There is no question that investing in France means dealing with the complications of the French economy: nightmarish bureaucracy...endless vacations...workers who go on strike at the drop of a béret...a tax burden that accounts for 45% of GDP… French ways are not quite the same as American ways, and you must take these facts into account when considering making an investment in France. Yet somehow France survives, and the economy is on the upswing. Although it seems a ludicrous notion when you're stranded at Charles de Gaulle airport because the baggage handlers or air traffic control have gone on strike, this is the country that introduced the word "entrepreneur" into the English language. The world's fourth-largest exporter, France has a per-capita GDP of $27,500 and inflation stands at just 2%. With last year's growth rate coming in at 1.1%, and this year's forecast to be 2.6%, the French economy has a lot going for it--including ultra-modern transport and communications systems, competitive energy costs, and an AAA credit rating. But, yes, it also has a 35-hour work week, 9% unemployment, and all kinds of generous provisions for the workforce that would result in much wailing and gnashing of teeth in the lean, mean, business world of North America. Yet, despite France's long tradition of state involvement in the economy, successive recent governments, both left and right, have been striving to create the kind of pro-business environment sought by international investors considering French investment options.
For most overseas onlookers, France's marketplace image conjures up visions of perfumes, cosmetics, top-quality wines, and gourmet foods. All are valuable exports, but so too are Mirage jets and Renault, Peugeot, and Citröen cars. Although eBusiness is growing significantly, the country's traditional muscle lies in engineering and transportation; few would disagree with the fact that TGV trains rank among the world's best. More than 150 North American biotech and pharmaceutical companies now operate in France, including Amgen, Abbott Labs, Baxter, Genzyme, and Quintiles. As you would expect, French development agencies are tremendously upbeat about the advantages of choosing the country as a European base. DATAR-IFA, the main government agency, cites seven reasons why foreign companies should consider investing in France:
1. It's a large market in the heart of Europe.
2. It's a country open to the world.
3. There's a strong pro-business environment.
4. Financial markets are attractive and competitive.
5. The workforce is productive.
6. The country is at the forefront of science and technology advances.
7. France is known for quality, reliability, and productivity.
The government's stated objective of attracting inward investment is confirmed by the extensive incentive programs on offer. Set up by the government, the main economic development and investment promotion agency provides various kinds of assistance to potential investors. To attract jobs to less affluent areas, financial subsidies and tax incentives are offered at local, regional, and national levels. Eligibility requirements for obtaining grants and subsidies are the same for both French and foreign investors. The Invest in France Agency has offices in North America, and this group has been clearing the path for U.S. and Canadian companies to expand their operations into France. Their services include negotiating the best possible financial incentive packages, cutting through red tape, identifying existing facilities or green-field sites to meet investor's needs, organizing visits to sites, and advising on administrative practices, employment legislation, and French and European law.
Companies setting up in specially designated areas of towns and cities located in certain parts of France can be exempted from five years of tax on company profits. Activities that qualify for tax breaks include manufacturing, commercial, and crafts-orientated activities. North American investors can also go through regional development boards, which offer new businesses assistance in setting up, funding, and getting started. An individual project manager is appointed for each investment project, whose job is to ensure the venture is mounted as efficiently and rapidly as possible.
Learn more about investing in France in IL Postcards.
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