By Jonathan Gregson in La Baule – As Chairman and CEO of the Invest in France Agency (IFA), David Appia had several reasons to be pleased with the outcome of the 8th World Investment Conference held in La Baule, in France, from June 2-4, 2010. Firstly, the findings of the latest European Attractiveness Survey conducted by Ernst & Young showed France retaining its position as the second most popular foreign direct investment destination in Europe after the United Kingdom.
“The survey allows us to see how we stand in relation to competitors”, he says, “and our relative market share increased slightly last year”.
More importantly, the survey ranked France top among European nations in terms of R&D activity, an area in which he says “the strategic stakes are very high.” Moreover, the job content of foreign investment projects in France is much higher than in other European countries such as Germany. That, he believes, says a lot about the attractiveness of France – even during this recent period when global flows of foreign direct investment (FDI) have slowed down…
71 innovation clusters “open to foreign companies operating in France”
Mr. Appia points to the 71 sector-specific innovation clusters that have been set up in France, among them world-leading centers for nanotechnology, biotech and medical applications. A further six new clusters are being created in environmental technologies, building on the leading position of French companies in water supply and waste management, that will feed into and mutually develop technologies with other green businesses. He notes that out of 639 investments by foreign companies last year, 72 were focused on clean technologies, 59 of which were in renewable energy.
“All of these 71 clusters”, he adds, “are open to foreign companies operating in France.” Many have already taken advantage of this, with some 754 foreign companies already established in one or more of the clusters.
Moreover, foreign investors can draw on different incentives and levels of support from both national and regional bodies. France’s Research Tax Credit, which provides for a 30-50% refund on all R&D expenditure, has proved particularly popular. Mr. Appia notes that “some 12,000 companies have benefited from this, with total cost savings amounting to €4 billion. This has had a powerful effect in enhancing France’s attractiveness for research-driven companies”.
Other reforms that have made France more attractive to foreign companies are moves towards a more flexible labor market, alongside which there is the streamlining of visa and residence requirements and better tax treatment for foreign executives and key workers. “To which will soon be added new measures to facilitate long-term residency of up to ten years in France for executives and business people who have made an exceptional contribution to the economy”, adds Mr. Appia.
“World class strengths” and a productive and highly-skilled workforce
“While France has world class assets”, says Mr. Appia, “in term of its education system, a highly qualified workforce, effective infrastructure, and low-cost nuclear energy, we cannot simply rely on them to attract investments. While good infrastructure provides the ‘hardware’ of attractiveness, we must continue to develop the ‘software’ – knowledge, the digital economy and innovation”.
“At the end of the day”, he observes, “attractiveness should not be judged according to just one factor, such a low labor costs. Companies should also consider employee productivity, and here France is ranked third in the world according to the International Labour Organization. New types of employment contracts will greatly enhance flexibility. Also there is the availability of skills and centers of excellence which in France are well distributed across the regions. Last year we saw investment projects in every region of France.”
“Asian companies, in particular”, says Mr. Appia, “consider France to be a strong base from which to build up their operations across Europe, the Middle East and Africa (EMEA), with major Chinese groups like Huawei establishing regional headquarters here”. The importance of fast-growing ‘emerged’ economies such as China, India and Brazil as potential investors in France means that the IFA is taking a more focused, proactive approach to these markets. However he insists that “this does not mean we are forgetting traditional investors like the United States or Germany”, adding that “68% of new investment projects last year came from other European countries”.
Mr. Appia is aware that most FDI projects are decided on the basis of a relatively long time-scale. “Our job is therefore to help investors understand where the country is heading, its vision of the future, and the political commitment that will help it to reach these goals.”
