Zug: Switzerland's best kept secret

The masts of countless yachts bobbing about in Zug's marina obscure what would otherwise be stupendous views across Lake Zug. For a town of just 30,000 people, there's an abnormally high ratio of pleasure craft in this town, and many appear inexplicably capacious for cruising around a lake that measures just 14 kilometres long.

Beside the marina, hushed conversations take place around the dining tables inside Hafenrestaurant. Two German-speaking men in crisp Hugo Boss shirts talk earnestly over plates cradling prime cuts of beef. On the table next to them, a middle-aged Australian woman in a tailored ivory suit sips from a glass of riesling opposite her Dutch companion. Further along, a smartly dressed trio speak Italian, and business plans are strategised in French and Spanish over salmon fillets and curry soups. This restaurant, in Trump speak, is where the art of the deal gets done.

Towering above a fleet of prestige German sedans and brutish Italian sports cars outside the entrance is what local historian, Dr Christian Raschle, calls the Ship of Tolerance. "It is meant to symbolise the 126 nationalities residing in Zug. Soon it will be floated on the lake, where it will stop in different locations, teaching the need for everybody to get along."

The "ship", a scaled down version of Noah's Ark, is decorated in patchwork sails that have come straight from school art rooms. "It is sponsored by Glencore Xstrata," Raschle explains, alluding to the mining behemoth that, at last glance, boasted a market capitalisation of $73 billion.

Glencore owns mining assets on every continent bar Antarctica, including coal mines in New South Wales' Hunter Valley region. But it has none in Switzerland, and yet its head office is here, in Zug. Like many companies headquartered in town, very little – if any – of the actual work or product that's responsible for the billion-dollar profits they generate originates in Zug.

Zug's commercial registry lists as many companies as there are people who live in the canton. The town's biggest employer – there are more jobs than residents, with many workers forced to commute because of high rents – is the German engineering goliath Siemens. It alone employs 2000 workers. Swiss pharmaceutical giants Roche and Novartis both own production facilities here, despite their nerve centres being just an hour away in Basel. And the new administrative offices of V-Zug, a whitegoods manufacturer that was founded here, occupy an entire block.

While these and other foreign firms such as healthcare packager Johnson & Johnson and drug wholesaler Boots are notable for their physical presence, there are also thousands of what Raschle calls "letterbox firms" – anonymous companies with their registered headquarters addressed in Zug, but with no production facilities in or around town.

According to a handbook titled The Canton of Zug – A Place to Live and Work, business revenues in Zug are almost five times the national average on a per capita basis. This, it states, is due to the large number of legal entities based in Zug, where influential trading houses determine global spot prices for gold and oil and other precious commodities. All of which begs the question: How does the smallest of Switzerland's 26 cantons manage to hold a disproportionate sway over financial markets around the world?

Zug's genesis as a fiscal powerhouse can be traced back to 1944, when it ranked as Switzerland's poorest canton. The Swiss system allows individual cantons to determine their own taxes as long as they fit within a broader federal framework, so Zug's governors devised generous taxation laws intended to lure foreign holding companies and benefit individuals.


Prospective investors were treated as clients rather than taxpayers, with free logistical aid and support when choosing sites offered as enticements. And the city realised that its proximity to Zurich could be leveraged to its advantage through ready access to its international airport and notoriously secretive banks.

Most of the commercial action takes place in Zug's New Town, where Ferrari and Maserati dealerships that are unable to stock their showroom floors fast enough for the number of orders they receive nudge up against the low-rise offices of commodities trading houses. The pyramidal Mount Rigi rises to the south above a ring of picture-perfect hills sloping gently into the lake, and steeples and turrets pierce the clouds. From a tourist perspective, all are standard fare in this country.

Zug nevertheless possesses a picturesque Old Town that gained recognition as a city in 1240. Remnants of those early days are found in a 52-metre-high clock tower and the four remaining round towers that once formed part of the city ramparts. The musty, timbered chambers of its Gothic town hall now house art instalments and there's a museum that's dedicated to its fishing heritage. All make Zug worthy of a day trip out of Zurich or Lucerne.

But as much as Zug's mayoral offices have tried to highlight its historical attractions and its idyllic location, no one is around to see it. It's early on a Monday afternoon and the streets are practically deserted. If this were Lucerne or Zurich – both just 30 minutes away by train – the streets would be teeming with people.

"Yes, but here, everyone is working," explains Raschle, shrugging his shoulders. Even those having lunch.



Swiss International Air Lines flies to Zurich via Singapore or Hong Kong, code sharing with Qantas, Singapore Airlines and Cathay Pacific. Prices start from $1760. Go to swiss.com


Local train services connect Zug with Zurich and Lucerne. Package deals and transport are available through MySwitzerland.com




Mark Daffey travelled courtesy of Switzerland Tourism.