France becoming more attractive to German investors

The premesis of the German chemical giant BASF at Genay in France. []

While German companies already have a strong presence in France, more and more of them want to invest in the country, attracted by the French government’s digital policy, among other reasons. EURACTIV France reports.

France has the wind in its sails in Germany. In a study entitled “German companies in France: economic situation, perceptions and prospects 2018-2022”, German companies showed renewed confidence towards France, particularly due to a change in the political and economic environment.

Accordingly, whereas only 41% of German businesses surveyed in 2016 considered that the economic situation in France was good, as many as 90% of businesses thought this in 2018.

“In the eyes of German businesses, France has undeniable assets which make it a major partner,” stated the study, carried out by the Franco-German chamber of commerce and industry and the consulting firm EY.

Artificial intelligence

“France’s new attractiveness is based on its reforms, its high innovative capacity and its desire to place digitisation and artificial intelligence at the centre of economic development,” said Jörn Bousselmi, director general of the Franco-German chamber of commerce and industry.

However, “50% of German investors expect an even greater effort from France on the challenges of innovation and digital transformation,” the study stated.

Such efforts were declared by French President Emmanuel Macron in March, when the roll-out of the “artificial intelligence plan” until 2022 was announced. Provided with a €1.5 billion budget, this plan aims to make France a world leader in the field.

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Moreover, France’s new attractiveness appeals not only to Germany. The Élysée will not be missing “the artificial intelligence [AI] train” since, at the same time, the Korean company Samsung has decided to establish its third largest researcher centre in Paris, thus creating around one hundred jobs for researchers.

At the same time, Japanese company Fujitsu decided to expand its Paris-Saclay research centre to develop its work on artificial intelligence under the European research programme Horizon 2020.

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Germany is a major employer in France

Nevertheless, Germany remains the second largest foreign investor in France. In total, 4,500 Germany businesses are established in France and employ more than 312,000 people.

According to the study, German businesses said the investment and job creation prospects are positive in France. Consequently, 43% of them stated that they are planning to invest in France, and as many also announced that they would increase their workforce.

Avenues for improvement

Even though German investors are optimistic and welcome the reforms undertaken by the French government, they mentioned some avenues for improvement, such as labour market flexibility and simplifying the labour law.

This is a project which Macron quickly tackled. The ordinances for the reform of the labour law were entered into the official gazette on 22 September. They provide businesses with precisely the flexibility to boost employment, often at the employees’ expense.

German businesses also noted a lack of resources in terms of technical staff and issues with their training.

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Working hand in hand

“The businesses are unanimous in stating that these reforms can only be carried out with the other countries and Germany in particular,” the study said.

The companies recalled the importance of Franco-German relations to support the European project, which is shaken by the outside world’s instability and particularly by the rise of nationalism even within the EU.

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“The new image conveyed by France is a real chance to renew Europe. Faced with the uncertainties created by an unstable international context, success will only be achieved with the help of Europe and more particularly the enrichment of the Franco-German partnership,” underlined Serge Guérémy, an associate at EY.

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