Export.gov - France - Doing Business in

As the world’s fifth largest economy, centrally located within the European Union, there is strong competition for market share in all French industrial and service sectors. American exporters to France generally face more competition from European companies than from Asian ones. Positioned at the heart of the world’s largest market, France offers a favorable economic environment to potential exporters.

Country Commercial Guide 2012 Please contact Olivier.Collette@trade.gov

Market Overview

France and the U.S. are long-standing, close allies. Despite occasional differences of views, the U.S. and France work together on a broad range of trade, security and geopolitical issues.

With a GDP of approximately $2.77 trillion, France is the world’s fifth-largest economy (2011). It has substantial agricultural resources, a large industrial base, and a highly skilled workforce. A dynamic services sector accounts for an increasingly large share of economic activity and is responsible for nearly all job creation in recent years. Real GDP decreased by 2.5 % in 2009, but recovered somewhat with 1.6% in 2010 and 1.7% in 2011, while the unemployment rate increased from 7.4% in 2008 to 9.5% in 2010 and 9.3% in 2011.

France is a member of the G-8 (and instigator of the G-20), the European Union, the World Trade Organization and the OECD, confirming its status as a leading economic player in the world.

France is the second-largest trading nation in Western Europe (after Germany). France ran a $92.7 billion trade deficit in calendar year 2011. Total trade for 2011 amounted to $1,236 billion, 61% of which was with EU-27 countries.

Trade and investment between the U.S. and France are strong. On average, over 1 billion dollars in commercial transactions take place between France and the U.S. every day, with the U.S. being France's sixth-ranked supplier and its sixth-largest customer. France ranks as the United States' thirteenth largest supplier for imports of goods and eleventh-largest customer for US exports.

“Although trade in goods and services receive most of the attention in terms of the commercial relationship, foreign direct investment and the activities of foreign affiliates can be viewed as the backbone of the commercial relationship. The scale of sales of U.S.-owned companies operating in France and French-owned companies operating in the United States outweighs trade transactions by a factor of almost five. In 2009, France was the twelfth largest host country for U.S. foreign direct investment abroad and the United States with investments valued at $85.8 billion was the major foreign investor in France with Germany. During that same year, French companies had direct investments in the United States totaling $189.3 billion (historical cost basis), making France the sixth largest investor in the United States. French-owned companies employ about 760 thousand workers in the United States while over 650 thousand employees work for of U.S. companies established in France.”

U.S.-France trade in goods, services and income receipts totaled nearly $129 billion in 2010, broken-down as 52 percent in goods, 25 percent in services, and 23 percent for income receipts.

The main trading categories in goods are U.S. industrial chemicals, aircraft and engines, electronic components, telecommunications, computer software, computers and peripherals, analytical and scientific instrumentation, medical instruments and supplies, broadcasting equipment, and programming and franchising opportunities, all of which are particularly attractive to French importers.

The trade balance on all bilateral transactions between the United States and France can be viewed at: http://www.bea.gov/international/bp_web/simple.cfm?anon=71&table_id=10&area_id=19

Market Challenges

Ensuring that France's investment climate is attractive to foreign investors is a stated priority of the French government, which sees foreign investment as a way to create jobs and stimulate growth. Past debate in France over “economic patriotism” has caused some observers to question the depth of this commitment. Nevertheless, investment regulations are simple, and a range of financial incentives for foreign investors are available.

Foreign investors say they are attracted to France by its skilled and productive labor force, good infrastructure, technology, and central location in Europe. France’s EU membership and usage of the euro facilitate the easy movement of people, services, capital and goods. However, despite considerable economic reform and market liberalization over the past decade, U.S. and foreign companies often point to the tax environment, high cost of labor, rigid labor markets and occasional negative attitudes toward foreign investors as disincentives to investing in France, but they welcomed the tax, labor, and pension reform initiatives launched by President Sarkozy in 2007 and 2010. President Sarkozy is credited with introducing tax-free overtime payments and eliminating the annual flat business tax. He also reduced by more than half the small and medium enterprise wealth tax levied on investments that increase a firm's equity capital. In a 2010 American Chamber of Commerce poll, U.S. investors showed optimism about France emerging from the financial crisis, but have varying views on the pace of growth in 2011 and 2012.

France has pursued economic reform that increases the attractiveness of the French economy to foreign investors, and French authorities offer a variety of investment incentives. France is closing the gap with the U.S. and some other European countries in personal computer use and Internet access.

While today's foreign investors face less interference than before, France has not entirely overcome a traditional preference for state intervention and a sometimes reflexive opposition to foreign investment. In some cases, this can be seen in labor organization opposition to acquisitions of French businesses by U.S. firms, often reflecting a perception that U.S. firms focus on short-term profits at the expense of employment. In other cases, French firms have stated a preference for working with French and European rather than U.S. firms. A degree of opaqueness in the privatization process (see below) can also aggravate suspicions about the equal treatment of foreign investors in publicly held firms. In addition, official comments regarding the purpose of the French "Strategic Investment Fund" established in 2008 sometimes misleadingly referred to as a French sovereign wealth fund, highlighted French sensitivity about hostile foreign takeovers.

In the case of labor market regulation, the impact of the 35-hour legal workweek on companies is mixed. Many companies used the transition to the 35-hour workweek as an opportunity to negotiate annualized work-hour programs with their employees that allow for greater labor flexibility.

Market Opportunities

Leading non-agricultural sectors considered to offer "best prospects" for U.S. business in France are (in order of market size): Computers & Sofware (CSF, CSV), Aircraft and Parts (AIR), Travel and Tourism (TRA), Safety and Security Equipment (SEC), Computers and Peripherals (CPT), Telecommunications Equipment (TEL), Medical Equipment (MED), Automotive Parts and Equipment (APS), Plastics (PMR), Cosmetics (COS), Textile (TXT), Educational Services (EDS), Direct Marketing and E-Commerce Business to Consumer (ECC).

The French market for food products is mature, sophisticated and well served by suppliers from around the world. Additionally, an increasing interest in American culture, younger consumers and changing lifestyles are contributing to France’s import demand for food products from the United States. Generally, high quality food products with an American image can find a niche in the French market, particularly if they can gain distribution through stores and supermarkets that specialize in U.S. or foreign foods. Significant market opportunities for consumer food/edible fishery products exist in a number of areas: fruit juices and soft drinks (including flavored spring waters), dried fruits and nuts, fresh fruits and vegetables (particularly tropical and exotic), frozen foods (both ready-to-eat meals and specialty products), snack foods, tree nuts, "ethnic" products, seafood (especially salmon and surimi), innovative dietetic and health products, organic products, soups, breakfast cereals, and pet foods and treats. In addition, niche markets that have shown rising demand exist in France for candies, chocolate bars, wild rice and kosher foods. Market opportunities for U.S. exporters also exist for oilseeds, protein meals and other feeds, as well as for wood products and grains.

Market Entry Strategy

In general, the commercial environment in France is favorable for sales of U.S. goods and services. Marketing products and services in France is similar to the approach in the U.S., notwithstanding some significant differences in cultural factors and certain legal and regulatory restrictions. Competition can be fierce, but local partners are readily available in most sectors and product lines.

In support of U.S. commercial interests in France, the U.S. Embassy in Paris uses the combined resources of various U.S. Government agencies to promote the export of U.S. goods and services. It also supplies information on trade and investment opportunities, and serves as an advocate for U.S. firms.

Links to web sites outside the U.S. Government or the use of trade, firm, or corporation names within U.S. Commercial Service web sites are for the convenience of the user. Such links and use do not constitute an express or implied official endorsement or approval by the United States Department of Commerce of any private sector web site, or of the products or services of specifically identified companies or of any of the private entities that may have contributed to a U.S. Commercial Service web site.

Print | Last Updated: 10/12/12 3:41 AM