European Affairs

After Paris Terror France Raises Efforts to Attract Foreign Investments     Print Email
By Jacqueline Grapin, Founder and Co-Chair of the Board of The European Institute

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Early in the morning, at the very moment when the second French raid targeting terrorist ringleaders was going on in Saint Denis, North of Paris, on Wednesday, November 18, a packed assembly of around 500 CEOs and senior executives from multinational companies with sizable operations in France was gathering at the Conseil Economique et Social for a day of discussions on “Les Etats de la France.” Under the circumstances, the topic of the day as well as the meeting itself, “Is France attractive for international business?”, may have seemed strange. The organizers had wondered whether they should cancel the meeting. Not at all said the government. All the leading participants showed up, including the French minister of the Economy, Emmanuel Macron and a number of senior representatives of the Administration. They agreed that the best way to fight adversity and terrorism is to focus on what needs to be done.

There are 20,000 foreign companies operating in France. They employ some 2 million people. And a third of French exports is made by foreign operators in France. The French government recognizes that heads of foreign companies in France are the important people who will decide where to direct their new investments.

This meeting has been organized every year for 10 years by Denis Zervudacki and his company D.Z.A., and the meeting has often provided the opportunity for the participants to criticize France and its administration. French bashing is a specialty of the French. This time it was interesting that opinion surveys performed some time before the terrorist attacks revealed a significant improvement in attitudes about France. The general observation was that there is a gap between the perception of France and its reality: France is more attractive than most people believe.

While 68 % said that the country’s ability to attract foreign investors had diminished in the last decade, 78 % said that recent reorientations by the government are in the right direction. It has become clear that France has too many laws and regulations and that its administration does not move fast enough to remedy that. In this meeting it was recognized that the public sector and the private sector do not work in the same time zone. One is too slow while the other is permanently accelerating.

One recommendation of the group was the “one for one” rule: for each new law or regulation, an old one should be eliminated. Simplification is the name of the game. And it was recognized that stability, especially in the area of taxation, is necessary.

The investors present agreed that what attracts most companies to France is the French people and their talent; not the government. Representatives of several international corporations (Astra Zeneca, AIG, Roche, Pfizer, Aviva, ABB, Henkel, Siemens, Shell) argued that a major attraction of France is the high academic level of its elite, and the creativity of its young population. It was noticed that it is precisely the cultural openness, fought by the Islamists, that is the source of the talent of the French population, native and non-native. Christophe Duron, CEO of Procter & Gamble France and Benelux, noted that multinational companies operating in France, including his own, export a lot of French people around the world. But he added, “They are like salmons, they always come back to France.”

Muriel Penicaud, French Ambassador for Foreign investments, pointed out that in 2014 new investments in R&D increased by 39 % in France. In the last five months, several prominent high tech companies such as Google and Cisco have invested sizable amounts in French start-ups. She recognized that a lot remains to be done, for instance to fix tax issues and modernize labor laws and regulations. “We must not paint the Eiffel tower in pink,” she said. “We must just paint it in blue, white and red.”

Conclusion: In 2015, France is more attractive for foreign investments than it was in 2014 and 2013. With structural reforms underway, attractiveness is likely to improve even more. The government is more conscious than before of the improvements that are necessary, and more willing to work at them even when the war against terror consumes so much energy, and perhaps even more because of that. Leaving this meeting one wondered whether the madness of terrorists attacking Paris by night had awakened France and its government, not only in terms of implementing a security response, but also for keeping the country even more open and alive. A rather counterproductive outcome for the terrorists’ undertaking.