Doing business in France: Advantages & Disadvantages

Advantages and benefits of doing business in France

Investment climate

France is a business-friendly country, with one of the largest markets in Europe, and access to the European single market. Its capital, Paris, is an important financial center in the region and the European leader in venture capital.

France also has a talented workforce, innovative business leaders, a high-quality transportation infrastructure, and strong intellectual property protections. In recent years, the French government has expanded its policies to continue attracting foreign interest and investment.

Technology and innovation

Technology plays an important role in the French economy and its government invests heavily in R&D, creating a favorable foundation for innovation. The Sophia Antipolis technology park in Paris has the highest concentration of technology engineers outside Silicon Valley. Major global technology players have established a presence in the park including companies like Accenture, Cisco, Intel, IBM, Air France, and Orange.

Manufacturing

France is an industrial powerhouse and despite a decline in overall output, manufacturing remains one of the country’s largest economic sectors. The country is home to leading automobile manufacturers (Peugeot and Renault) and the world’s leading aircraft manufacturer (Airbus). With an increased focus on technology and innovation and the country’s strong entrepreneurial culture, the French government continues to support the manufacturing sector in order to increase its competitiveness.

Tourism

As with many European countries, tourism plays a key role in the country’s economy. France receives over 85 million visitors per year – representing nearly 10% of the country’s GDP. France is one of the most visited countries in the world, and its popularity can be attributed to its history, cultural influence, culinary experiences, and renowned attractions, including UNESCO world heritage sites located throughout the country.

Disadvantages and risks of doing business in France

Despite significant advantages, doing business in France can present some challenges of which outside investors and businesses should be cognizant of.

The process of opening a business in France as a foreign, non-EU resident can be lengthy. Furthermore, once established, U.S. businesses must be prepared to deal with the country’s extensive and complex labor laws which have a special emphasis on employee rights and protections. Employment costs can run high due to the payroll taxes that employers are required to pay.

France also presents some cultural challenges. While English is considered the main language used for business in most EU countries, in France, businesspeople and even visitors are expected to have some grasp of French. While it is not obligatory to speak French, to refuse or even attempt to speak it, may be considered rude.

The power structure and hierarchy norms in France are very defined and can seem alien to Americans. The business environment is very formal, and individuals are expected to know the rank of their counterparts and act accordingly. Greeting and addressing clients and colleagues in the proper manner is also encouraged.

When doing business in France, it’s important to consider local norms and understand these cultural differences in order to make a good impression.

Frequently asked questions for doing business in France

Why should I consider doing business in France?

Not only is France one of the largest economies in Europe but is the 6th largest in the world. It boasts a large domestic market and is a major springboard to the rest of the European single market. Great infrastructure, highly developed telecommunications and technology, and access to one of the largest capital markets in the region.

What challenges should I consider when expanding to France?

While there are challenges to doing business in any foreign country, some of the common challenges of doing business in France include complexity in labor laws and higher cost of employment, differing business norms and language barriers, and a strict regulatory environment.

What is the corporate tax rate?

The current corporate tax rate in France is 33.3%

What are the business entity types available?

There are many entity types in France, the most commonly used are:

• Société par actions simplifiée (SAS) or Simplified joint-stock company
• Société a responsabilité limitée (SARL) or Limited liability company
• Société anonyme (SA) or Public limited company

How long does it take to incorporate a business in France?

Depending on the entity and business type, it can take between 1 and 4 weeks.