France - Market Challenges France - Market Challenges
Britain’s exit from the European Union (Brexit) may pose uncertainty for French and U.S. companies as they seek to understand how the departure will ultimately affect business interests and trade. France has been moderately successful in attracting companies across multiple sectors to transfer operations from the United Kingdom to France, touting the country’s central location in Europe, high quality of life, and educated labor force. Nevertheless, the uncertainty surrounding Brexit, especially the potential for trade disruptions and the movement of workers, is impacting business decision-making and may pose challenges for U.S. exporters.
In November 2018, the “Yellow Vests” protest movement emerged from discontented segments of the French public who felt left behind by Macron’s ambitious reform agenda. The weekly, often violent, demonstrations have affected cities and rural communities across the country and have commandeered French political discourse. In response, the government announced in December €10 billion ($11.4 billion) in measures to assist low-income earners and pensioners. A “Great National Debate” – a combination of town halls featuring government leaders, community discussions, and an online platform for public complaints and proposals – contributed to a dramatic fall in participation in the protests after Macron’s government announced additional measures of about €6.4 billion in April.
Among U.S. investors in France, 62 % said the current social climate was a “nuisance” for U.S. companies operating in France. Nevertheless, 42 % of U.S. firms still plan to hire new employees in France over the next two to three years.
U.S. firms must currently navigate national and European regulations and standards for selling products in France. The French often interpret existing EU regulations more stringently than other Member states and regulate in areas where the EU has not yet proposed legislation.
Another challenge for U.S. firms is dealing with highly concentrated retail distribution chains and networks. Many French global manufacturers and suppliers exercise strong control over these retail networks, with well-organized buying offices that have put in place very stringent selection processes for new suppliers, products and services. High retail mark-ups combined with innovative and creative marketing approaches are prerequisites to enter the French retail market.