The Washington Diplomat / January 2005
By Larry Luxner
Move over, freedom fries.
Last year's efforts by jingoistic Americans to boycott all things French — in the wake of President Jacques Chirac's opposition to the U.S. invasion of Iraq — have long since fizzled.
In fact, U.S. direct investment in France last year jumped by 12% over 2002 figures, accounting for one-fourth of all new investment projects in France.
A new three-year, $35 million publicity and marketing campaign aimed at the U.S. business community seeks to drive home the message that if you want to invest in Europe, look no further than France, the world's fifth-largest economy.
"CEOs here are concerned with one thing, and it's not political differences. It's how they can succeed economically," said Keith Yazmir, vice-president of marketing and communications for Invest in France. "Political issues did come up in the recent presidential campaign, but the feeling in the embassy is that we've moved past that."
According to Yazmir, roughly $1 billion in commercial transactions take place between France and the United States every business day. France is consistently among the world’s top five destinations for foreign companies to open subsidiaries. And with the recent expansion of the European Union to 25 countries — creating a common market with a combined GDP of $10.4 trillion — the Chirac government is placing renewed emphasis on helping international companies succeed within its borders.
"The French government is getting serious about creating an environment for success," Yazmir told The Washington Diplomat in a phone interview from New York. "That's reflected in 50 new measures passed this year, which are specifically designed across the board to encourage companies to invest in France. There are 50 more measures now being debated in the legislature."
The 50 new reforms encompass four broad categories:
* Research and development. New reforms include operational and financial incentives, R&D tax credits and enhanced incentives for start-up companies.
* Support for foreign managers. New reforms for foreign managers and their families, designed to streamline the procedure for entry and aid with getting settled and receiving work permits.
* Support for foreign investors. New reforms include modernization of the business law and special measures to facilitate starting up business in France.
* Attracting the best talent. New reforms include a renewed focus on attracting outstanding researchers and foreign students and the development of enhanced collaborative programs between French and foreign universities.
According to Invest in Fance, the most significant new R&D reform is an increase in the size and number of available research tax credits from $7.2 million to $9.6 million annually.
In addition, the scope of how the tax credits are computed has been widened to include a percentage of a company’s total R&D expenditure, regardless of any year-to-year increase (the sole factor taken into account in most other country’s tax credit systems).
Foreign managers living in France for less than 10 years are now entitled to tax-exempt allowances and bonuses and are able to deduct social security payments they make back home. For foreign investors, visas, work and resident permits are now guaranteed within three weeks of successful applications, and spouses of manager-level and higher foreign nationals are guaranteed their own work permits.
To attract additional talent to France, new reforms include a focus on targeting top international researchers to work in France, improving the conditions of entry and residence for foreign students, increased cooperation and collaboration on joint university programs and plans to attract students and research in target key sectors.
General Motors, for example, is spending around $125 million to expand an auto factory in Strasbourg. Recently, Switzerland's STMicroelectronics, Dutch consumer electronics giant Philips and Illinois-based Motorola announced a $2.8 billion joint venture to build an R&D facility near Grenoble, in order to develop advanced semiconductor technology.
At present, the United States is the top investor in France, supporting almost 550,000 French jobs, while France is the second-largest investor here, supporting almost 600,000 U.S. jobs.
Invest in France is the French government's agency for international investment. Its mission, says Yazmir, is "to help companies find the most profitable and competitive solution in France for their European business goals."
He added that "we also want to address what the French government has identified as misconceptions in the marketplace."
Asked to elaborate, he said that even though "France is an incredibly powerful and well-known brand," businesspeople still think of the country in terms of wine and cheese. What also comes immediately to mind are 35-hour workweeks and never-ending labor disputes.
"Those perceptions don't come from nowhere, yet they don't tell the whole story," he said. "Productivity is a double-edged sword. There are more days lost to strikes in the United States than in France. And while people work a lot more here than in France, the French hourly productivity rate is higher," he said.
"This isn't a question of outsourcing, it's a question of going there for specific reasons. France is the fifth-largest economy in the world, and the second-largest destination for foreign direct investment, right behind China — and ahead of the United States."
Invest in France has 32 offices in 22 countries, including three in the United States: New York, Chicago and Palo Alto, Calif.
Besides facilitating access to financial and fiscal incentives, Invest in France provides key industry contacts, site selection studies and regulatory information and helps identify potential partners and acquisition opportunities. Services are customized, confidential and complimentary.
For more information — and to view a complete listing of the 50 new measures, visit the Invest in France website at www.investinfrance.org, or call the agency's New York office at (212) 757-9340.