France: Investing

FDI in Figures

France ranks third in the world in attracting Foreign Direct Investments. Paris is the second city in the world, after Tokyo, in terms of establishment of multinational headquarters. It has about 500. Nevertheless, the country showed a decline in foreign investment due to the deterioration of the international economic situation; this should however improve with the economic recovery.

The country's strengths include: its position as a fifth world's largest power, its highly skilled workforce, industrial base and agricultural resources and its geographic location in the center of Europe.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	62,257	34,027	33,905
FDI Stock (million USD)	920,842	1,132,961	1,008,378
Performance Index*, Ranking on 141 Economies	100	71	-
Potential Index**, Ranking on 141 Economies	18	-	-
Number of Greenfield Investments***	680	408	-
FDI Inwards (in % of GFCF****)	10.0	22.8	-
FDI Stock (in % of GDP)	32.3	42.8	-

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

FDI Inflows By Countries and Industry

Main Investing Countries	2009, in %
Netherlands	15.9
UK	14.1
Luxembourg	12.2
Belgium	11.2
USA	10.3
Germany	10.0
Switzerland	5.9
Spain	3.5

Main Invested Sectors	2009, in %
Manufacturing	28.3
Finance and insurance activities	23.5
Real estate activities	13.6
Trade, car and motorcycle repair services	8.6
Administrative and support services	7.5
Information and communication services	5.0
Specialized activities, research and technology	4.0

Source: Bank of France - Last Available Data.

Form of Company Preferred By Foreign Investors: SA: public limited company
Form of Establishment Preferred By Foreign Investors: The subsidiary
Main Foreign Companies: Consult some examples of investment projects in France.
Sources of Statistics: The Ministry of Industry
The French Agency for international investments

Why You Should Choose to Invest in France

Strong Points: France is one of the world's ten economic powers. It has quality infrastructures. The work force is qualified and productive (second in Europe in terms of hourly productivity). France is an innovative country with an highly developed tertiary fabric.
Weak Points: The drawbacks of the French market are: one of the highest taxation rates in the world, significant manpower costs, low competitiveness in some sectors which can hinder the economies of scale. Research suffers from insufficient collaboration between the public and private sectors.
Government Measures to Motivate or Restrict FDI: Foreign companies enjoy the same government aid as French companies (aid for productive investment, R&D, professional training, job creation, etc.). The number of administrative formalities for foreign companies to settle in France has been reduced.

To fight against the financial crisis, the French government has implemented different mesures: the economic relaunch plan has committed the financing of 1,000 projects. These investments bear on transport infrastructures, higher education and research, State real estate property, housing and urban redevelopment and also health. Additionally, Sarkozy's government has abolished the professional tax in order to permanantly stimulate investment. Furthermore, the government established a strategic investment fund of EUR 20 billion, in Autumn 2008. Its aim: to buy stakes in industrial companies whose development is essential to the French economy.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By France: France has signed bilateral agreements on investments with 81 countries.
To see the list of countries, click here.
To see the conventions, click here.
International Controversies Registered By UNCTAD: There is one case of controversy registered, that of Eurotunnel versus France and the United Kingdom.
Organizations Offering Their Assistance in Case of Disagreement: ICCWBO , International court of arbitration, International chamber of commerce
ICSID , International Center for settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency: France is a signatory to the Convention of the MIGA.

Country Comparison For the Protection of Investors

	France	OECD	United States	Germany
Index of Transaction Transparency*	10.0	6.0	7.0	5.0
Index of Manager’s Responsibility**	1.0	5.2	9.0	5.0
Index of Shareholders’ Power***	5.0	6.8	9.0	5.0
Index of Investor Protection****	5.3	6.0	8.3	5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Procedures Relative to Foreign Investment

Freedom of Establishment: Yes. The formal investment regime remains among the least restrictive in the world.
Acquisition of Holdings: Possible
When more than 5% of the capital or voting rights of a company listed on the stock exchange are likely to change holders, it is compulsory to inform the Financial Market Authority (within 5 days) and the issuing company (within 15 days).
Obligation to Declare: For any acquisition of over 10% of the capital or voting rights of a French company: declaration for statistical purposes to the credit institutions.
For any creation or acquisition of more than one third of the capital or voting rights, when the investment is over 1.5 million euros: administrative declaration to the Ministry of Finance (Directorate-General of the Treasury and Economic Policy) (in French).
Competent Organization For the Declaration: Directorate of the Treasury and Economic Policy of the Ministry of Finance
Requests For Specific Authorizations: Some sectors are subject to procedures to obtain prior authorization: games for money; private security; research and development activities on pathogenic or toxic agents; phone-tapping systems; information technologies; information systems security; goods and technologies with a dual use; means of cryptology in the digital economy; companies holding national defense secrets; the arms trade; companies which have concluded a contract with the Ministry of Defense.

Office Real Estate and Land Ownership

Possible Temporary Solutions: There are several temporary solutions: domiciliation of the company at the private address of the director, domiciliation in a business center, lodging in relay-workshops (ateliers-relais), company "nurseries" (pépinières d'entreprise) and renting professional premises.
The Possibility of Buying Land and Industrial and Commercial Buildings: Yes
It is possible to buy freehold or leasehold, to build industrial and commercial premises or to buy through a real estate company.
Risk of Expropriation: According to French law, foreign investors are entitled to adequate and promptly paid compensation if they are victims of expropriation.

Investment Aid

Forms of Aid: Subsidies, discounts and reductions of costs, tax exemptions, loan guarantees, payment of expenses for personnel training
Privileged Domains: Job creation, regional development, the food industry domain, protection of the environment, aid for Research and Development, Pole of competitiveness
Privileged Geographical Zones: Areas eligible for the regional development subsidy
Regions concerned by the European ERDF program
Free Zones: Urban Free Zones
Organizations Which Finance: The State, local administrations (regions, departments, town councils)
The EU through the ERDF
Some big industrial groups which back new investors

The French Agency for International Investments
The National Agency for the Development of Research
The Fund for the Development of SMIs
OSEO, Financing and support for SMEs (merger of the ANVOR - French innovation agency - and the BDPME - Bank of the development of SMEs)

Investment Opportunities

The Key Sectors of the National Economy: Aerospace, automobile, food industry, pharmaceuticals, micro electrotechnology, logistics, health equipement.
High Potential Sectors: Call centers, biotechnologies, telecommunications, information and communication technologies, the environment
Privatization Programs: Electricity, gas and rail transport, postal services.
Tenders, Projects and Public Procurement: BOAMP, French Public Procurements (in french)
EBP, Tenders and Projects in France
Tenders Info, Tenders in France
Ted - Tenders Electronic daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: The French government still maintains legal monopolies in public service companies: the rail network (RFF), public transport in Paris (RATP), tobacco manufacturing and distribution (Altaldis) nuclear plants (EDF).
Sectors in Decline: Textiles, shoes

Finding Assistance For Further Information

Investment Aid Agency: The French Agency for international investments (AFII)
The Fund for the Development of SMIs
OSEO, Financing and support for SMEs
Other Useful Resources: Report of the AFII
The heading devoted to business opportunities of the AFII
Report on foreign direct investment in France, AFII, 2009
Doing Business Guides: The Lexmundi « Doing Business » guide to France
The Deloitte "International Tax and Business Guide" to France
France Commercial Guide 2010 - Buy USA

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