Political forecast for business
France offers a (relatively) stable business environment to businesses. Thus, the country is a (relatively) stable market for foreign investments. FDI inflows are considerable, however, they seem to be volatile in certain political circumstances. France’s GDP output is the 5th largest in the world, meaning that France is a huge consumption area in itself, in spite of the fact that the country is currently struggling with budget, growth and unemployment issues.
France is a leading political force in the EU and a key international actor, permanent member of the UN Security Council. We are talking about an economically struggling but politically notable player in the field. After the planned economic stabilization (2017-2018), a stronger economic growth might be expected in the country, further encouraging FDI inflows.
An intervetionist state?
However, government policies might constitute a political risk for business. In the French political system, state intervention is a tradition both on the right and the left side of the political fence. Political science says that there is an “illiberal tradition” in France. Investors should be aware of this fact and they should understand the nature of this environment in order to be successful in it.
From the French point of view, state intervention often means the defence of
the French Republican model.
Those who want to do business in France need to understand the nature of the French Republican model. The French welfare system has its own rules and own logic of functioning. A relatively high taxation, regulated professions, governmental veto rights, group interests and political pressure groups, trade unions, chambers of commerce, the idea of unfair competition, the occasional adverse regulation and so on and so forth: while the French social system is not necessarily special per se, it has its own special rules investors should be aware of.
France is an ambigous territory for many foreign companies who do not know or do not really understand the French Republican model and the French economic thinking. Uber, Netflix, Amazon, Booking.com Ryanair, Titan – they are recent examples of companies that had or still has difficulties doing business in France, often because of some unwanted governmental attention.
The importance of foresight
That is why foresight and insight are particularly important for those doing business in France. It would be just as well if companies could preapre for political controversies. In fact, France is one of the rare Western countries where the notion of political risk still has a meaning. Conflicts between companies and political actors are quite common. (Anglo-Saxon) investors and French actors often speak different languages and do not understand each other. Debates are often purely political, even when they seem to be legal or economic.
Companies can prepare for these occurences, or can outright avoid them by understanding the logic of the French system.
I help companies to cope with these challenges. If you need help with these issues, contact me here. Let’stalk and find out how I can help you to meet your goals!