Business in France
The relation between France and the Netherlands
The Netherlands and France are becoming increasingly more important to each other. The trade between the two countries has been increasing steadily in the last 5/10 years and France has become the third main trade partner of the Netherlands after Germany and Belgium.
In 2018, the export volume from the Netherlands towards France amounted to €39,1 billion and the overall annual trade volume reached €65 billion in 2019.
The Netherlands and France are also closely connected in the field of investments, particularly in the areas of transport and energy. The Netherlands are the 4th largest investor in France. The Dutch presence on the French territory is significant with over 2.400 businesses in France, accounting for more than 260.000 jobs, and with a total turnover of more than €51 billion.
* Export and important data 2018/RVO
Business opportunities in France
The French government has initiated a series of reforms designed to boost economic growth, stimulate investment and create and develop business activities. France positions itself actively as an open economy towards foreign investment, start-ups, scale-ups and SME’s. As a result, doing business in France has become more attractive and France has become a competitive international key business partner, located in the centre of Europe with easy access to (Northern) Africa.
In particular, innovation plays a major role in French economic policies and initiatives: the internationally recognized FrenchTech initiative, major research and development tax treatment, the quality of personnel, the proximity of French innovation clusters and the potential for research partnerships with French academia are structural advantages of the French economy.
At the end of 2019, France became the leading destination for international investment in Europe. The main sectors for foreign investment were the manufacturing sector (machinery and mechanical equipment, textiles, clothing and accessories, chemicals, plastic, automotive, naval and aerospace) and the service sector (software and IT services, wholesale and retail, consulting, engineering, transport and storage). Foreign companies with subsidiaries in France employed 2 million people in the last year, and were accountable for 31% of France’s export.
In addition to the above-mentioned sectors, the Dutch government has identified several specific attractive sectors for Dutch SME’s in France.
Through their economic network both in the Netherlands and France, they actively assist Dutch entrepreneurs seizing possible opportunities in the following markets:
- Fashion industry ;
- Health and life sciences ;
- Digital opportunities in health, energy, e-commerce, connected objects and digital transformation ;
- Olympic games 2024 in Paris ;
- Innovation in smart and green mobility, aerospace, sustainable energy, AI and blockchain.
Trends following Covid-19
The consequences of Covid-19 are still unknown at the time of writing. In response to the crisis, the French national and regional authorities have put into place the Covid-19 Economic Response Plan in order to mitigate the economic impact on businesses. Support measures are aimed at
direct financing (solidarity fund and other direct financial support, access to state guaranteed business loans and accelerated tax refunds) ;
postponement of payments (business loans, social contributions, direct taxes, commercial lease and invoices of gas water and electricity) ;
limit economic damages to employees and employers (partial activity or temporary lay-off, conditions for taking paid leave and sick leave for employees who have to take care of their children).
France is in the summer of 2020 in a phase of recovery, reopening and reinvention. Managing this economic uncertain time will be a challenge for businesses, since a second wave is to be expected and the pandemic may have altered our habits. New consumer behaviour focussed on local procurement, responsible consumption and decarbonization must be taken into consideration in future business development: less is more and small is beautiful.
According to a survey conducted by EY between April 20 and 30, 2020, international business leaders were contemplating a minor or major reduction of their investment projects in France but none of them mentioned neither cancellation nor expansion.
A substantial decline in investment in the aviation, automotive, equipment, chemicals and plastics sectors could be expected, but the French government has developed several investment programs for these sectors, which are subject to sustainable and circular objectives. Other sectors, including healthcare, online entertainment and e-commerce should be less affected by the current crisis. A major trend to be envisaged could be the automation and digitalization of industrial processes, back offices and customer relations. In addition, a reconfiguration of global trade and supply chains could take place, which results in a new combination of reshoring, nearshoring and offshoring.
Currently, the Dutch embassy is conducting a survey on the Dutch image in France with French business and government decision makers. The final results are to be expected at the end of the year, but in general Dutch entrepreneurs are considered in France as reliable business partners. They are innovative and technically strong and have a strong sustainability image. Such strengths may contribute to doing successfully business in France, as well during and post-Covid 19.