Swiss retail patriotism

A Swiss acquaintance of mine is 'not short of a few bob', as we would say in Yorkshire. He inherited a good business from his father, ran it very successfully for most of his adult life, the sold it profitably and retired about twenty years ago.

His days as a pensioner are hardly tranquil – 'manic' is probably the best word for them. He normally has several major DIY projects on the go at once. He has a substantial house in his home town in the lowlands of Switzerland, a substantial house in the alps and a sizeable apartment in the sun-kissed Tessin. Definitely 'not short of a few bob'.

Once a month he joins a group of other successful people from his home town for a lunchtime Stammtisch in a restaurant. Each of them can be said to be 'not short of a few bob'. During his business years, they were the movers and shakers whom one got to know as a result of doing business and got to know in order to do business. Unfortunately, time is passing and the most reliable presence at the Stammtisch is the Grim Reaper.

In the course of his DIY activities ('DIY' is a bit of a demeaning term for his heroic projects; he even has his own dumper truck) he has come to buy most of the things he needs from Amazon (Germany or China) or AliBaba (China). Being 'not short of a few bob' he does not care too much about price – the range of products on offer is what appeals. But a five- or ten-fold price difference is not to be sniffed at, even for him.

When a similar product can be had in Switzerland, its price can be a multiple of the Amazon/AliBaba price. He recently bought a heavy-duty lawnmower/snowplough for use on the steep slopes behind his alpine house. This cost him about CHF 500, the shipping took it to about 1'000 CHF and there was a bit more for customs duty. The nearest Swiss equivalent (which was almost certainly also a Chinese product) would have cost him nearly 5'000 CHF. [You can take the exchange rates CHF-EUR-GBP as 1:1, near enough for our purposes].

Being a financial blown husk in comparison with this chap, price is important for me, so that I, too, buy almost everything but food from Amazon.

The other day my friend told his Stammtisch brothers that he was thinking of buying an electric car from China. I hope he was joking. I personally think the idea is crackers – having imported and exported cars within Europe on a few occasions, the paperwork that will be required to bring a Chinese car into Switzerland does not bear thinking about. The lawnmower was bad enough – shipping that involved at one point having to deal with a gang of Slovenian shake-down artists.

But that issue to one side, the interesting point for me here is that he was told in no uncertain terms by some of the others there that he was 'unpatriotic' for not restricting his purchases to Swiss suppliers. When he told me this tale, I, a free market absolutist, was struck by the implications of his friends' position.

Someone who is 'not short of a few bob' can afford to be relaxed about price. For me, though, price is much more important, as is the holy concept of the free market. Where I live in Switzerland I am far away from those things called 'shops', which townies take for granted. A return train ticket to and from civilisation can cost me 50 CHF. In Switzerland, either in person or online, I have a very reduced choice between expensive products: an expensive 'Swiss' electric kettle was still made in China; from Amazon I could get an equivalent product for almost one sixth the price. I can't afford patriotism. I don't mind the Swiss having 'their' products made in China, but I draw the line at anything from a two to ten-fold markup on the product they stock.

There are still quite a lot of Swiss people who barely care about price. I have a theory that the reason Apple did and does such a good business in Switzerland with its phones and its computers is that they are much more expensive than the competition. No doctor's surgery is complete without at least one huge – really huge – white Mac monitor in reception, which probably cost two or three times its Windows competitor. I think back a few decades to my French doctor's rather grubby premises. No receptionist, he answered all the phone calls himself. At the end of the consultation he would ask for fee of, say, 50 Francs in cash, which he tucked away in the cash box in his desk. Things have probably changed a bit since then, but Switzerland is indeed a very rich country.

If more and more Swiss people go out of their way to buy from abroad, acting in their own interests as homo œconomicus, caring nothing about 'patriotism', what will become of Swiss retail traders of all branches, even those, nota bene, just flogging Chinese-made products?

They will go out of business – and that is good so, say we free marketeers, since it shows the market at work. They can only ever get near to Amazon/AliBaba prices if they cut their overheads, which in turns means cutting wages, employing fewer workers and cutting the massive over-regulation that reaches into every corner of life in Switzerland. The Swiss domestic market is tiny, so retail traders have an uphill struggle before even considering price and profitability. Specialisation and personal service will only get you so far.

There is a business in my nearest town that stocks a huge range of items for plumbers and other tradesmen. You can't go along the shelves and find what you need; there are four chaps behind the counter – you tell one of them what you want (as best you can: 'the little brass hose gubbins that fits on a tap'); he then he wanders off into the stores in search of… whatever. He returns some while later with something that looks about right. Before I accept it I ask him how much it is. Slightly peeved that I should ask such an amateurish question, there is little bit of staring at the monitor and waggling the mouse, then '24 Francs' he says, with a certain polished de haut en bas shamelessness. I had taken the precaution of looking the part up on Amazon, receiving numerous offers all for around 3.50 Francs with a four day delivery time to my door. Four days to save 20 Francs seems reasonable to me, so I make my excuses and leave.

This business is a bit of a special case, but not much of one: many of its customers are professional electrical and sanitary installers who don't care about price, since they are just going to pass it on to their customers, who will probably not react when they look at the itemised bill – if they look at it – that the switches and sockets in the electrical installation cost them about 150 Francs apiece (including the electrician's markup, of course). Switzerland is indeed a very rich country. For 150 Francs in total the tradesman could have bought all they needed from Amazon. Why this business can expect their customers to pay the no doubt substantial salaries for these chaps to wander around the warehouse is a mystery to me. But one thing is sure: if that business were exposed to proper market forces and the final customers also were on a tight budget, the motto would be, 'change or die'.

Cutting wages is brutal but essential for survival. There is currently much wailing in Switzerland about the seeming scarcity and expense of rented accommodation. The prices are high not because there is any shortage of accommodation, or because foreigners are invading and snapping up apartments, but because more and more people are willing and able to afford almost whatever rent is asked of them. The price of renting will come tumbling down when fewer people can afford these outrageous rental prices; the builders and landlords will also have to cut down on their Swiss lust for perfection at the high end of the market and build a few apartment blocks that normal people can afford.

If you crank up wages so much ahead of other countries you should not be surprised when your lack of competitiveness leads to your ruin.

And what will the catalyst be for this change? Membership of the European Union. The Swiss will duck the issue as long as they can, but as I have argued elsewhere, EU membership is the only solution available to the current Swiss predicament. The market will be opened in both directions; the population will have free access to all the inexpensive EU products; Switzerland's own producers will have to get their act together and offer some competitive trading in a market that is 30 times – repeat that – 30 times larger than their domestic market.

I am not a fan of the EU by any means – there is a lot wrong with it. But the old Switzerland has run out of steam. Joining the EU offers the chance to dump a lot of historical baggage that is holding the country back, particularly its now pointless neutrality. Its defence can be integrated into that of its European neighbours. Certain holy doctrines will have to be sacrificed, among them the exercise in futility that is direct democracy at a national level in which near 50-50 results decide everything and nothing. When this will happen I cannot tell, but sooner or later, happen it must.