doing business, france, economy

France, formally known as the French Republic, is a leader among European nations and the entire world, with memberships in the United Nations Security Council, NATO, the G-7, the G-20 and the European Union.

The main landmass of France is located on the Bay of Biscay and the English Channel in Western Europe. The country also includes several overseas regions, referred to as overseas departments, that became part of France proper in the 21st century. Total land mass is 551,500 square km. It is four times the size of the U.S. state of Georgia and slightly smaller than Texas.

About 52 percent of the land mass is devoted to agriculture and 29 percent is forest. Most of the population is in the north and southeast regions of the country. Paris is the largest city.

Manufacturing in France

Although services comprise the largest portion of France’s GDP, industry is a healthy 19.5 percent of the total. Typical manufactured products include machinery, chemicals, automobiles, metals, aircraft, electronics, textiles and food processing. For other types of manufactured products such as safety features, you can read at Dynatect.com what is on offer.

Industrial production is growing at about 2 percent, so the industrial sector is growing more slowly than that of many other countries. France ranks 130th in the world for industrial growth. However, as the 6th largest global economy, even a 2 percent growth rate results in substantial gains.

Other Important Industries

Tourism is one of the most important industries for France. Over 89 million foreign tourists visited France in 2017, making it the most visited country in the world. Utilities are also important—in fact, Electricite de France is the largest utility company in the world and Engie, another utility company, is the world’s largest independent utility.

France is the second largest exporter of agricultural products in the world. Wheat, grapes, sugar beets, wine and cheese are among the most important commodities.

Some key industries and companies have been privatized and are run or majority owned by the state. These companies include Air France, France Telecom, Renault and Thales. The government often has a large stake in important power, transportation and defense companies.

Supply Chain Infrastructure for Manufacturing

France has one of the strongest transportation infrastructures in the world, and its prime location makes it an easy gateway for imports, exports and the flow of materials around the globe. It also boasts more than 1 million km of paved roadways, including 11,416 km of expressway. Coupled with the strong technology and telecommunications infrastructure, France is an ideal country for ensuring on-time deliveries and preventing unexpected delays.

Shipping

France has 30 registered air carriers and moved more than 4 billion metric tons of good in 2015. It has 294 airports with paved runways. Fourteen have runways long enough for the largest freight carriers, but many of the shorter runways can support freight planes as well.

France has more than 29,000 km of standard gauge railway track, placing it at number 10 in the world. It also has 8,501 km of inland waterways navigable by ships of up to 3,000 metric tons. Major seaports include Brest, Calais, Dunkerque, Le Havre and Marseille. Le Havre is a multimodal port able to ship or transfer goods by rail, water or roadway.

Workforce

France’s labor force is 30.7 million as of 2017, and approximately 20 percent of the workforce is engaged in industry. The labor force is well-educated. Unemployment hovers at around 10 percent. Much of the unemployment is a result of reluctance to hire because of France’s well-known labor laws that make it difficult to let people go and provide for five weeks of holidays per year. In addition, even when not unionized, the French workforce is prone to striking without much notice.

The government of French President, Emmanuel Macron is taking steps to make France more welcoming for business. In late 2017, a series of reforms were enacted, designed to improve competitiveness, simplify employment contract negotiations and make it easier to hire and fire employees. These reforms include tax cuts that will reduce the top rate from 33 percent to 25 percent by 2022 and cut required social security contributions.

Economy

France has taken steps to rein in spending and reduce its budget deficit, but its public debt still nearly equals its GDP of $2.86 trillion. The GDP growth rate is around 2 percent.

France was one of the earliest members of the EU. The Euro is the official currency. Inflation is currently running at a little over 1 percent per year.

France exports $549.9 billion of goods, making it the 7th largest exporter in the world. Its key export partners include Germany, Spain, Italy, the U.S., Belgium and the U.K. Primary export commodities include aircraft, plastics, chemicals, pharmaceuticals, iron, steel, beverages and machinery and equipment.

Imports were $601.7 Billion in 2017, and key import commodities included vehicles, crude oil, aircraft, plastics, chemicals and machinery and equipment. Top import partners include Germany, Belgium, Netherlands, Italy, Spain, the U.K., U.S. and China.

Political Landscape

France’s government is characterized as a semi-presidential republic. It has 18 regions, including the overseas departments. The latest iteration of the government structure came into effect in 1958 when the Fifth French Republic was established. The president is elected by an absolute majority vote for a five-year term. The parliamentary branch term is four years.

Tax Rules

France levies business taxes of 15.45 percent on the first €38,120 of taxable income and 34.33 percent on all income over that. According to the World Bank, total tax and contributions can equal 60 percent of revenue, but this will likely ease as the Macron reforms kick in. Currently, the average company requires 139 hours to process all taxes.

Special Circumstances

France ranks relatively high for other factors that may affect a decision to locate manufacturing facilities within its borders. Construction permits, utility connections and registering property are all relatively quick and easy to obtain. France offers strong intellectual property and trademark protections for industrial properties and products.

Getting Down to Business

The complexity of France’s employment and tax regulations means that companies looking to do business there should be certain that their ERP system is up to the rigors of tax calculation, preparation and reporting. QAD Internationalization and QAD Multi-GAAP IFRS compliant general ledger with its built in VAT, income and employment tax management capabilities provides the needed functionality in a simple, easy to use yet powerful and flexible solution, and QAD’s newly released production orders capabilities support all modes of manufacturing.

How would you describe the state of Manufacturing in France? Learn more about manufacturing and doing business in other great countries around the world.

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