Many supposedly reputable foreign companies are taking Swiss consumers to the cleaners. Their marketing is masterful in its obfuscation. Some recent product launches exemplify how such companies seek to make excessive profits by charging “Swiss prices” when they have no need to, and how they abuse consumers’ trust here.
Netflix, the US-based video on demand service, announced its arrival here in Switzerland to great fanfare. Fans of the company and media alike hailed the company’s entry to the Swiss market with a collective cheer. Prevailing sentiment reflected widespread delight at a cheaper competitor with huge muscle arriving to take on the virtual duopoly of Swisscom and UPC Cablecom.
But like so many foreign companies seeking to exploit the high pricing potential of Switzerland, all is not quite as rosy as their smiling marketing folk would have us believe. As reported previously in Le News, Netflix is charging Swiss customers a premium over the rates it charges elsewhere in Europe. And for a very reduced service. It only offers a catalogue of 300 films in French, and its English list is woefully old. The most recent films are at least three years old (against four months for Swisscom and UPC Cablecom). Even terrestrial TV station RTS, broadcasts films that are 22 months old. What galls is being told by Netflix over the phone that only subscribers can see the catalogue. This should probably be read as Netflix doesn’t want potential customers to see how poor its selection is until they’ve signed up. And even though Netflix offers a free one month trial, it will be relying on customer inertia together with a claim that it will be adding new material in the future to keep most people signed up after they’ve started paying (through the nose).
Netflix in the US costs $7.99 (CHF 7.74) for basic monthly plan – one viewer – while in Austria, France, Germany and Belgium it costs EUR 7.99 (CHF 9.60) but in Switzerland it is CHF 11.90 ($12.26) which means Swiss residents are being charged an eye-popping 53% premium).
But Netflix is not alone in slimming down Swiss consumers’ wallets. Spotify in the US costs $9.99 per month but in Switzerland it’s a whopping 33% more at $13.35 (CHF 12.95).
And then there is Apple. The company recently launched its latest smart phone. As far as it was possible to tell the main marketing message was that there would be long queues outside the shops. The specific attributes of the product barely warranted a mention. And the price is CHF 684 ($706 incl tax) in the US or if you have no other option, CHF 759 from Apple in Switzerland – a handsome 11% premium.
And the company is also trying to launch a wrist watch. Again, its marketing appeared not to be so focused on the product’s attributes (other than pictures) but was centred on creating spurious controversy by boasting that its whizzy gadgetry poses a serious threat to the Swiss watch industry. This is a fallacious claim that verges on the exploitative. Sadly it was not identified as such by most media professionals and Swiss watch industry executives.
Adobe is another super-charging company. For a small business to buy a one year subscription to Adobe’s industry standard Creative Cloud product costs CHF 88.95 per month in Switzerland while in the US it’s a mere CHF 67.84 (US 69.99) a hefty 24% premium. Adding insult to injury, there is no real alternative to Creative Cloud for most individual designers and small companies.
While prices of most things are high in Switzerland. So are wages. The two are linked (although interestingly the cost of employing a person is France is marginally higher). You just need to look around any Swiss town to see a population that is affluent, educated and employed.
The grubby poverty so apparent in even major western cities such as London, Berlin and New York is not evident here every time you use public transport or you enter a public building. Social problems are contained and managed by a well-funded state. There is a de facto social contract: Get paid a good living wage, and in return pay local prices and give your custom to those companies that ensure employment, dignity and decent wages. Not everyone sticks to their side of the deal. People who shop routinely across the border for groceries and services; shops who do not pass on savings to customers, (for example, from importing on a strong franc) and foreign companies (as detailed above) who export into Switzerland. These foreign companies do not have to pay high Swiss employment and other costs but they charge excessively for their products – because they can – and their Swiss competitors cannot compete by reducing their prices because they must pay high Swiss costs. These foreign companies are at best exploitative and at worst guilty of stripping out value that they have not earned from Switzerland. And these companies all proclaim corporate social or ethical responsibility policies.