Chaplin had alwaysretained his British nationality).The Manoir de Ban is now destined to become the"Charlie Chaplin Heritage Site". A museum devoted to theIn 1952 Chaplin visited Britain for a film premiere, butfilm pioneer and the early days of Hollywood, the site willhad his re-entry permit revoked by Hoover. As a result,also include a film theatre, outdoor stage, film school andChaplin chose to live in exile in Switzerland with his family,restaurant.moving to the Manoir de Ban in Corsier-sur-Vevey,overlooking Lake Geneva.The project had been on ice for over a year owing to legalHeritage sitewrangles, but in December it was announced thatinvestors had agreed in principle to buy the Manoir deAfter his last film, A Countess from Hong Kong, in 1966 Ban and that building could be finished by summerand he returned to Hollywood to receive a special Oscar 2009. EU expands border-free zone,Swiss to join laterBorder controls from the Baltic Sea to the Adriatic havebeen lifted recently in Europe's passport-free travel zone.Switzerland is due to join the Schengen Area inNovember 2008, but the move is likely to be delayed asratification of the treaty with several European Unionmember nations is still pending.The entry of nine former mostly Eastern European statesis seen by many as a final lifting of the old Iron Curtaindivide between the former Soviet bloc and the West. Butthe lifting of border checks has triggered fears of a rise incrime and a flood of illegal immigrants.inject new life into border-region economies and put anend to the hassle of delays at most European borders.DelaysInitially the lifting of internal controls involves just landand sea borders, but that will be extended to airports atthe end of March 2008. Switzerland, which is not amember of the EU, was initially scheduled to join theSchengen zone this year. But delays in the parliamentaryratification process in three EU countries have made itunlikely that the area will be extended to Switzerlandbefore 2009.From one minute past midnight the Schengen Area wasSwiss voters approved the Schengen treaty in aextended to cover Poland, Slovakia, Hungary, the CzechRepublic, Slovenia, Latvia, Lithuania, Estonia and Malta.nationwide vote two years ago. Switzerland will have toimplement technical and legal changes and airportWith its current 24 members it creates an area one-third infrastructure the only remaining border post to nonthesize of the United States affecting 400 million people Schengen countries will have to be adapted. Theand allowing passport-free travel over 4,000 kilometres. cantonal authorities in charge of security at airports -"Together we have overcome border controls as manmadeobstacles to peace, freedom and unity inalso have to train up their police units.Europe,"said European Commission President José ManuelBarroso at a ceremony in the Estonian capital, Tallinn.He said the expansion would boost trade and tourism,Switzerland will have to pay into a special Schengen fundset up by Brussels. In 2006 the government estimatedthe Swiss contribution at about SFr13 million ($11.3million).21INDO-SWISS BUSINESS + JAN-FEB 2008

EventAnnual Meeting 2008Innovative Collaboration,The Only Global OptionParticipants at the World Economic Forum AnnualMeeting 2008 focused on the tools for addressing themany challenges emerging as a result of the shiftingpower equations in the world.The Power of Collaborative Innovation is arguably the lastremedy to the stresses of intense globalization that havebeen evident in financial market volatility, wideningincome disparities, and in conflict zones around theworld. As former British Prime Minister Tony Blairobserved in the closing plenary session: “Globalization isforcing changes in how people collaborate in afundamental way.” Blair added: “If we are interconnectedand the world is interconnected, the only way for the worldto work is to have a set of common values. We have nooption but to work together.”Collaborative innovation is far from the norm ininternational affairs, not least because the structures ofglobal governance have not evolved for nearly three22generations. Nation states still rule, while business andcivil society are often not at the table. In the currentcontext, the World Economic Forum provides a uniqueplatform for multiple stakeholders to address a range ofglobal, regional and industry issues. Fosteringcollaborative innovation becomes all the more critical inINDO-SWISS BUSINESS + JAN-FEB 2008

Eventa time of heightened uncertainty.Precious outcomesJapanese Prime Minister Yasuo Fukuda unveiled a fiveyear,US$ 10 billion fund to support efforts in developingcountries to combat global warming a move to ensurethat top priority is given to climate change at this year'sG8 Summit in Hokkaido. In addition, Japan aims tocreate a new multilateral fund with the US and the UnitedKingdom to mitigate changes in the earth's climate as aresult of global warming.The Bill & Melinda Gates Foundation announced a US$306 million package of agricultural development grants"designed to boost the yields and incomes of millions ofsmall farmers in Africa and other parts of the developingworld so they can lift themselves and their families out ofhunger and poverty".The World Economic Forum, Forum Member companiesand the United Nations launched initiatives to facilitatebroader and deeper private sector support ofhumanitarian relief operations. Among the programmesestablished: Agility, TNT and UPS, three leading logisticsand transport companies, are joining forces to help thehumanitarian sector with emergency response to largescalenatural disasters.The World Economic Forum launched a landmark reporton the interfaith dialogue between Muslim and Westernsocieties. Islam and the West: Annual Report on the Stateof Dialogue was the result of in depth research andpolling in more than 40 countries. The report is intended24to be an annual global reference on the state of dialogueamong faiths that will increase interfaith communicationand strengthen efforts to deepen understanding.The World Economic Forum released the first part of themost comprehensive investigation into private equity: TheGlobalization of Alternative Investments Working PapersVolume 1: The Global Economic Impact of Private EquityReport 2008. The study focuses on the demography ofglobal private equity deals, the willingness of privateequity-backed firms to make long-term investmentsglobally, and the impact of private equity investments onthe employment levels of firms in the US and corporategovernance in the United Kingdom.The Forum's Global Education Initiative (GEI) designatedRwanda as the launch country for a pilot programme ofthe initiative. In partnership with the Education For All FastTrack Initiative (FTI) under the banner of the GlobalEducation Alliance (GEA), the Forum will provide theplatform to combine the strengths of the private sectorand foundations to achieve education for all in lowincomecountries.Mayors, regional governors and the private sectorlaunched the World Economic Forum's SlimCity Initiative,an exchange programme between cities and companiesto support action on resource efficiency in urban areas,focusing on energy, water, waste, mobility, planning,health and climate change.British Prime Minister Gordon Brown, MicrosoftChairman Bill Gates, Irish musician Bono, H.M. QueenRania Al Abdullah of the Hashemite Kingdom of Jordan,United Nations Secretary-General Ban Ki-moon, WorldEconomic Forum Founder and Executive Chairman KlausSchwab, Nigerian President Umaru Musa Yar'Adua, andCisco Chairman and Chief Executive Officer John T.Chambers issued a joint statement vowing to make 2008a turning point in the fight against poverty. The world isfacing a "development emergency", they said, pledging to"work together to help the world get back on track to meetthe Millennium Development Goals."The Forum conducted an innovative outreach exercisewith the online video website YouTube, asking peoplefrom around the world to answer "The Davos Question"What one thing do you think that countries, companies orindividuals must do to make the world a better place in2008. More than 2 million people took part, andbusiness, government and civil society leaders from theAnnual Meeting posted replies. Among those submittingvideo responses: President Shimon Peres of Israel,President Abdoulaye Wade of Senegal, President HamidINDO-SWISS BUSINESS + JAN-FEB 2008

EventKarzai of Afghanistan, former US Secretary of State Henry The legacy institutions of global governance are notA. Kissinger and Irish musician Bono. The resulting global capable of tackling the many interconnected andconversation may be viewed at www.youtube.com/Davos complex challenges of a multipolar world.Fourteen global CEOs and company chairmen Collaboration among nation states is not sufficient torepresenting a range of industries and regions issued a address pressing global problems, ranging from, forcall to their peers to join collaborative efforts to example, the conflict in the Middle East to preservingstrengthen public governance frameworks and global water supplies. The participation of business andinstitutions as a core element of their approach to civil society is needed.corporate citizenship.Climate change is an immediate test of whether a newThe Annual Meeting agenda was organized under five brand of collaborative and pragmatic leadership cansub-themes Economics and Finance: Addressing lead to real and lasting results.Economic Insecurity; Geopolitics: Aligning InterestsThe world is in transition. The US is too strong to stand onAcross Divides; Business: Competing Whilethe sidelines, but too weak to go it alone. The state is noCollaborating; Science and Technology: Exploringlonger the most important point of reference for manyNature's New Frontiers; and Values and Society:populations.Understanding Future Shifts.Addressing Economic InsecurityBusiness: Competing While CollaboratingTo survive and prosper in the rapidly evolving globalThe unfolding financial crisis should be viewed as amarketplace, companies must win the war for talent andchapter in a much larger, more profound story theinnovate rapidly but also, where appropriate, collaboraterebalancing of global wealth away from the West and- even with the competition.toward the emerging economies of Asia and the MiddleEast.As worldwide markets reward swift and agile companies,mobile technology has become a powerful tool forThe shift of economic power from West to East is anempowering consumers and connecting customers andepochal transformation that is taking place faster thanclients with product and service providers.anticipated.In addition to shifts in technology, the global businessThe challenge to policy-makers and businesspeople isclimate continues to be profoundly affected by shifts inhow to address the more dangerous side effects of globalpower from developed economies to emerging marketsgrowth such as the widening income disparities, inflationincluding Brazil, Russia, India and China, which areand environmental degradation.spawning multinational companies of their own that areThe decoupling of global growth from the US economy is effectively competing against established corporationspremature, but there is a new dynamic with the rapid from the West.growth of China and other emerging economiesGlobalization is decentralizing power, whileshortening and softening the US downturn.demographic differentials are heightening the fight forCharting a more equitable and sustainable course for talent.global growth will require long-term investments inWeb collaboration is distributive; open source results inhuman capital, education, health and environmentalrobustness but not innovation. How to innovate is lessprotection.complicated than discovering what to innovate.Greater coordination of macroeconomic policy, beyondThe practice of corporate global citizenship is crucial for ajust the G8, is needed given the limits of traditionalcompany to succeed in this context.monetary and fiscal policy in a global economy.Science and Technology: ExploringGeopolitics: Aligning Interests AcrossNature's New FrontiersDividesScience and technology are progressing so fast thatCollaborative innovation is the framework to addressadvances are challenging our assumptions about themajor global challenges linked to the intensification ofhuman experience. While death remains inevitable, whenglobalization.and how it happens is now less of a mystery.25INDO-SWISS BUSINESS + JAN-FEB 2008

EventDeeper understanding of the essence of our individuality,DNA, may help us to be more in control of our health andlifespan. Meanwhile, the finality of paralysis is beingchallenged by developments in neurotechnology andregenerative medicine. In addition, advances in geneticsare providing new weapons against cancer.These developments are changing the rules of the labourforce, the calculus of healthcare and our concepts of age,equality and privacy.Highly bespoke diagnosis and treatment is challengingthe traditional assumption that each person needs, and isentitled to, a common slate of medical procedures.However, patients and doctors fear that people with agenetic disposition to disease will face discrimination andthat employers or insurers might reject them.globalization must becombined with a sense ofvalues centred on the notionsof justice and freedom toensure its sustainability overthe long run.Burgeoning urbanpopulations place enormousstrains on existinginfrastructure, particularly inAsia and Latin America.Urbanization must be madesustainable.While consuming less is adifficult message in much ofthe world, developing marketconsumers have theeconomic motivation to “get more for less” whichpromotes demand for energy-efficient products.It is not necessarily faith that brings people into conflictbut rather politics and the pursuit of economic andmilitary power, as well as the manipulation of ideology,whether religious or secular.To foster cross-cultural understanding, public and privatelearning institutions must work to promote empathy. TheInternet can play a critical role in education to bridgedivides.The Forum would like to thank the distinguished Co-Chairs of the Annual Meeting 2008, who led manysessions and provided valuable insights and wisdom.They were:While science may decrease our mortality, the total cost of Tony Blair, Prime Minister of the United Kingdom (1997-healthcare will rise.2007); Member of the Foundation Board of the WorldBusinesses are fundamentally altering the way in which Economic Forumthey conduct research. They are increasingly relying on James Dimon, Chairman and Chief Executive Officer,collaborative research rather than large-scale integrated JPMorgan Chase & Co., USAresearch that invents a new technology from top tobottom.K.V. Kamath, Managing Director and Chief ExecutiveValues and Society: Understanding FutureShiftsGlobalization's impact on cultures, societies and valuesmust be the subject of deeper, more qualitative analysis.Increasing interconnectedness has not always led tosecularization or homogenization. Often, in fact, it hasexacerbated divisions.The growth of economic opportunity as a result ofOfficer, ICICI Bank, IndiaHenry Kissinger, Chairman, Kissinger Associates, USAIndra K. Nooyi, Chairman and Chief Executive Officer,PepsiCo, USADavid J. O'Reilly, Chairman and Chief Executive Officer,Chevron Corporation, USAWang Jianzhou, Chief Executive, China MobileCommunications Corporation, People's Republic ofChina26INDO-SWISS BUSINESS + JAN-FEB 2008

AllianceRTAs: Gateways to Global TradeExport Import Bank of India (Exim Bank) has made an exhaustive studyof various regional trade agreements (RTAs) in the context of theirimportance in nurturing global trade. The Exim Bank study alsotouches India's engagement with RTAs. Following is the gist of thestudy.There is a growing realization among countries thatregional and multilateral agreements could hecomplementary and mutually reinforcing approaches totrade reforms. Such regional integration agreementscould lead to enhanced regional trade, which in turncould provide a boost to multilateral trade. Moreover, theDoha Declaration drawn up by the WTO ministers in late2001 also recognizes that Regional Trade Agreements(RTAs) can play an important role in promoting theliberalization and expansion of trade and also inincreasing investment and productivity gains andfostering development especially in developingeconomies.RTAs are increasingly being viewed as a link betweendeveloping and developed countries towards thecommon goal of economic development and as agateway to global trade. The need for such agreementshas arisen from a number of socio-economic, politicaland security considerations. Countries have embracedregional trade agreements primarily due to the followingreasons:• To derive benefits of increased preferential access tohighly competitive larger markets;• The slow progress in trade liberalization under the WTOand bottlenecks in multilateralism based trade talks;• A sharp increase in FTAs around the world, which hasprompted other countries not involved in regional tradeagreements to also consider engagement in suchagreements and remain competitive in internationaltrade;• To promote liberalisation and bring about policyreforms;• To attract more foreign direct investment into thecountry; and• Political and security considerations.28Proliferation of RTAsThere has been a significant increase in the number ofregional trade agreements in recent years, with presentlymore than one third of the world's trade taking placewithin the framework of such agreements. Of the 205RTAs notified to WTO and which are in force, as on July18, 2007, 124 are FTAs, accounting for 60% of the total,46 are Economic Integration Agreements (ElA), 12 areCustoms Unions (CU), 12 are Partial Scope (PS)Agreements, while 11 are Accession Agreements. Thepredominance of FTAs is probably due to the fact that theyare faster to conclude and require a lower degree ofpolicy coordination among the contracting parties ascompared to plurilateral or multilateral negotiations.The growing interest in regional trade agreementsamong countries has been particularly noticed since thedawn of the new millennium; 124 agreements(constituting 60% of the total) having entered into forcepost 2000. As earlier observed, FTAs continue to be themost preferred form of agreements as around 65% ot theagreements entered into force post 2000 comprise FTAs.An investigation of the trend reveals that the maximumnumber of agreements entered into force during 2004and 2006. This could be attributed to the failure of theFifth WTO Cancun Ministerial Conference in 2003 andthe Sixth WTO Hong Kong Ministerial Conference held in2005. Further, between 2004 and 2007, as many as 40FTAs and 23 ElAs have entered into force. While thedominance of FTAs implies a growing tendency amongmember countries to establish bilateral preferentialagreements, growing number of EIAs indicate theincreasing preference among countries to deepenbilateral economic integration beyond trade in goods.Nature of Regional Trade AgreementsIn comparison to majority of agreements amongdeveloping countries in the initial years of regional tradeagreements, there has been an increasing tendencyINDO-SWISS BUSINESS + JAN-FEB 2008

Allianceamong developed countries as well to enter into trade The intra-bloc merchandise exports as a percentageaccords between themselves as also with developing share of bloc's total exports for European Union has beencountries, as depicted by the increasing share of such as high as 66% in 2005; in case of NAFTA it has beenagreements during 2000-2007 as compared to 1995- 56% and around 50% for East Asia Economic Caucus1999. As a consequence, the share of south-south (EAEC), indicating the high degree of integration amongagreements, which comprised 67% of the total these blocs. Despite having a bloc, there are instances ofagreements during 1995-99, decreased to 39% between trade agreements between countries within a bloc. This2000-2007. Compared to only 10 agreements between distinctive feature is particularly noticed in the CIS tradedeveloping and developed countries during 1995-1999, bloc, where all CIS countries, with the exception ofthe number has surged significantly to 51 during the last Moldova, have entered into agreements with only otherseven years, constituting 46% of the total number of CIS countries. Another interesting feature could heagreements during the period.observed in Japan's initiative towards a trade agreementwith ASEAN, in spite of it having established bilateralDeveloping countries have evinced keen interest inagreements with Singapore and Malaysia, which areengagement in RTAs with more developed nations to gainmembers of ASEAN. Like CIS countries, India and Sriaccess to the larger and potential markets and benefitLanka have also established an FTA, despite beingfrom the immense trade opportunities inherent in thesemembers ot the South Asian Free Trade Agreementmarkets. This subtle and gradual shift in the interest(SAFTA). Similarly, as in case of Japan, India has tradeamong developing countries to engage in agreementswith developed countries and vice versa has beenagreements not only with ASEAN but also with someparticularly noticed since 2004. This could he attributedmember countries viz. Thailand and Singapore.to the interest among developed countries to engage in It may be observed that countries are engaging inbilateral agreements with developing countries agreements with trading blocs as a whole to access thesubsequent to erosion of their confidence in larger and more potent markets of the region. A typicalmultilateralism. It may be cited that for United States, all example in this regard could be the advantage oftrade agreements except those with Israel and Jordan, entering into an agreement with blocs such as EU, whichhave entered into force post 2004.provides access to all member countries of the Union.Emergence of Trade Blocs & RTAsRecognizing this, countries such as Norway, Croatia,Albania, Mexico, Jordan, Algeria, Tunisia, Chile, EgyptThere has also been a fast rise in the number of regional etc. have entered into bilateral trade agreements with thetrade blocs around the globe as a result of the willingness European Union. However, for a member country, aon part of countries to enhance and foster trade customs union or common market could restrict therelationship with neighbouring nations. Countries are choice and freedom to enter into bilateral agreementsalso transcending physical geographical borders to with non-member countries, as the common externalrapidly enter into trade relations with distant countries as tariffs have to be adhered to. This is particularly true forwell. Southern Cone Common Market (MERCOSUR) and larger and relatively more advanced member countries inNorth American Free Trade Area (NAFTA) have emerged the bloc.as major blocs in America. With the emergence ofIt may be also observed that countries in almost allsignificant trade blocs like Association of South East Asianregions of the world are showing an increasing interest inNations (ASEAN) and the South Asian Association forexpanding their trade opportunities with countriesRegional Cooperation (SAARC), Asia too is rapidlybilaterally outside the region or a bloc. In Asia, Singaporeembracing regionalism.has been the most aggressive in its pursuits of regionalCommon Market for Eastern and Southern Africa trade agreements with number of countries like New(COMESA) and Southern African Development Zealand, Australia, United States, Jordan and Panama.Community (SADC) in Africa; Greater Arab Free Trade Singapore is one of the leading RTA signatories with 18Agreement (GAFTA) and Gulf Cooperation Council such agreements in place. Other countries that are(GCC) in West Asia; European Union (EU) and European involved in the most number of RTAs are Mexico withFree Trade Agreement (EFTA) in Europe and the engagements in 19 agreements, Chile with 17Commonwealth of Independent States (CIS) trade bloc agreements, United States with 15 agreements andcould be identified as crucial developments in regional Turkey with 10 agreements. An investigation of the tradeeconomic integration, which have also significantly pattern of these countries over the past decade clearlyenhanced intra-bloc trade.attests to the positive impact of RTAs on the trade29INDO-SWISS BUSINESS + JAN-FEB 2008

Allianceperformance of a country. The value of trade of all these Building (TCB) efforts have also played an important £countries with individual RTA partner countries over the role in strengthening its trade relations with especiallypast five years has also increased sharply. Moreover, developing countries.trade with RTA partner countries constitutes a majorRecognizing the potential for greater regionalportion of the total trade of these countries, whichcooperation for development, major Asian economiesreinstates the importance of RTAs in global economictoo have rapidly embraced regionalism in the course ofintegration of these countries. For example, in case ofthe past decade, which has led to the proliferation ofMexico and Singapore, trade with RTA partner countriesseveral regional trade agreements involving most of theconstitutes around 85% and 63% of their global traderespectively. Similarly, for Chile, trade with RTA partnersAsian economies. ASEAN has been the major trade blocconstitutes as high as 80% of its global trade.in Asia, with intra-ASEAN exports accounting for 23% ofglobal exports of ASEAN in 2005.There are some key factors that have promoted regionaltrade agreements in these specific countries. In case of ASEAN is also expanding with the 'ASEAN plus three'Mexico, the shift from an inward looking trade policy to a initiative, with free trade agreements with Japan, Chinamore liberal, and outward oriented trade policy, the and Korea. ASEAN entered into an agreement with Chinapresence of Maquiladoras, offshore assembly units along in 2003 to form the ASEAN-China FTA (ACFTA). Also,the US-Mexico border and a number of export incentives bilateral efforts are taking place to establish the ASEAN-provided by Mexico have played an important role in Japan Closer Economic Partnership (CEP) Agreement,fostering its trade relations with other countries both intra ASEAN- Korea FTA (AKFTA), and ASEAN-India FTAregionally and extra regionally. With regard to Singapore, (AIFTA). The 'ASEAN plus three' could be identified as aits pro-exports, liberal trade policies and elimination of crucial development in regional integration, which hasmost restrictions on imports boosted its trade the potential to significantly boost trade and developmentengagements. Similarly, prioritization of ensuring access in Asia. Value of total trade of 'ASEAN plus three'to larger markets in its multidimensional trade policy, countries reached US$ 4.3 trillion in 2005, which wasimposition of low and uniform applied tariffs and a stable 20% of global exports. It is therefore, important for Indiaeconomy were instrumental in the proliferation of Chile's to further strengthen its engagement with ASEAN andengagement in RTAs. United States' Trade Capacity thereby, be an integral part of a Pan Asia Free Trade Area.30INDO-SWISS BUSINESS + JAN-FEB 2008

AllianceIndia's Engagement in Regional Trade of its pursuits towards eventual multilateralism.AgreementsWhile India needs to maintain consistency in its negativeIndia's endeavour to foster its international trade haslists with regard to agreements with different countries tobeen well complemented by its efforts to promote effectively protect the domestic industries, it is also crucialregional trade. Target countries in India's regional trade to address the issue of non-tariff trade barriers, especiallyinitiatives cover various regions of the world. In Asia, when engaging in regional trade agreements withIndia made a foray in RTAs with an FTA with Sri Lanka in developed countries like the US or the European Union.1998. This was followed by a Comprehensive EconomicWith the recognition of the positive impact of RTAs on aCooperation Agreement (CECA) with Singapore, an FTAcountry's trade performance, India could explore tradewith South Asian Association for Regional Cooperationaccords with all major trading blocs in different regions of(SAARC) members (SAFTA) and with the members of Baythe world viz. MERCOSUR, NAFTA, EU, ASEAN, GCC/of Bengal Initiative for Multi-Sectoral Technical andGAFTA, SADC/ SACU and CIS, which could substantiallyEconomic Cooperation (BIMSTEC), a frameworkenhance India's market access and choice of competitiveagreement for FTA with Thailand and a frameworkagreement for CECA with ASEAN.imports. Moreover, India could also consider engaging inagreements with at least one of the major members of aWith the establishment of Joint Study Groups (JSGs), trade bloc in case of its inability to strike an accord with aIndia has also initiated negotiations with a number ofbloc as a whole, which could act as a potential gatewaycountries like Korea, China, Japan, Russia, Malaysia andto other markets of the bloc.Indonesia. These initiatives form an integral part of India's'Look-East Policy', which has gained substantial India could draw insights from the global trend andmomentum in recent years and has started yielding pattern of gradual shift from south-south tradedesirable results on the economic, political and strategic agreements to preferential agreements betweenfronts. India is also seriously pursuing negotiations to developing and developed countries, and exploreestablish RTAs with other developing countries located opportunities to engage in trade agreements with moreelsewhere.developed countries like US, Japan, EU. India hasIndia has in place a preferential trade agreement (PTA) initiated negotiations for a Comprehensive Economicwith MERCOSUR and with Chile; a framework Partnership Agreement with Japan and a broad-basedagreement tor FTA with the Gulf Cooperation Council trade and investment agreement with EU, which needs to(GCC); and a PTA with South African Customs Union be carried forward. An RTA with USA, with significant(SACU). India has also established JSGs with Mauritius market potential and evident complementarities couldand Israel to explore the possibility of an FTA.also prove to be beneficial for India. Such agreementscould also facilitate and enhance investment flows intoEngagement in regional trade agreements has had aIndia.significant effect over the past decade on India's tradeperformance with its partner countries. India's exports to India could also look beyond FTAs exclusively in goods toand imports from its RTA partner countries have expand the scope of agreements to incorporate services,significantly increased from 2001-02 to 2006-07. India's investment, monetary cooperation and trade logistics.trade with its RTA partner countries as a percentage of itstotal trade has shown a notable rise from 20% to 30%On the strength of its services sector, India could set upfrom 2001-02 to 2006-07.exclusive free trade agreements in services, which couldbe later expanded to trade in goods. India could widenThe Way Forward For Indiathe scope of Bilateral Investment Promotion AgreementsIt is imperative for India to assess the long-term(BIPAs) to include specific investment incentives inimplications arising out of any engagement in RTA andgrowing sectors such as infrastructure. With regard toadopt an integrated approach consistent with the long- monetary cooperation, the model of the Mercosurterm interest and potential of the economy. Engagement Structural Convergence Fund (FOCEM), which facilitatesin regional trade agreements should be one and not the transfer of funds from more developed countries to lessonly avenue for enhancing its international economic developed countries in the bloc, could be a model ofcollaboration. India needs to explore bilateral and emulation for the SAARC region, that could effectivelyplurilateral trade initiatives and effective regionalism lead to economic development and integration of thebeyond free trade agreements, however, in continuance region. 32INDO-SWISS BUSINESS + JAN-FEB 2008

Newssecond round of the parliamentary elections, for seatswhere no candidate had gained enough votes to beelected outright, it was clear that even on the centre-right not everyone was happy about the prospect ofPeople's Party calling the tune.Switzerland's usually calm political atmosphere wasthrown into turbulence in 2007, leaving many to wonderwhether things would ever be the same again. It was ayear of ups and downs for the rightwing People's Party,the largest in parliament. In the October elections itincreased its share of the vote yet further, to 29 per cent.In the run-up to the cabinet election, Socialists, Greensand centre-right Christian Democrats formed a behind-the-scenes alliance designed to unseat Blocher. Theybacked a second, less controversial, member of thePeople's Party, Eveline Widmer-Schlumpf, to standagainst him.But in a major surprise less than two months later, itscontroversial figurehead, Christoph Blocher, was votedout of the cabinet.The elections brought gloom for the centre left SocialistParty, whose share of the vote fell below 20 per cent,although it remained the second largest party. Manysupporters of the left switched from the Socialists to theGreens, who achieved almost ten per cent.Clever campaignSwiss standards, and again it was the People's Partywhich dominated the field. Using the most up-to-datemethods of communication, and unworried by politicalcorrectness, it set the tone for the whole campaign.The most controversial element was its "black sheep"poster, which showed three white sheep kicking a blacksheep out of Switzerland. The poster, considered bymany to be "anti-foreigner", was widely criticised inSwitzerland, and attracted much negative commentabroad. But it proved popular with party supporters.The party campaign also focussed on Blocher himself. InSwitzerland, where personalities traditionally keep in thebackground, this was highly unusual. But the slogan"Strengthen Blocher, vote for the People's Party" wonvoters in places where the party was not especiallyactive.Growing disquietSwiss Politics UndergoAn Unusual Phase of TurbulenceOnce the People's Party had established its strongposition of parliament in the elections, it appeared to bea foregone conclusion that Blocher would be re-electedfor a second ministerial term.People's Party officials were not alone in failing to noticehow the disquiet of the centre parties was strengtheningan anti-Blocher movement. However, even in theA major upsetThe announcement that she had succeeded in gainingmore votes than her eminent rival unleashed wildjubilation in parliament on the one hand, andconsternation and indignation on the other. Widmer-Schlumpf asked for time to consider her position.The Swiss waited with bated breath not something theyare used to in politics to hear her decision the nextmorning.When she announced that she would accept herelection, her party was plunged into turmoil. It declaredthat it would not support her, or the other People's Partyminister, Samuel Schmid, who is also regarded as amoderate.The People's Party said instead that it would go intoopposition. Under the Swiss system of direct democracy,this means that it will put its policies directly to the peopleby launching people's initiatives about the issues itconsiders important.Its highly competent, if controversial, election campaignindicates that it is at present much better able to get itsmessage across than any of the other parties.Meanwhile, parliament has come out of the latest eventsstrengthened, having proved that it does not merelyrubber-stamp decisions taken elsewhere.But only time will tell what the long-term impact of thissmall revolution in Swiss politics will be.33INDO-SWISS BUSINESS + JAN-FEB 2008

NewsRevisiting 1954: The Miracle of BerneBerne, July 4, 1954: In the FIFA World Cup Final, theheavily favoured ball artists from Hungary, led by thefamous Ferenc Puskas, have taken an easy 2:0 lead overGermany. The game seems to be over.“Rain is pouring down incessantly”The message by German radio reporter HerbertZimmermann is not only meteorologically significant. Onan increasingly heavy pitch, the physically strongGermans fight their way back into the match. Before thebreak, the game is tied at 2:2. It also suits the Germanside that team equipment manager Adi Dassler (theHungary's 3:3 equalizer. Finally, the “Miracle of Berne” isborn a “true football miracle”, as Zimmerman puts it atthe end of his live broadcast. But Germany have not onlybecome surprise winners of the World Cup. For manyGermans, July 4, 1954 also marks the birth of theirfederal republic, or at least of Germany's economicmiracle.Now, 50 years later the unforgettable “Miracle of Berne”hits the movie theatres, lavishly adapted for the big screenby director Sönke Wortmann and co-writer Rochus Hahn.founder of adidas) has provided them with a new type of When the host city of Berne launches a sloganscrew-in studs that turn out to be highly effective on the competition for the EURO 2008 shortly thereafter, theslippery Wankdorf pitch.Bernese miracle is still fresh in people's memories evenamong generations that weren't even born in 1954. So,After the half-time break, the men around legendarysmall wonder the slogan “Berne works miracles” ends upcoach Sepp Herberger (“Every game lasts 90 minutes.”)as the winner. Needless to add, many locals believe thatkeep on fighting untiringly. In the 85th minutethe miracle will repeat itself at the new Wankdorf at leastZimmermann reports: “Rahn should take a shot from thefor one of the four teams playing in Berne.back.” Indeed, the brawny attacker from Essen firstdribbles past two Hungarian defenders before unleashing EURO 2008: Italy, France, Netherlands anda low shot that proves unstoppable for world-class keeperRomania play in BerneGrosics. “Goal! Goal! Goal!In the closing minutes Toni Turek, aptly called “footballgod” by a jubilant Zimmermann, is forced to make anumber of miraculous saves. And the Welsh linesmansignals an alleged offside position, thus denyingBern works miraclesTeams to play in Zurich and Berne: Italy, France,Netherlands (only in Berne) and Romania.Teams to play in Basel and Geneva: Portugal, CzechRepublic, Turkey and Switzerland (only in Basel). 34INDO-SWISS BUSINESS + JAN-FEB 2008

NewsScientists Solve the Mysteries of SleepA Lausanne University research team hastaken a step closer to answering aquestion that has baffled scientists forcenturies – why do humans need to sleep?Studying sleep deprivation in mice, theteam has managed to determine whathappens in the brain at the molecularlevel when asleep, and to isolate a genethat regulates sleep activity."I was always amazed that no one knewwhy we sleep," Mehdi Tafti, head of theresearch project at Lausanne University'sCentre for Integrative Genomics said.Tafti, an expert in sleep disorders, hasspent the past 20 years trying to work outwhy humans spend a third of their lives inbed.His research team recently published theirfindings in the Proceedings of the NationalAcademy of Science journal, identifying agene – Homer1a – that controls levels ofcalcium in neurons in the brain.Mice, like humans, need calcium tofunction when awake, but the longer theyare up and about, the more calciumbuilds up, and when the levels get toohigh, the neurons get over-stimulated.Sleep, therefore, is nature's way ofreducing these excessive calcium levels inthe brain. And Homer1a plays a key role."This gene regulates the levels of calciumto protect against hyperactivity of thebrain," explained Tafti. "The more you stayawake, the more it is activated."It rings an alarm bell in your head and triesto counterbalance the build-up, warning:"Be careful, calcium is trying to get in – youhave to regulate it otherwise it's going tobe toxic," he added.Sleep deprivation"In animal models, sleep deprivation islethal; sleep deprived rats or mice die aftertwo or three weeks – but we don't know35why," said the Lausanne professor. "It has never been tested in humansbut long-term sleep deprivation would probably lead to death."Whether you are able to snooze until midday or wake up at the crack ofdawn is all down to your genes, say experts. But what's the minimumamount of shut-eye we can get by on each night?"The hypothesis is that there is a core amount of sleep that everybodyneeds, probably about five to six hours," he said."I always say it's like food intake. You need a certain amount of food butyou know that everybody eats more than what we need. Sleep isregulated in the same way."Possible applicationsThe fact that humans also possess the Homer1a gene therefore opensup a huge field for possible medical applications. It could be used tohelp people control their tiredness and stay awake longer, or at theother extreme improve the recovery process during sleep.Tafti also imagines possible uses for treating people suffering fromdepression or schizophrenia. The scientists believe that there is a highchance the newly identified gene has an important influence on thesleeping disorders of people suffering from depression.Contrary to what might first be imagined, sleep deprivation is anextremely potent anti-depressant. "The problem is that it doesn't lastlong as when they go back to sleep they wake up depressed," he said."If you remove this gene in mice, they may have a depressive-likebehaviour and if you over-express the gene you can treat thedepression," said Tafti. Tests using humans are expected to start withinthe next four to five years.INDO-SWISS BUSINESS + JAN-FEB 2008

NewsSwiss exports grew by more than 10 percent in 2007 forthe second year in a row, although the final quarter sawdemand fall off. The strength of the watchmaking industrycontributed towards the good performance, figures fromthe Federal Customs Office show.The global economic outlook could mean that figures arenot as good this year, even if the Swiss economy is unlikelyto suffer.According to the statistics, the food, beverage andtobacco industry did best last year, increasing itsexports by nearly 24 per cent. Coffee sales abroadtrebled to SFr570 million, while beverage exportsincreased by a third.The watchmaking industry (+16.1 per cent) came insecond in the export rankings. It was a record year forwatchmakers, who shipped nearly SFr16 billion worth ofgoods abroad last year."Our success is mainly due to the good health of theglobal economy and demand from emerging markets,"said Jean-Daniel Pasche, president of the Federation ofthe Swiss Watch Industry. Pasche said that watchmakerswere in a position to respond to customer demand forinnovative products.Luxury watchesThe luxury watch segment represented two-thirds of salesabroad, with clients especially interested in mechanicaltimepieces. But there was increased demand for all kindsof watches.Swiss Exports Up 10 pcDespite Global Economic Slowdownthan the previous year.Exports to industrialised nations, especially to those in theEuropean Union, Switzerland's biggest trading partner,grew by a tenth, while those to emerging marketsincreased by a quarter. There was almost no growth inUnited States exports.Slowing demandWhile the year was generally good for Swiss productsabroad, the final quarter of 2007 saw a decline ingrowth, especially in December."The decline in export growth reflects slowing demandfrom the global economy," said Felix Brill, an economist atSwiss bank UBS. "However export and import data is quitevolatile in Switzerland, since a single event, such as anaircraft purchase by a local airline can easily distort thefigures."Brill said that this trend is likely to continue in 2008. "Thestrength of the Swiss franc versus the euro and the dollarwill also dampen export growth," he added. TheSwiss economy should not suffer from a turndowneither according to Brill, who says that imports willremain strong."This should continue as a result of stronger consumption,especially for label brands, due to employment growthand real wage increases," he pointed out.No recession fearsWatchmakers for example are not particularly concernedThe metal industry, third in the export rankings, saw prices by fears of a recession or of a knock-on effect for thefor iron and steel take off, increasing by nearly a quarter in turbulent financial markets.2007, but overall growth was only slightly above last "Our progression will continue," said Pasche. "We don'tyear's result at 15.3 percent.think our sales will be affected by the current state of theThe plastics sector's exports stood at 12.5 per cent, while stock market."the machine and electronics industry's growth was 1.5 Brill tends to agree. "If anything, firms have found it easierpoints better than in 2006 at 11.3 per cent. Equipment for to access cheaper loans over the past few months," hethe graphics sector (-6 per cent) and telecommunications said. "They also still have full order books and don't seemitems (-19.8 per cent) failed to attract foreign buyers. about to give up on plans to invest."The chemical industry, which includes the all-important But he warns that "if the US does go into recession, andpharmaceutical sector, saw sales abroad increase by 9.3 consumer and business sentiment deteriorate,percent in 2007. However, this was more than a third less companies could delay investments". 36INDO-SWISS BUSINESS + JAN-FEB 2008

NewsBright Future Seen forSwiss Biotech UnitsDespite black clouds hovering over global stockmarkets, the long-term financial future of the Swissbiotechnology sector remains bright, say industryexperts.Executives from the biotech and pharmaceuticalindustries joined investors and researchers in Genevarecently for the start of the seventh annual BioDataconference in Geneva."Swiss biotech is by far the most advanced and maturebiotech sector in Europe. BioData therefore representsan important forum for the industry," Frankfurt-basedinvestor, Kai Brünig, said."It's an important meeting place for the Swiss life sciencessector and essential for the economies of the LakeGeneva and Rhône Alps regions," Pierre-François Unger,canton Geneva's minister in charge of economy andhealth, told the 350 participants.According to the State Secretariat for Economic Affairs(Seco), with 137 biotech companies and 81 biotechsuppliers, Switzerland boasts the world's highest percapita biotech density.Long-term futureAs global stock markets kept experiencing turbulenceamid fears of a worldwide economic slowdown, biotechinvestors and industry experts in Geneva tried to calmparticipants' nerves."While the short-term is going to be tough, the long-termis bright for the sector," said Ulrich Kinzel, director atNomura Code Securities."Fundamentally the biotech sector should be optimisticabout the future, but there's no question that we are in adifficult market environment right now," agreed SimonMoroney, CEO of biotech firm Morphosys, whichrecently signed a $600 million (SFr660 million) deal withSwiss pharmaceuticals giant Novartis.37The regional two-day event, the largest of its kind inSwitzerland, provides a unique opportunity for young,innovative start-ups from the Lake Geneva and Franco-Swiss Rhône Alps regions to present their projects whichmight lead to longer-term partnerships, fundingagreements and scientific cooperation."We shouldn’t forget that the pharmaceutical industry isvery powerful and has extremely deep pockets." Kinzeladded: "There are lots of bargains in the biotech sector; thebottom clearly has still not been established. In the futurewe will see rich licensing deals by big pharmas, there willbe more biotech mergers and we shouldn't forget that newmarkets are developing such as in central and easternEurope, Russia and Asia."The problem, according to the experts, is that anyonewanting to invest in biotech needs patience to "hold outuntil the markets recover". This is why other areas of lifesciences, such as medical technology, have been a recentfocus for investors, BioData chairman Hervé de Kergrohensaid."Investors want to balance their portfolios between biotechand medtech [medical technology]. Medtech generatesquicker exits and a less risky bet, while biotech requires amuch longer horizon and bigger investment sums," heexplained.Helping handA large part of the early success of young biotech start-upsis also down to regional synergies and a helping-handfrom the right people. Since 2001, BioData has beencollaborating with the Lake Geneva life sciences clusterBioAlps."This year we are going to support a dozen new start-upsfrom the region such as Leman Cardiovascular, ArisGen,DiagnoSuisse and Med Discovery," said Lionel Eperon,BioAlps's president.But for the region to keep its competitive edge, privatebanking and business angels should wake up andparticipate at the early stages of biotech companies suchas Actelion, Addex and Speedel, added de Kergrohen. "Ifthey do that, this part of the world could be even moresuccessful in the life sciences sector," he said. INDO-SWISS BUSINESS + JAN-FEB 2008

NewsSwiss Nanotech Initiative toImprove Quality of LifeNanotechnology could be soon applied to monitoringhealth, the environment and security on a large scalethanks to a new national initiative in Switzerland.The Nano-Tera project could also provide an opportunityfor engineering research and education to match theresults of more traditional scientific endeavours.Nanoscience and nanotechnology involve studying andworking with matter on an infinitesimal scale. Onenanometre is one-millionth of a millimetre and a singlehuman hair is around 80,000 nanometres in width.While there are many projects involving nanotechnologyin Switzerland, the time is now right to make the next step,according to the project initiators."Switzerland has opportunities because it's a technologyleader," Giovanni De Micheli, chairman of the Nano-Teraexecutive committee said in Bern recently. "The idea is toconnect the small picture with the big picture."Broadly speaking, the project aims to improve quality oflife for the Swiss population as well as create innovativeproducts that could provide a boost to the economy byintegrating nanotechnology into so-called embeddedsystems."We want to anticipate what future products will be withthis programme," said Patrick Aebischer, president ofLausanne's Federal Institute of Technology. The initiativealso hopes to attract industrial partners at a later date withthe promise of widespread use of some products.An athlete's or a patient's heart could, for example, bemonitored using a smart shirt that connects to a widernetwork and provide up-to-the-minute information tomedical specialists.Hard taskAccording to De Micheli, western nations must re-evaluate their approach if they are to withstand increasedcompetition from Asia in particular and attract the beststudents again.Nanotechnology has already reached a point where itspractical use for monitoring can be considered. However,developing entire systems will be no small task, accordingto Boi Faltings, head of the artificial intelligencelaboratory at the Lausanne institute."We will be building a large number of small devices thatwill generate a large amount of data," he said. "Some ofthe challenges will be about how to manage these38systems, how to ensure they are reliable."According to Faltings, monitoring the environment withnanotechnology, for example, will provide a moreaccurate picture for specialists, allowing them to detectnew phenomena and trends, such as how pollutionaffects people."We cannot hope to deal with disease simply by analyzinggenes," he added. "Why not analyze people to see howthey react to pollution? We don't know that much so weneed to collect data."One possibility would be to use systems developed by theproject to track pandemics such as bird flu. There areconcerns though that implementing such systems couldbe detrimental to a person's privacy if they are beingconstantly monitored. Faltings admits that this can beproblem, but that it can be overcome."There are new technologies being developed that dealwith data without revealing the source of thatinformation," he said. "The aim is not to identifyindividuals, but to answer overall questions."Re-injecting lifeThe Nano-Tera project will cost around SFr120 million($110 million) over the next four years. One of the maingoals is to re-inject some life into the once mightyengineering sector, particularly at universities."We would like to show that engineering is not just sittingbehind a computer," he said. "It's about creating systemsthat can have an impact on society.”INDO-SWISS BUSINESS + JAN-FEB 2008

NewsA Hundred & Going StrongDeliciouslySwitzerland's best known chocolate began as anexperiment over a kitchen stove; a century later it is afavourite in 110 countries round the world.The Swiss pride themselves on their innovative spirit, andToblerone is no exception. No one had mixed chocolateand nougat before Theodor Tobler and his cousin EmilBaumann tried out the idea over that stove in 1908.But equally groundbreaking were the marketing ideasthat tumbled out of Tobler and pushed his brand ingeneral and the new bar in particular to the top.The triangular shape was in itself a stroke of genius – andpractical too. The pieces could be broken off and theremainder pushed back into the tube.The widespread legend is that Tobler was inspired by theshape of the Matterhorn, but according to his grandsonAndreas, Theodor in fact got the idea from the dancershad seen at the Folies Bergeres in Paris forming a humantriangle as part of their act. The name is a combination ofTobler's surname and "torrone", the Italian word fornougat. Typically for Tobler, it simultaneously promotedthe brand and the individual product. He was quick topatent both name and recipe.Marketing manTobler had early understood the importance of getting hisname in the public eye, at a time when manymanufacturers expected to sell their products by word ofmouth.Tobler was well aware that the domestic market was verysmall, and that he needed worldwide sales. In amarketing event in 1921 Toblerone samples werehanded out to passers-by in London."There will soon be no one in London who has not heardof Toblerone, and this is a city with a larger populationthan the whole of Switzerland," commented the firm'scustomer magazine, Jurnalo Tobler.Triumph and disaster ...Tobler's entrepreneurial spirit and his willingness to takerisks was both his strength and his weakness. He hadtaken over his father's chocolate business in Bern in 1900when he was 24. He was proud of his humble roots andhis business acumen, which set him apart from Bern'sconservative elite.For years the company did very well. It could not only paygood dividends to its shareholders, it also had ahealthcare system for its workers, and provided old ageand disability pensions at a time when this was by nomeans standard.From the beginning Tobler embarked on a course ofexpansion, becoming the third -biggest Swiss chocolatemanufacturer by the early 1920s. But as the decade wenton, economic depression began to bite.He came under fire from his shareholders for the hugeThe company found itself in severe financial difficulty, andsums spent on publicity, and also from the Swiss Heritagein 1931 the creditor banks appointed their own man toSociety for plastering the city with sheet metaltake over. Tobler was squeezed out. He died in 1941.advertisements. But he was unrepentant.After a series of takeovers, Toblerone has been part of"You can become well-known by letting time do its work. Kraft Foods since 2000.But then you risk being overtaken by others before youreach your goal," he once commented to justify hisstrategy.Early advertising focused on the Tobler name. It was onlyin the 1920s that the company started to push Tobleroneitself, initially as a product for women and children....and triumph againBut whatever the fate of the parent company, the bar hascontinued to go from strength to strength. Tobler's dreamof worldwide sales has been fulfilled: 96 per cent ofToblerone production goes abroad. The 400-gram40INDO-SWISS BUSINESS + JAN-FEB 2008

NewsToblerone Gold is the most popular confectionary item in An unusual publicity event is to mark this centenary year.duty free shops.In late spring, Switzerland's four largest cities are tocompete against each other for the honour of hosting theNor has it lagged behind on inventiveness. It has "great Toblerone Anniversary Celebration" in September.broadened its range with new flavours and sizes. In 1982The challenge is to build the highest tower ofToblerone entered the Guinness Book of Records with a Toblerone boxes the fastest. Anyone can help – but theseven-kilogram bar. boxes will be empty! Cheesemakers Say Cheese!Exports of Swiss cheese hit a record high in 2007, with "They have gone down a bit for various reasons," Escher59,303 tonnes of various makes, including fondue mix, admitted. "Prices went up a bit in 2007 but also a massiveheading abroad. Imports of cheese also increased, amount of Gruyère AOC was exported in 2006. Also theshowing that the gradual liberalization of the European competition is not sleeping! In France in particular Comtécheese market had led to a clear increase in the exchange is a similar product to Gruyère AOC and is being stronglyof goods, according to the Swiss Cheese Organisation. marketed."A total of 3,235 tonnes more cheese was exported in2007 than the previous year, a rise of 5.8 per cent.Emmental AOC was the star performer, shifting 1,291more tonnes than in 2006."Swiss cheese is still considered an interesting productabroad – our specialties are very popular amongconsumers as they grow naturally and are of a very highquality," David Escher, director of the Swiss CheeseOrganization.Other cheeses that did well included Switzerland Swiss,Tête de Moine AOC and Tilsiter. "Switzerland is a countrywhere hard and semi-hard cheese is produced – we arevery strong on these products. On soft cheeses we areperhaps less strong than the French," Eschersaid. "Emmental AOC falls into theformer category and has been ourbest seller abroad for ever."Many specialist semi-hard cheeseswere also in demand. "People arelooking for that special taste whichthey can't necessarily find in theirown countries," he said.Not doing so well however wereGruyère AOC and ready-to-usefondue mix, exports of whichdropped by 294 and 266 tonnesrespectively.Great importCheese exports play an important role in the Swiss dairybut also national economy, according to the cheeseorganization. More than 40 per cent of milk is turned intocheese, a third of which is exported.The main export market is Italy, followed by Germany,France and the United States. However, last year was alsogood for cheese imports, which rose by 11.9 per cent to37,329 tonnes.The cheese organization said increases could be seenabove all in the categories of "other cream cheeses","other soft cheeses", other semi-hard cheeses" and "otherhard cheeses" – "basicallycompetitively priced goodsdestined for large retailers or theindustrial sector".Since the gradual liberalizationof the cheese market within theEuropean Union in 2002, Swissexports have risen by 6,587tonnes, or 12.5 per cent, withimports also increasing by6,142 tonnes, or 19.7 percent."The future is looking good forexports as long as prices staystable," according to Escher. 41INDO-SWISS BUSINESS + JAN-FEB 2008

NewsWarren Buffett's FirmGives New Life toSwiss ReAiling Swiss Re has been given a timely lift by Warren The firm's initial plan to buy back up to SFr6 billion ($5.51Buffett's Berkshire Hathaway group, which has bought a billion) of shares has now risen to SFr7.75 billion.three percent stake in the world's largest reinsurer.Berkshire will assume 20 percent of Swiss Re's propertyand casualty exposure over the next five years as part ofFuture intentionsThe so-called "quota share" agreement that allowsthe deal. Shares have continued to rise on the back of the Berkshire to take over a fifth of Swiss Re's property andrecent announcement.casualty risks comes with the upside of claiming 20percent of premiums paid. The mechanics of the deal areThe Zurich-based reinsurer announced in November thatnot unusual in the industry, but the scale is larger thanit would have to write down SFr1.2 billion ($1.1 billion)average, according to Wiemer.related to United States subprime mortgage losses. Thisfollowed a SFr1.21 billion payout bill for natural disasters The deal gives Berkshire greater access to the Europeanin 2007 – higher than the previous year.market and a means of channelling its funds away fromthe shaky dollar. Precise details have not been revealed"This is a remarkable statement of trust and confidence bybut the three per cent stake is estimated to be worthprobably the most knowledgeable insurance investor inthe world," Swiss Re chief executive Jacques Agrainaround $800 million (SFr870 million).recently told newspersons. "We are extremely proud to It has also led to speculation about the future intentions ofhave [Berkshire] among our shareholders."Buffett. Most analysts do not expect Berkshire to launch aBank Vontobel analyst Heinrich Wiemer agreed that full takeover, but some believe it may increase its stake atBuffett's personal seal of approval carried a lot of weight, a later date.despite only taking a small stake. The iconic investor, "I wonder if this is purely a financial investment or just aknown as the "sage of Omaha", has built a vast fortune first step towards something more," insurance expert Peterthrough shrewd acquisitions in the insurance sector. Maas from St Gallen University said."Buffett is the world's most respected insurance insider "Investors needed a new storyline because although theand long-term anti-cyclical investor. You probably couldgeneral business model worked, earning money in thenot find a more authoritative voice in insurance," he said.traditional reinsurance markets, the newest financialThe Berkshire Hathaway deal both softens Swiss Re's services division had problems. So where does the triggerexposure to property and casualty claims and frees up for new development come from? It could come frommore money for its continuing share buyback scheme. outside.”42INDO-SWISS BUSINESS + JAN-FEB 2008