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The French business environment in a nutshell: a guide for British investors

Posted Oct 09, 2024
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France’s position in the European market

Overview of the GDP in France

France’s GDP in the #3 highest in Europe, with $2.63 trillion (US) in 2022. A growth of 1.4% is expected by the end of 2024.1,2

France ranks #7 for the highest GDP worldwide.3
Sectors like banking, energy, retail and tourism as well as major investments enabled to put France’s economy on the spotlight.4,5

Source: 1 Statista & International Trade Administration 3 World Data  4 TC Global 5 CEDEFOP (European Centre for the development of vocational training

World in hands

Major industries in France

There are numerous expanding sectors of excellence within France such as:

  • France was the #6 biggest exporter of agricultural and agrifood products worldwide in 2021. Its market share of 4.5% came just behind the one of the United States with 9.6%, the Netherlands with 6.6%, Brazil with 5.4%, Germany with 5% and China with 4.5%. 29
  • GHG emissions reduction in the food industry is in the process, with already a 21% decrease since 2015. This transition is going faster than other industries such as manufacturing (-14%). Its goal is to decrease greenhouse gas emissions by 40% by 2030.30
  • France is the second-largest exporter in the world in the aerospace industry.31

Many of these industries are present in the Hauts-de-France Region, located in the northern part of France. The territory is also:

  • One of the leading regions in the automotive sector
  • home to many companies in the logistics industry
  • France’s #3 best-performing territory for agrifood companies.

Source: 29 Ministère de l’agriculture et de l’alimentation, 2022

30 (source : Rapport SECTEN CITEPA de Mars 2023 avec les données provisoires de 2022)

31 Invest in France

Reasons behind Hauts-de-France’s attractiveness for Foreign companies

France ranks #1 in Europe for foreign development and investment projects, for the 5th consecutive year.

Hauts-de-France is the 1st European country for foreign development and investment projects. 8 The Hauts-de-France Region is the #2 French Region for Foreign Direct investments is the #4 French region regarding the number of projects. It is also the 2nd French & European region for Foreign Direct Investment in the industrial sector in terms of jobs. In addition, it is the #8 region in Europe for foreign direct investment (regarding projects).

Northern France’s battery industry has been growing with the development of 4 gigafactories since 2020. Important investments have been announced in the region such as the Chinese group XTC New Energy Materials or the Taiwanese group ProLogium.10,11

Source: 8 EY 2023 10 Reuters 11 RFI

Europe map

How the Made in France is perceived in Europe and in the world?

Token of quality

The Made in France label is seen as a token of quality and is well perceived worldwide. Made-In-Country Index states that France had an index of 81/1001 in 2017. As it were products and merchandise that have been produced in France and meet demanding measures can carry this trademark.

Usleep in a good example of that. They chose to expand their manufacturing plant in Dourges in the Hauts-de-France Region so that they could obtain the Made in France label.

According to Luciano Biondo, Former president of Toyota Motor Manufacturing France:
“Our salespeople say it (the Made in France label) makes a big difference. A car’s origin is often third or fourth on the list of priorities for customers, and French-made vehicles carry a lot of clout—especially in the domestic market.”

Source : 1 Satista

Expanding your business in France

Having the right partner means having an easier time setting-up in France. Nord France Invest and the attractiveness agency Hello Lille can facilitate your expansion process in France.

There are 5 important steps to follow with regards to administrative procedures:

  1. Selecting your business structure
  2. Drafting your legal notice
  3. Pick the right legal status and prepare your bylaws and charter
  4. Put the share capital in a bank account
  5. Fill in the company declaration & registration
Doing paperwork

Tailored support to set-up in France and in the world?

Different options are available

Due to their knowledge of the regional ecosystem and expertise in international development as well as their team of experts, Economic Promotion Agencies are meant to assist companies in their development. Nord France Invest for example in the Investment Promotion Agency for the Hauts-de-France Region and Hello Lille is the attractiveness agency for the Lille metropolis. Whether it’s about doing administrative procedures, finding your site or becoming part of the regional ecosystem, they can assist you.

The main advantage of Economic Promotion Agencies is that they centralise all the information you are going to need during your project by having one dedicated contact. It means accessing the right people and saving precious time during your development project. On top of that these services are 100% Free and confidential.

Doing Business in a flexible way in France

Nord France Invest and the Attractiveness agency Hello Lille assist foreign companies in expanding their venture.

Our experts in international development support companies in investing on the territory and set-up their site.

Their offer is 100% free and confidential.

UK Business Centre Lille: dedicated solution for British companies

The UK Business Centre Lille is a soft-landing solution which helps British companies to face their difficulties and access the EU market.

Whether it’s about opening a bank account, finding business partners, exporting your goods to the EU, setting-up in Hauts-de-France, we have the right solution!

British companies can get assistance for the following matters:

  • Tax representation
  • Customs representation
  • Business development
  • Legal matters
  • Finance/banking
  • Logistics
  • Retail/ecommerce
  • Setting up in Hauts-de-France
Setting Up Contracts

A “setting-up contract” was developed for strategic expansion project in the Hauts-de-France to help them establish themselves without hurdles. In one single document you can find the commitments provided by public authorities throughout your development project.

This is a unique process in France and aims to facilitate your expansion. This moral contract illustrates the commitment of local authorities to help foreign companies expand on our territory.

It includes:

  • Administrative permits;
  • Deadlines for issuing agreements;
  • Recruitment and training support;
  • Tax exemptions;
  • Incentives;

It will enable to create a dedicated team for your project via national, regional or local government. Deadlines can be reduced up 7 months instead of ten to 12 months for environmental authorisations and building permits.

Labour laws in France

everthing you need to know

Understanding the characteristics of labour laws in France will help you find talent & skills.

The rights of workers

Having an understanding of the French labour market implies that you can optimise your labour structures.
According to French law, an employed person can work 35 hours a week, and any hours after that is considered overtime. This will obviously have implications for companies.
Nord France Invest and Hello Lille can help you make sure that you follow these requirements.

Working hours

The 35-hour work week is more of a benchmark rather than a limit. The employee can agree with their employer to work more hours if the fixed salary makes up for the overtime or if it is offset by bonus paid leave. Even though the workweek is limited to 48 hours, it can go beyond with an authorisation from the inspector general’s office.

An employer can also recruit more workers during peak periods and offer partial days-off if demand is reduced.

Working contracts

At the moment, the minimum gross hourly salary is €11.52. The estimated labour cost in France in cities such as Paris is €34 per hour, which takes into account gross wages and social contributions.13

This will however be different depending on the region. Labour costs in the Hauts-de-France are more attractive than other French regions. An EY study carried out in 2020 gives you key figures about that in different industries:

  • Back-office services: 22% lower than the average of our European counterparts and -14% than our French counterparts
  • Logistics: 34% lower than the average of our European counterparts and -9% than French counterparts
  • Production: 27% lower than the average of our European counterparts and -13% than our French counterparts
  • Technology: 20% lower than the average of our European counterparts and -11% than our French counterparts

Source : 13 INSEE

Social protection

French social security relies on mutual insurance contributions between the employee and the employer, which for the employer represents roughly 40% of the employee’s gross salary. However, this will vary depending on the size of the company, its location or even the business structure. 14 They include:

  • retirement insurance;
  • health insurance;
  • family allowances
  • unemployment compensations

The social security in France is easily adaptable and flexible for companies provided they choose the correct location and partners.

Trade Unions

Only 11% of workers are members of Trade unions.15 But they are very influential in France. The Trade union’s size will vary depending on how big the company is. Companies exceeding 50 workers have to have trade union delegates. As for companies with 11 to 49 workers, they will require a Social and Economic Committee.16

Source : 15 Worker participation

16 HSF notes

According to Eric Moyère, General Manager, Communication and Business Planning, at Toyota:

“The 3rd reason lies in the commitment and motivation of the teams. To illustrate this idea, every two years, we carry out a satisfaction survey on our network of factories and the Valenciennes site, these last 4 years being the European site which receives the most positive opinions. This can be explained by the quality of social dialogue which can be described as responsible and peaceful.”

Talent and innovation ecosystem in France

An environment made to make the life of companies easier

Due to its dynamic and innovation-friendly environment, France has 31 of the world’s 500 most powerful companies as well as many competitiveness clusters.17 The Hauts-de-France is a good example of that with thriving sectors such as automotive, agrifood and logistics.

Source: 17 Campus France

Available talent & skills

Available talent is France’s main advantage. Many French people have a university degree. To give you a bit of perspective, in 2021, 50% of people between 25 to 34 have a tertiary qualification in comparison with 47% across OECD countries. 20   

Synergies between schools and companies make it easier for companies to conduct their R&D projects.

The Hauts-de-France for example, is the first region for university education and for continuing education. It is also the #3 biggest French region for education. It is the home of more than 240,000 students and also seven universities.

On top of that, the region has also 40 specialised training institutions operating in different fields

Many programmes tailored to the needs of manufacturers, especially winning programmes from France 2030
Electro’mob: it focuses on electric battery innovation and has the support of Lille’s GIP FCIP.
Electro’mob: it focuses on electric battery innovation and has the support of Lille’s GIP FCIP.
FODUBLIVE: specialised electric battery innovation and has the support of Envision AESC France SAS.
FODUBLIVE: specialised electric battery innovation and has the support of Envision AESC France SAS.
C-DECIDE: its aim is to develop a thorough training programme from a 1st-year degree up to the doctorate level in order to create the “Academy of Industrial Decarbonisation”, a 1st in France.
C-DECIDE: its aim is to develop a thorough training programme from a 1st-year degree up to the doctorate level in order to create the “Academy of Industrial Decarbonisation”, a 1st in France.
CYBER-INDUS: specialised in cybersecurity, is backed by GIP FCIP of Lille.
CYBER-INDUS: specialised in cybersecurity, is backed by GIP FCIP of Lille.
Dig-Scale: aims to digitalise and decarbonise mobility and is backed by the Artois Hauts-de-France CCI & the Euralogistic Cluster.
Dig-Scale: aims to digitalise and decarbonise mobility and is backed by the Artois Hauts-de-France CCI & the Euralogistic Cluster.
DEFFI-TL it also aims to digitalise and decarbonise mobility and is backed by AFT.
DEFFI-TL it also aims to digitalise and decarbonise mobility and is backed by AFT.

Numerous programmes are also tailored to job seekers

Proch’emploi

An initiative led by the Hauts-de-France to connect jobseekers and employers.

GSK training centre

It gives training for different types of jobs in the Health sector

Battery Training Center in Douvrin

Ran by Stellantis, this training centre aims to help employees at their Douvrin site transition into emerging jobs in the electric mobility sector.

Recruiting in France

France has not really experienced shortages for skilled talent, however recruiting employees can be tough.

Due to its expertise and network, Nord France Invest can help the companies they support find their 1st employee in key jobs. Due to the help of institutions such as Pole Emploi, Nord France Invest will assist you in finding the right talent for your business. There are also programmes such as Proch’ Emploi – created by the Hauts-de-France – which connect businesses and job-seekers.

French Competitiveness Clusters

Competitiveness clusters are crucial for companies to have a strategic and commercial advantage.

There are around 71 competitiveness clusters in France. 21 Hauts-de-France has also 7 of the best performing clusters in France: Bioeconomy For Change, Aquimer, I-Trans, Team2, Euramaterials, Clubster NSL and Cap Digital Transport.

Many centres of excellence back these clusters: the Agence Hauts-De-France, Smart Specialisation Strategy, and regional schools and universities. They aim to expand skills in certain sectors such as agrifood, retail, health and R&D.

Source: 21 DGE

22 Welcome to France

Research Tax Credit

The Research Tax Credit can be very beneficial to companies. At the moment, it represents 30% of a companies’ eligible annual research and development

The R& D tax credit can be a huge asset for your company in France. Currently, the R&D tax credit is equal to 30% of a business’ allowed annual research and development costs up to €100 million per year & 5% over this amount.23

Taxes in France

What taxes do companies need to pay?

Corporation Tax

Corporation tax rate have reduced gradually since 2017, to be in line with the European one. At the moment, the tax rate is at 25% in France. 24

Source: 24 Trading Economics

Company Property Levy

Companies and entrepreneurs in France must contribute to the company property levy (CFE) as well as the contribution on the added value (CVAE). The 1st one relies on the rental value of a company’s property. The CVAE is based on the added value built in the reference year for taxation.25

Source: 25 French Business Advice

Challenges related to supply chain for British companies

New measures, solutions

British companies had to rethink their supply chain due to new regulation. Some of the major ones are: rules of origin, UKCA to CE marking Sanitary and phytosanitary controls.

Northern France is the nearest European continental neighbour to the UK. Its closeness to the UK as well as its efficient transport infrastructures will enable them to deliver their goods to their clients without hurdles.

Real estate and land costs are lower in Hauts-de-France than in other European regions.27 Warehouse costs are 31% lower in Hauts-de-France than the average of other major cities in Europe and offices are 52% lower than the average.

Nord France Invest and the UK Business Centre Lille can give you tailored assistance to develop your company in the Hauts-de-France.

An example of this is the recent €40 million investment made by the acrylic fiber manufacturer Dickson-Constant. The company invested in the Hauts-de-France region to enhance its production capacity and meet increased customer demand with the support of Nord France Invest.

A great example of success story Made in Hauts-de-France in the one of Dickson Constant, specialised in acrylic fibers. The company needed in to increase its production capacity and was already settled in the region. Nord France Invest helped them find a new site to meet their new needs. The region was a strategic choice for them to access its market all around the world and this is why the reinvested:

“We have to deliver our customers increasingly rapidly because they hardly keep stocks. From Portugal, we were able to deliver the entirety of Europe in 48 hours. However, from the Hauts-de-France Region, 80% of our client can be delivered in 24 hours.”

Eugène Deleplanque, CEO of Dickson Constant

Sustainable Development in France

The commitment of the French government as well as the Hauts-de-France Rehion

“The French market is also a driving market, particularly on all subjects linked to CSR and sustainable development. We have launched several initiatives there which have been or will be taken over by the group, such as the activity of recovery of furniture and cleaning of buildings.”

Mickaël Locoh, VP Southern Europe and Africa, Steelcase.

French consumers are increasingly looking to buy more responsibly. Researchers have conducted a study which showed that 62.4% of their respondents paid more attention to the impact on the environment of the products they buy.28 More traditional businesses are also implementing programmes to decarbonise their activity, such as steel production. Companies like ArcelorMittal are investing majorly in more sustainable steel production methods in Northern France.

In 2007, the standard number of tons per European resident was 18.96. In 2020, it was reduced to 13.65. The average tons per resident is even lower in France, with 16.15 in 2007 and 10.90 in 2020.

France has been increasingly investing in cleaner alternatives to fossil fuels and develop more green technologies. Through these energy sources, the aim is to decrease CO2 emissions.

Recycling is one of the business activities of the future to reduce the carbon footprint. Li-Cycle, for example, decided to set up in Hauts-de-France to recycle Lithium-ion batteries used in the automotive industry.

CO2 emission
Net zero

Programmes like France 2030 have been created to encourage sustainable business initiatives. A €54 billion budget was allocated for companies with sustainable business projects in France. It involves business activities like manufacturing electric vehicles with zero CO2 emissions, smart agricultural equipment, research in biomedical or even producing food that respect the biodiversity.

France 2030 is on the national level, in Hauts-de-France there is the REV3 initiative, which encourages sustainable projects in the region. Its goal is to decarbonise the economy.

REV 3

REV3 has planned a fund to support eco-friendly projects in the region in line with green and digital transformation. This is a huge asset for companies looking to develop more sustainable activities.

This shows the commitment of the region to transitioning its economy especially in the automotive industry, shifting towards electric mobility through its “Gigavalley” which already has 4 gigafactories.

6 things to keep in mind

Key points about the article

Once you grasp its major characteristics, the business environment in France is highly favourable to companies. Here are the things you should remember from this article.

#1

Public authorities are here to give you the necessary support for your project. Nord France Invest – the Investment promotion agency for Hauts-de-France – and Hello Lille can give you free and confidential support to guide you through your expansion. The UK Business Centre Lille is also here to assist British companies through a soft-landing solution and benefit from the help of expert.

#2

The setting-up contract can make international companies’ development project easier by combining in a unique document the support available from public authorities they could benefit from.

#3

Laws and regulations in France are not as complex as businesses might think it is once you grasp the way it operates.

#4

Public authorities facilitate finding employees for companies with institutions like Pole Emploi as well as programmes like Proch’ Emploi. Their goal is to connect businesses with job seekers. Payroll costs are also much more attractive in Hauts-de-France compared to other cities in France and Europe.

#5

Hauts-de-France is the nearest European continental region to the United Kingdom. Due to its many assets, it can help British companies access their markets smoothly.

#6

France favours the development of eco-friendly initiatives with France 2030. On the regional level, REV3 encourages the same type of initiatives on the territory.

Do you have a project to develop in France?

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