The Manufacturing Industry in Zurich Executive summary The financial industry mainly includes the banking, insurance, trust companies, securities firms and leasing industry. Zurich is one of the three major financial centre in the world which has long been known as a world leader in private banking services arena. Because of this, a substantial amount of assets transferred to Zurich throughout the world as well as the world’s financial industry professionals has gathered here.
However, Zurich is facing challenges from other financial centre, such as London. Their bank secrecy has made limited concessions to pressures from Mounties which are facing economic recession. Introduction With the increasing economic and business that comes with globalization, especially with the arrival of the information technology revolution. Human society is entering the information society from industrial civilization to information civilization.
Likewise, financial industry which attracting a great deal of attention towards the information age. Global financial industry becomes more digital, integrated and ultra large scales, showing the unprecedented fierce competition situation. Zurich, as one of the world financial centers famous for its private banking services, which are attracting a great deal of attention. Although Zurich has a large number of capital and talents, their bank secrecy is facing threats and challenges.
This report will describe the global financial industry major trends as well as its development status and future trends in Zurich from the political economic and social perspective. Industry Analysis Industry overview and major trends The financial industry is a unique industry which manages the financial products; its sub-industries mainly include banking, insurance, trust companies, securities firms and leasing industry (http://wick. Embalm. Mom/wick/financial industry 2013, Para. L). The financial industry is one of the world’s most influential and the largest industry in the economic field.
The influence of this industry is reflected in it as an intermediary in monetary activities, which has penetration effect on all sectors of the economy. More importantly, the capital as an important factor of production has become an initial condition and the objective function in modern economic activities. The pattern of modern economy has changed from the traditional “in-kind (services) – currency – in-kind (services) ” into “currency – in-kind (services) – currency’ (King, 013). Large scale is characterized by its size, species and volume (see appendix 1).
With the accelerated process of economic globalization and the rapid development of network technology, the global financial industry has obviously showed the following ten characteristics and trends: (1) the relaxation of financial regulation; (2) the financial innovation;(3) the globalization of financial market; (4) the financing characterization; (5) the bank internationalization;(6) the bank business universal; (7) the bank capital centralization; (8) the electronic network finance; (9) a diversified uncial industry in Zurich By Viviane_ailing (www, 2001).
Zurich – as the bank capital of the world Zurich is an area of less than a hundred square kilometers and less than 400,000 populations. Zurich is prosperous. More than 300 banks build here, 20% of total global capital are embroiled from here every year. Thus, people assert that Zurich is the bank of Europe even the bank of the world. According to Swiss Banking Association (2010), Zurich financial sector contributed 11% of the GAP, which banking contributed 6. 7%, and 4. 3% of insurance contributions (CBS, 2010).
Therefore, four Nanking giants of Swiss financial industry called the Federation (SIBS), the Swiss Insurance Association (SW), the Swiss Funds Association (SEA), the Swiss financial center of New Infrastructure (SSW) had developed a financial plan. The plan had come up with the new financial framework, which combines Switzerland overall economic development, employment situation, national tax, external financial services, and the technology and education factors. In the plan, Zurich will become the world’s third largest financial center after London and New York before 201 5 (Zoo, 2007).
A supportive political economic environment As a major international financial center, Zurich has a number of unique favorable conditions. Firstly, neutral Switzerland has a stable political economic situation and flourishing financial industry as well as a large number of worldwide trading liquidity. Therefore, Zurich is a gathering place and refuge for international hot money (Chou, 2008). Secondly, the Swiss Franc has kept stable for a long time. So, when the other currencies such as the Euro and the U. S. Alular under pressure, the speculators will purchase Swiss francs (International Service of the Swiss Broadcasting Corporation, 2012). Thirdly, country funded. Swiss is a nation with a high level of domestic economic development. Its economic condition is better than other Western countries, due to the strong industrial competitiveness; Swiss accumulated a rich surplus capital. Fourth, Swiss banks consider the money is safe in the first place and then make profits. Thus, wealth management is the most significant business of the Swiss financial industry.
There are three Swiss banks can be seen in a ranking of the world’s top ten wealth managers. “At the end of 2011, Swiss banks managed assets totaling CHEF 5,600 billion. If only consider the cross- order private wealth management, Switzerland is the undoubted world market leader with a share of 27%, or CHEF 2,100 billion” (Griswold 2013 Para. 3, see appendix 2). Fifth, geographical advantage, well infrastructure facilities and transport provide convenient factors for the monetary operational activities (Chou, 2008).
Financial industry creates the harmonious city life Zurich has caught the world’s high-end talent to relocate. According to the data from the Swiss Federal Government Statistics Bureau and the Zurich City Hall population statistics office, by the end of 2005, there were 110,892 foreigners Ovid to the financial center-Zurich, which occupied the 30. 2 % of the local population and most of them are the high-level economic talents. The data displays that the foreigner immigrates moved to Zurich mainly come from German, followed by Italy, Spain, Portugal, Turkey, Thailand and so on (Zoo, 2007).
Swiss population by these following reasons directly. Firstly, Zurich attracted many high-level foreign migrants due to the rising status of the urban functions. Zurich is the most important financial center not only in Switzerland, but also through the whole of Europe. With he rapid development of the global financial industry as well as the restructuring and reshuffle of banking, securities, insurance and other major financial sector has created an irreplaceable opportunities for Zurich. Secondly, harmonious city life in Zurich attracted a high level of overseas immigrants.
In 2006, Zurich gained the first place in the Worldwide Quality of Living Ranking. Besides, Zurich public annual GAP reached more than 50,000 U. S. Dollars per year, and the resident income became the number one in the world. Finally, the increasing internationalization of Swiss economic policy has attracted many high-tech immigrants. After Switzerland Joined the United Nations as well as the acceleration of the global economic integration, Switzerland is actively developing trade relations with other countries around the world (Swiss population statistics department, 2006).
Swiss banking secrecy is facing new challenges In 1934, the Swiss Parliament passed the “Bank Secrecy Laws”. According to this law, banks should prevent customers’ information by the third party informed. Whatever the third party is a private or official, and the real property owners can never show p. Swiss Bank won the trust of consumers throughout the world, becoming one of the countries with the most absorbing offshore wealth. However, this law also opened the “door” for illegal funds, especially the wealthy people who can take advantage of this “umbrella”.
In order to avoid the national tax, they can transfer personal wealth to Swiss. After the financial crisis, some U. S. And European countries are facing a serious practical problem which is the lack of bank money and high unemployment, so they are keeping the pressure on Swiss to prevent the country’s money flows to foreign countries. So, in times of stress, Switzerland announced that their banks will increase the information exchange with overseas tax sectors. Germany and Switzerland have signed a new tax treaty, which avoids the German citizens to transfer their assets to Swiss banks and conceal the income tax (Chou, 2008).
London as the world’s three largest financial centers, is one of the biggest competitors to Zurich. Before 2008, London engaged in nearly half of business in European investment banks, manages nearly 80% of all European hedge fund assets, and operating 42% of the global foreign stock exchange which twice as big as New York. According to market data firm Z / Yen Global Financial Centers Index, London is still beat New York, Hong Kong, Singapore, Zurich and Frankfurt and other competitors in the world (Wang, 2013).
Key findings and Conclusion Financial industry is a significant industry to global economic advance, which mainly includes banking, insurance, trust companies, securities firms and leasing industry. Zurich is one of the world financial centers with fewer populations and perfect private banking services and other financial sub-industries. Zurich has attracted a number of the talents from all over the world to relocate here, due to their rosaceous economy and the comfortable living environment.
The United States and other developed countries are exerting pressure on Swiss banking industry, so that they can avoid nation’s funds transfer into the Swiss financial market. In my opinion, Asian and European countries may decide to open bank accounts in own countries. Not only because the nation’ s financial industry including the bank service is more perfect and convenient than before, but also a large number of foreign banks set up branches overseas which give them more choices. However, Zurich has established ranches overseas with a dominant position, because of their professional service system and rich experience in banking.