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Report prepared by U.S. Embassy Paris, released by the Bureau of Economic and Business Affairs, August 1996
This Country Commercial Guide (CCG) presents a comprehensive look at France's commercial environment using economic, political and market analysis. The CCG's were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies Through the combined efforts of several U.S. government agencies.
The market in France has long been and will continue to be of major importance to U.S. suppliers across a wide range of industrial and consumer goods, food & agricultural products, and services. France is the tenth-largest trading partner of the United States worldwide and the third-largest in Europe (after The United Kingdom and Germany). Commerce Department statistics show that U.S. merchandise exports increased by 4 percent in 1995 To USD 14.2 billion; yet, with some USD 17.2 billion in U.S. imports of French goods, the U.S. merchandise trade deficit with France stayed at USD 3 billion. Over the past 15 years, merchandise trade between the U.S. and France has stood in historical balance. Trade in services added around USD 12 billion more to the USD 31.4 billion volume of bilateral trade In goods between the United States and France in 1995. The U.S. And France share many trade similarities, particularly their global standing as the world's top 2 exporters in 3 very important sectors: defense products, agricultural goods, and services. Franco-American trade is also remarkable for its symmetry, as 6 of the top 10 exports are the same each way.
With unemployment rising to politically unacceptable levels (hitting 12.4 percent in may 1996), the government of French President Jacques Chirac has yet to make significant inroads in reducing the over 3 million unemployed workers in France. The major economic question is whether economic growth, after rebounding to 2.8 percent in 1994 and registering a 2.2 percent increase in 1995, will remain strong enough to enable France to Make good on its steadfast pledge under the Maastricht treaty to reduce the government deficit to 3 percent of GDP in 1997 in Order to qualify for the European monetary union. The latest forecast by the government statistical agency INSEE calls for 1.3 percent growth in 1996. After absorbing last summer's increase in the vat, inflation is running at an annual rate of just over 2 percent in France -- still one of the lowest rates of inflation in the European Union. On the structural side, some progress is being made in privatization as well as defense industry restructuring, but traditional pressures to protect small Business and shorten the work week remain strong.
In general, the dynamic French commercial environment is favorable for sales of U.S. goods and services. Owing to the complementarity of the goods and services that the two countries export to each other, marketing products and services in France is much like marketing them in the U.S., notwithstanding some significant differences in cultural factors and the legal framework. Concerning French marketing and distribution channels, the most noteworthy trends remain the explosive growth of super-markets and hyper-markets (often at the expense of small family enterprises, which is now a political issue), mail order marketing, and franchising -- where U.S.-owned franchises achieve high sales and enjoy stunning average growth rates of 12 percent per year.
The next marketing wave will likely involve harnessing the Internet. However, because of the huge installed base of France Telecom's "minitel" units, the number of internet users in France is extremely low when compared to the United States. Trade policy differences involving the regulation and reform of such sectors as air services, broadcasting & radio, and legal services exist. The telecommunications sector is in the process of being reformed and will begin being liberalized by January 1, 1998. In these cases, French government action (or inaction) is heavily influenced by strong domestic interest groups and can serve to limit the market access of U.S. firms. Nevertheless, taken in the aggregate, these and the various other French or EU commercial obstacles do not begin to compare in scale with the many market opportunities in France.
The leading non-agricultural products considered to offer "best prospects" for U.S. business in France are (in order of market Size): computer software, industrial chemicals, electronic components, computers & peripherals, security & safety equipment, Electrical power systems, lab & scientific equipment, aircraft & parts, films/videos & other recordings, medical equipment, avionics and ground support equipment, pollution control equipment, automobiles & parts, telecommunications equipment, and agricultural machinery. On the services side, the French markets for travel & tourism, employment services, and insurance hold the most potential for American suppliers.
French imports of U.S. food & agricultural products including manufactured tobacco, spirits, and wood & products) during CY 1995 were valued at USD 997 million, a 13.2 percent increase compared to 1994. French agricultural imports are trending toward consumer-ready foodstuffs and away from bulk commodities for animal feeds. In 1995, fresh, frozen and/or dried fruits were the leading U.S. agricultural export to the French market in terms of value. Wood & products and fish & seafood followed as numbers two and three by value. The French market for food products is mature, sophisticated and well-served by suppliers from around the world. For U.S. agricultural products, therefore, It is unlikely that major market breakthroughs will occur; instead, business opportunities will be created through niche markets for regional American foodstuffs (Tex-Mex, Cajun and California cuisine). In general, U.S. food products are considered to be of high quality, although at times landed prices appear high.
France offers a variety of financial incentives to American and other foreign investors, and its investment promotion agency, Datar, provides extensive assistance to potential investors both in France and through its agencies around the world. Financial subsidies and tax incentives are offered at the local, regional and national government level to attract investment to the country's economically depressed areas. Such incentives are available equally to French and foreign investors. Furthermore, foreign companies registered in France receive the same treatment with respect to participation in technology development programs sponsored by the French government and have equal access to R & D funding. France's major ongoing privatization program is creating new investment opportunities in sectors that were previously state-controlled.
In support of U.S. commercial interests in France, the U.S. Embassy in Paris is pursuing a "strategic commercial plan" using the combined resources of the various Trade Promotion Coordinating Committee member agencies within the Embassy. Key objectives of this post commercial strategy are to promote increased exports of U.S. goods and services (including tourism), to monitor and supply information on areas of opportunity (e.g. the French government's privatization program), and to advocate effectively on behalf of U.S. firms.
II. ECONOMIC TRENDS AND OUTLOOK
A. Major Trends and Outlooks
SUMMARY
The French economy rebounded during the first quarter of 1996 after the decline in output experienced during the public sector strike at the end of 1995. Strong consumption led rapid real GDP growth, but indicators for April and May hint that this first quarter momentum will not continue into the second quarter. Overall, economic activity in France is expected to be sluggish in 1996, with real GDP growth around 1.4 percent, as a part of a Europe-wide slowdown. In particular, the sluggish German economy will dampen French exports.
A more favorable monetary environment will help improve economic conditions in 1997, since the Bank of France has been able to engineer interest rate cuts for the past six months. The corporate sector also continues to indicate that its investment expenditures will be substantially larger in 1996. The external sector will make a small net positive contribution to growth, despite the slowdown in Germany, as exports are expected to grow faster than imports. Taken together, these factors imply that the French economy should be able to grow by around 2.5 percent in 1997, enough to reduce slightly the unemployment rate.
RECENT DEVELOPMENTS AND SHORT-TERM OUTLOOK
The wide swings in recent demand indicators have been particularly difficult to interpret. First quarter real GDP grew rapidly at 1.2 percent, or almost 5 percent at an annualized rate. However, indicators for April and May show that the first quarter gains are not being sustained. Instead, the French economy appears somewhat directionless at the moment. While much of the pessimism associated with the decline in output during the final months of 1995 is off the mark, there is no concrete evidence that the economy is set to embark on a new growth cycle.
Consumer spending was surprisingly strong during the first quarter, with household consumption up by 2.4 percent. Some of the gains were technical: the "catch-up" effect from the weak fourth quarter of 1995; the fact that this is a leap year, with more than the usual number of shopping days during the first quarter; and the higher energy production due to colder-than- usual weather. There were, however, some genuine improvements as well. The savings rate declined sharply in the first quarter, perhaps indicating that households were beginning to be less concerned about the unemployment outlook and more optimistic about the general economic outlook. We believe that interest rate cuts and the recent strength of the French franc, as well as the government's repeated assertion that there will be no more tax increases (with a general promise of tax cuts as early as 1997), played important roles in buoying first quarter consumer confidence.
All is not, however, smooth sailing. April manufactured goods sales -- the best indicator of monthly consumption -- were down 1.4 percent compared to March. Similarly, the household confidence index for April was at its lowest since December, implying that there will likely be a correction in the second quarter. Ironing out these monthly swings, we project that household consumption could grow by slightly under 2 percent 1996 and by over 2 percent in 1997.
Similarly, the first quarter of 1996 witnessed sizeable gains on the production side. Industrial production in March was up 0.8 percent over February -- the fourth consecutive monthly gain. Production of cars, consumer goods, and semi-finished goods were all strong. However, as with consumption, April and May survey data indicate that these early gains are not being consolidated. May surveys in particular show that outlook for demand is weaker and opinions about inventories worse compared with the first quarter.
In general, investment has been weak, up only 0.1 percent in the first quarter. However, a rebound in business investment -- up 3.1 percent in the first quarter -- offers some room for optimism. We expect further investment pickup in the second half of the year.
France's external demand remains one of the biggest question marks. Both exports and imports increased sharply during the first quarter, again mostly due to the rebound from the fourth quarter of 1995. Over the second half of 1996, export growth should slow down, particularly with the projected anemic growth in Germany. Nonetheless, exports ought to increase at a faster pace than imports, thus making a positive contribution to real GDP growth.
With the overall economy projected to grow by only 1.4 percent in 1996, the unemployment rate, which averaged 11.6 percent in 1995 and reached 11.9 percent early in 1996, will continue to rise several tenths of a percentage point more before heading down. Our forecast calls for unemployment to average 11.9 percent 1996 and 11.6 percent in 1997.
B. Principal Growth Sectors
In 1994 and 1995 the fastest growing sectors, as measured in nominal value-added terms, were household goods and equipment (16% increase), financial services (11.5% increase), professional goods and services (11% increase), transport materials (10% increase), and transportation and telecommunications services (16% increase).
C. Government Role in the Economy
France has a centuries-old tradition of highly centralized administrative and governmental control of its essentially market economy. In 1995, French total general government outlays amounted to 54.1 percent of nominal GDP and, at the beginning of 1993, 70 state-owned enterprises accounted for approximately 30% of French GDP. Current government efforts to privatize many of these firms are gradually reducing the direct role of the government in the economy.
The privatization plan initiated in late 1993 by then-prime minister Balladur has continued under Prime Minister Juppe. Of the 21 major companies included in the program, nine have been privatized so far, including Banque Nationale de Paris, Elf Aquitaine, and Rhone-Poulenc. Privatization efforts continue on several fronts. In 1996, the government announced that as a part of a general restructuring of the defense industry, the Thomson Group (defense and consumer electronics) and Aerospatiale would be privatized. It also decided to relinquish its majority stake in Renault, bringing its holding to 46%. Finally, two bills before the French Parliament in June 1996 -- one to implement the EU-mandated liberalization of telecommunications by January 1, 1998 and another to corporatize France Telecom -- ought to eliminate France Telecom's monopoly and permit private investment in France Telecom.
The French government still maintains a large presence in key industries such as aeronautics, defense, banking, and insurance, and can still exert some control in privatized firms (see Section F, Investment Barriers -- Privatization). Both Socialist and Center-Right governments have, however, accepted that reducing government involvement is the best way to spur economic growth, reduce the high unemployment rate, and meet the targets for European Monetary Union.
D. Balance of Payments
Among third country markets and suppliers, the United States is the leading supplier of food and agricultural products to France, as well as the largest export market for French agricultural products outside of the European Union. According to data from French Customs, the value of French agricultural exports (including spirits, manufactured tobacco, and wood and products) to the U.S. in 1995 was USD 1.3 billion, while the value of French agricultural imports (including spirits, manufactured tobacco and wood and products) from the U.S. during the same period was USD 997 million, leading to a positive agricultural trade surplus for France with the U.S. of USD 346 million.
E. Trade Barriers
U.S. companies sometimes complain of France's complex technical standards and unduly long testing procedures. Testing must usually be done in France and standards sometimes appear to exceed reasonable requirement levels needed to assure proper performance and safety. Most of the complaints have involved electronics, telecommunications equipment, and agriculture phytosanitary standards.
The main explicit barriers to U.S. goods and services exist in the audiovisual and legal services sectors. In the name of protecting French language and culture, the French government maintains quotas on television and radio broadcasts which limit the access of U.S. programming to the market. The 1989 EU Broadcast Directive requiring 51% of television programming to be of European origin was incorporated into French law on January 21, 1992. This French law is more restrictive than EU norms, requiring 60% European and 40% French television programming during primetime and daytime hours. On January 1, 1996, France also instituted licensing regulations requiring 40% of all songs broadcast on the radio to be in French, although a few ethnic music stations like Radio Latina were exempted. Nevertheless, the market share of U.S. films, music, and television shows remains high -- U.S.-produced films, for example, attract approximately 50% of the French cinema audience. France shelved its longstanding push for even tighter EU television quotas in June 1995. Instead, its latest campaign is for new financial and other subsidies to film and television program makers.
The French government revised its legal services system in 1990, making it more difficult for foreign lawyers to practice in France. New-to-market foreign lawyers, who could once serve as legal consultants, are now required to qualify as "avocats" by passing either the full French bar exam or a less time-consuming "short-form" exam. In 1995, the French government allowed non-EU lawyers to qualify for the short-form exam, but this test still requires far greater knowledge of French law and language than would otherwise be necessary for the practice of international or U.S. law. In addition, the random choice of subject areas tested and the lack of a preparatory class make studying extremely difficult, and examiners have considerable discretion on deciding whether a candidate passes or fails. In practice, the only American lawyers now working in France are those who were members of the bar or served as legal consultants prior to 1990.
Despite the few highly publicized disagreements, the sizable bilateral trade between the U.S. and France is for the most part noncontroversial.
F. Investment Barriers
Screening
See Section VII, Investment Climate.
Privatization
The 1993 privatization law created minor limitations on non-EU investment in privatized firms. During its initial stock offering, the French government may not sell more than 20 percent of a firm's capital to non-EU investors (shares already held by non-EU investors are not affected by the 20 percent limit). Thereafter, private EU investors may sell their shares to non-EU investors, but the government can still exert control over who may invest if it holds a "golden share" in the company. A golden share allows the government to block the sale of any assets "essential to the national interest," prevent certain investors from purchasing additional shares in a company, and exert significant control over company management. In addition, any investor seeking to own more than five percent of outstanding shares of a privatized company in the health, security, or defense sectors must receive prior approval from the Economics Ministry.
Sectoral Investment Restrictions
Firms controlled by non-EU nationals may be denied national treatment in the following sectors: Agriculture, Financial Services, Accounting, Legal Services, Air Transport, Maritime Transport, Road Transport, Publishing, Telecommunications, and Tourism.
G. Labor Force
The French labor force is one of the country's strongest points in attracting foreign investment, combining high quality with competitive unit wage costs. In the most recent survey of U.S. investors in France, management was unanimous in agreeing that the quality of local personnel was adequate and 90 percent found labor costs to be competitive.
The Labor Code sets out minimum standards for working conditions including the work week, overtime, vacation, and personal leave. Other labor standards are contained in collective agreements, which are usually negotiated on a national or regional basis by the various unions and employers' associations.
The French minimum hourly wage was raised to FRF 36.98 (approximately USD 7.62) per hour as of July 1, 1995. The legal work week is 39 hours and average time worked hovers around this figure. When the work week exceeds 39 hours, non-executive employees are entitled to overtime payment and/or compensatory time off. Employees are entitled to 2.5 workdays of vacation per full month worked. The average private sector compensation per employee increased by 1.9 percent in 1995, which meant that the real labor cost fell, since the inflation rate was 2.8 percent that year.
French absenteeism is relatively modest by European standards. Massive public sector strikes in December 1995 hurt economic growth and stalled government plans to restructure the transportation and utilities sectors, but relatively peaceful labor relations have been the order of the day in the private sector.
H. Major and Third Country Competitors
As the world's fourth largest economy, centrally located within the European Union, there is strong competition for market share in all French industrial sectors. Major French organizations, e.g. Aerospatiale, Alcatel, Michelin, and Thomson, have manufacturing and marketing expertise which matches major U.S. multinationals and often receive substantial support from the French government.
American exporters to France face more competition from European companies than Asian, although the Japanese have been successful in developing a foothold in the French market through substantial investment in the Alsace region. German manufacturers are the most serious foreign competitors in France, building on the many Franco-German joint ventures that have been established. Each industry is dominated by its own principal competitors and should be carefully analyzed as part of a strategy to capture a share of the French market.
I. Infrastructure Situation
The French transportation infrastructure is among the most sophisticated in the world, benefitting from advanced technology and extraordinary investment by the government. The three main entry points for air freight are the Orly and Charles de Gaulle airports in Paris and Lyon's Satolas airport. France has 12 major maritime ports, many of which are equipped for container ships. The state-owned French rail system is one of the most comprehensive and technologically advanced in the world. The French highway system is also excellent and has become an increasingly important part of Europe's overall transportation network. The two main transportation advances in 1995-96 were the opening of an intermodal link with the north TGV (Train a Grand Vitesse) line at the Roissy/Charles de Gaulle Airport and the inauguration of the longest spanned bridge in the world, Le Pont de Normandie, linking Le Havre with Honfleur over the Seine estuary.
The French communications infrastructure is similarly advanced. Telephone lines blanket the country, and there is approximately one telephone receiver for every 1.5 French inhabitants. While computers are not extensively used at home or work, the French Minitel system is widespread and provides many of the consumer services found on the Internet. The French government has attached special priority to the creation of a French information superhighway by the year 2015, and is currently supporting a number of pilot projects to assess market needs and demand. France Telecom began the process of connecting with the Internet in March 1996, an advance which could link the entire country to the Internet at local telephone rates.
J. Major Infrastructure Projects Underway in France
1. Transportation Projects:
a. Roissy/Charles de Gaulle Airport Expansion
2. Defense Trade
a. Nuclear Aircraft
b. MEADS (Medium Extended Air Defense System)
c. Horizon Frigate Propulsion System
3. Construction Projects
a. "La Tour Sans Fin" - La Defense
b. Cite Internationale de Lyon
c. Georges Pompidou European Hospital
d. St. Denis Stadium
e. Vatry Europort
4. Environmental and Urban Development Project
a. Eco-Normandie Regional Technological Park
| Total | From U.S. | % U.S. | |
| High Value Products: | |||
| - Meat and Offals | 19,421 | 236 | 1.2 |
| - Dairy and Eggs | 10,979 | 12 | 0.1 |
| - Coffee, Tea and Spices | 6,870 | 4 | 0.1 |
| - Manufactured Tobacco | 7,706 | 3 | -- |
| - Prepared Meat | 1,551 | -- | -- |
| - Fish and Seafood, fresh or frozen | 12,018 | 490 | 4.1 |
| - Prepared Fish and Seafood | 3,890 | 21 | 0.5 |
| - Processed Grains | 1,029 | 34 | 3.3 |
| - Sugar and Confectionary | 3,920 | 18 | 0.5 |
| - Cocoa and Chocolate | 7,321 | 7 | 0.1 |
| - Prepared Grain Products | 7,355 | 25 | 0.3 |
| - Fresh and Dry Vegetables | 8,194 | 155 | 1.9 |
| - Fresh and Dried Fruits | 13,888 | 568 | 4.1 |
| - Processed Fruits and Vegetables 1/ | 9,323 | 359 | 3.8 |
| - Misc. Food Preparations | 4,248 | 96 | 2.2 |
| - Beverages (except spirits) | 5,627 | 59 | 1.0 |
| - Spirits | 2,605 | 122 | 4.7 |
| Subtotal High Value | |||
| Products | FRF 125,945 | 2,209 | 1.7 |
| (USD Millions) | 25,239 | 443 | |
| Subtotal Bulk | |||
| Products (*) | FRF 42,535 | 2,765 | 6.5 |
| (USD Millions) | 8,524 | 554 | |
| TOTAL HIGH VALUE | |||
| + BULK PRODUCTS | FRF 168,480 | 4,974 | 2.9 |
| (USD Millions) | 33,763 | 997 | |
(*) Includes live animals and animal products, nursery products, grains, oilseeds and seeds, plants for weaving, vegetable extracts, oils and greases, protein meals and other feeds, wood, unmanufactured tobacco and raw products (i.e., cotton, silk, wool and other animal hair, raw hides and skins)
-- Means nil or insignificant
1/ Including fruit juices
Source: French Customs
A. Bilateral Relationship
France and the U.S. are close allies. Despite occasional differences of view, the U.S. and France work together on a broad range of trade, security and geopolitical issues.
B. Political System
France is a democratic republic whose political system is based on a written constitution which was approved by referendum in 1958. According to the French Constitution, the President of the Republic is elected by direct suffrage every seven years. The President presides over the cabinet, commands the armed forces, and concludes treaties. He is also empowered to dissolve the National Assembly and, in certain emergency situations, may assume full power. The President appoints the Prime Minister, but because France's political system is a hybrid of presidential and parliamentary systems, the composition of the National Assembly determines the party or political grouping from which the President must choose his Prime Minister, resulting occasionally in the head of state and the head of government being from opposing parties. From March 1993 to May 1995, for example, Socialist President Francois Mitterrand served with conservative Prime Minister Edouard Balladur in an arrangement known as "cohabitation." Jacques Chirac defeated Socialist Lionel Jospin in the May 1995 presidential election, marking the end of cohabitation.
The Constitution provides for a bicameral parliament consisting of a National Assembly and a Senate. National Assembly deputies are directly elected by universal suffrage for five-year terms. Senators are indirectly elected for nine-year terms; one-third of the Senate is renewed every three years. The French political spectrum includes five distinct political groups. From the right to the left, these are: the extreme right National Front (FN); the neo-Gaullist Rally for the Republic (RPR); the moderate Union for French Democracy (UDF); the Socialist Party (PS); and the Communists (PCF). Numerous smaller parties have minimal national political impact, but have variable local political impact.
C. Political Events Affecting Business Climate
Gaullist RPR President Jacques Chirac assumed office as French President in May 1995, replacing President Mitterrand, who held office for two terms. During his campaign, Chirac made promises both to reduce the government deficit to three percent of GDP--in large part to meet Maastricht Treaty eligibility requirements for the European Monetary Union--and to lower France's high unemployment rate. In October 1995, however, he announced that reducing the deficit would take priority over job creation. Chirac and Prime Minister Alain Juppe continue to pursue the economic austerity program despite widespread strikes last December in response to the government's planned social security reforms and their resulting low popularity ratings. While both Chirac and Juppe continue to pay lip service to lowering unemployment, the French government has publicly asserted that lower deficits will reduce interest rates and spur growth, which in turn will reduce unemployment and allow the government to cut taxes.
Chirac's decision in 1996 to streamline defense industries and to restructure the armed forces will have a strong economic impact on the areas where bases and defense industries are located. French officials have indicated that they have targeted 60,000 jobs in the arms industry for cuts by 2002. Nevertheless, Chirac continues to claim that this downsizing will be achieved without massive layoffs, and stressed "conversion" of defense industries in his July 14, 1996 "state of the nation" interview.
IV. MARKETING U.S. PRODUCTS AND SERVICES
The United States and France produce many of the same goods and services and export them to each other. Therefore, marketing products and services in France is much like marketing in the U.S., with several significant differences. Following is a general overview of marketing in France. Specific counselling sessions with United States Department of Agriculture/Foreign Agriculture Service & Commercial Service trade specialists are recommended for those wishing more details as they plan their specific marketing campaigns in France.
A. Distribution & Sales Channels
The Retail Network
France possesses a diverse and comprehensive retail network which increasingly resembles that of the United States. From the largest department store chains to the smallest individual proprietorships, French distribution channels are exhibiting several important trends.
Small- and medium-sized family-owned firms, which traditionally accounted for a majority of French wholesale and retail trade, are rapidly losing ground to hypermarkets - large retail outlets carrying a wide variety of products at discounted prices. At the same time, mail order marketing and specialized chain stores have shown strong growth, further demonstrating the changing needs and preferences of consumers.
Primary Retail Channels:
- Grands magasins - Department Stores
- Hypermarches - Hypermarkets
- Supermarches - Supermarkets
- Magasins populaires - Convenience Stores
- Vente par catalogue - Mail-order Marketing
- Grandes surfaces specialisees - Large Specialized Stores
- Multi-Channel Retail Groups
- Centrales d'achats - Central Buying Offices
Department Stores: In 1995, there were some 167 department stores, employing 29,454 people and totalling USD 6.2 billion in sales. Paris has the highest number of department stores of any French city, and nine of the ten top-selling stores are located there. Department stores have lost some market share in all areas except in the medium-to-high price range. A unique feature of the French department store is that many non-food products are sold by the manufacturer's own sales staff, which can account for up to 20 percent of the store's total sales force.
Hypermarkets: Hypermarkets are self-service retail stores carrying 20,000-35,000 food articles and 3,000-5,000 non-food articles at competitive prices. They are generally located in suburbs, and cover a total sales area of 54 million square feet, or an average of 51,048 square feed. As of January 1, 1996, there were 1074 hypermarkets, employing 207,000 people. In 1994, they generated a total of USD 66.3 billion in sales.
Supermarkets: Also self-service retail stores, supermarkets are smaller versions of hypermarkets. They usually carry 3,500-4,500 food articles and 500-1,500 non-food articles. They generally cover 3,600-22,500 square feet. As of January 1, 1996, there were 7,306 supermarkets, employing 175,000 people. In 1994, they generated a total of USD 61.4 million in sales.
Convenience Stores: Convenience stores are generally self-service and carry a varied assortment (7,000-10,000) of food and non-food articles. In 1995, there were 400 convenience stores, employing close to 17,795. They generated a total of USD 4.3 billion in sales.
Mail Order Marketing: The French mail order market for consumer products is the fourth largest in the world. This market has tripled in the last ten years, reaching USD 9.1 billion in 1995. One out of two French households buys through mail order. Textile products make up 45 percent of mail-order sales, books and records 15 percent, and furniture and home decoration 10 percent.
Large Specialized Stores: Large specialized stores offer an extensive choice of goods in a specific category at a competitive price and with an emphasis on customer service. With over 5,400 stores of this type, this dynamic sector generates USD 20 billion in sales. Furniture stores are the most numerous (2,500), followed by do-it-yourself equipment stores (2,455).
Multi-Channel Retail Groups: The distinctions made above between hypermarket chains, supermarket chains, etc. are becoming blurred. In the last several years, major multi-channel retail groups have emerged, which own chains of different types of stores. Pinault-Printemps and Nouvelles Galeries Reunies fall into this category, because they own chains of specialty and convenience stores.
Central Buying Offices: In addition to contacting the largest store chains listed above, introducing products via central buying agencies is an excellent distribution method. A complete list of French central buying agencies, the Annuaire des Supermarches, Hypermarches, Centrales d'Achat et Groupements d'Achats, is available for about USD 150 (freight included) from:
L.S.A
Mrs. Majean
26, rue Doratour sur Glane
75015
France
Tel: (33) 1.44.25.06.00
Fax: (33) 1.44.25.06.92
Distribution Systems for Food Products in France
France has one of the most highly developed distribution systems for agricultural and food products in the world. There is an extensive network of transportation and distribution channels that assures consumers will receive the final product in good quality and at the proper time.
Normally, French imports of agricultural and food products are brought in from the west Atlantic via the northern French port of Le Havre, or via the ports of Antwerp and Rotterdam in the Netherlands. Imports from the Mediterranean and African countries come through the southern port of Marseille. Imports from other EU and European countries are often brought in by trucks through the world's largest wholesale food market at Rungis, which is located south of Paris. Since much of the processed food products in France are of domestic origin, there are well developed regional markets throughout the country.
Despite the fact that France has a very modern and relatively efficient distribution and transport system, frequent disruptions occur in product movement, due to unexpected strikes by port dockers or truck drivers, or some other labor disputes. Fortunately, the availability of alternative entry ports minimizes the magnitude of this problem for U.S. exporters.
Wholesale Distribution
There are about 27,000 wholesalers of food and agricultural products (including raw products) in France. The industry continues to consolidate and diversify with individual firms adding new services to their basic wholesale activities. Wholesalers now offer a whole "platform" of services for small- and medium-size food retailers and processors. Despite consolidation, many traditional French wholesale food companies continue to lose ground to large super and hypermarket chains, and most recently to the "hard discounters" who are increasingly expanding their own wholesale activities with "private labels".
Retail Food Distribution Channels
There are six principal categories of retail food outlets in France. The first five (hard-discounters, hypermarkets, supermarkets, city-center stores and department stores) represent the mass market and control about 56 percent of total food distribution. The sixth category, traditional outlets, includes neighborhood stores and specialized food stores.
It is expected that mass market outlets will control 75 percent of the market by the year 2000. As of January 1, 1996, there were almost 8,380 super- and hypermarkets in France. Hard- discounters have a total of 1,545 stores all over France and represent 8.4 percent of food sales in France in volume. It is expected that hard-discounters sales may reach USD 15 billion within five years, and the next few years are expected to see a contest between the full-range super/hypermarkets concept and the greater savings cooperative/hard-discounters concept.
Restaurants, Hotels and Food Institutions
Last year, French consumers ate 5.8 billion meals valued at almost USD 28 billion outside of the home in 131,000 restaurants, cafes, cafeterias and university dining halls. This represents about 13 percent of all meals consumed in the country. Out-of- home food is growing at the low rate of one percent a year. Almost 40 percent of out-of-home meals are consumed at commercial facilities (restaurants, hotels, fast food, etc.), while 60 percent are consumed at schools, hospitals or workplaces. French restaurants, hotels and institutions usually use the services of wholesalers or processed food buyers. In these cases, the well developed distribution channels of the wholesalers/importers are often the key to getting a new food product into that sector.
B. Use of Agents and Distributors
Considering the host of distribution options available in France, it is important for the would-be exporter to select the method best suited to his or her product. French buyers generally prefer to purchase through an intermediary, making sales directly to the end-user a scarce practice. However, sales of expensive, technically sophisticated goods are an exception to this rule.
Intermediaries may take one of three primary forms under French
law:
Distributor
A distributor (concessionnaire) is an individual or legal entity who purchases goods directly from a producer for the purpose of resale. The distributor operates independently and is only bound by the written provisions of the distribution agreement. These agreements, however, are subject to specific rules and regulations regarding exclusive distribution and price-fixing.
The conditions of contract termination are an important concern, and vary with the type of distribution agreement. A distribution agreement of specified duration may be terminated at the end of the contract period by either party without prior notification or indemnification. If the termination takes place before the end of the contract period, the terminating party may be sued for breach of contract.
A distribution agreement with an unspecified duration may be terminated by either party without indemnification after a fair notice period, usually six months. The termination of such a contract by the producer without fair notice may be grounds for damage claims by the distributor.
Agent
This category covers commercial agents as well as those persons acting as agents but not fulfilling the requisites for commercial agent status. Unlike distributors, agents do not actually purchase goods for resale; instead, they match up buyers and sellers on a commission basis. All agents exercise their activities in an independent manner, and their principals are exempt from payment of payroll taxes. Agents assume their own fiscal charges (business license tax and value-added tax) and social charges (health insurance, social security and retirement/pension benefits).
Commercial Agent: Agents with a written contract have the status of commercial agents (agents commerciaux) if they exercise their activity as a sustained independent profession and fulfill the following conditions:
A commercial agent is independent and free to act on the behalf of any other firm. However, in the case where the agent wishes to represent one of his or her principal's competitors, consent of the principal must first be secured.
The principal may justifiably terminate the commercial agent contract only if the agent shows substantial deficiency in carrying out his or her obligations. Otherwise, contract termination gives the agent a right to indemnification, often equal to two years' commission.
Other agents: Persons who do not fulfill all the requirements for commercial agency, and who are not in a position of subordination to the company they represent, are considered agents. Authorization of an agent can be effected by notarial act or private agreement. Either party may terminate the agency agreement at will, but the non-terminating party has a right to indemnification of losses.
Salaried Representatives
Unlike agents, salaried representatives have employment contracts. They and their employers share the burden of payroll taxes contributing to social security, unemployment compensation, and retirement/pension plans.
Statutory Representatives: Whatever their qualifications or title, persons are considered statutory representatives if they exercise their activity as a sustained independent profession and fulfill the following conditions:
Statutory representatives, like all employees, perform their work according to the instructions of their employers and benefit from the system of labor law protection. However, they possess a special right to indemnification if their employment is unjustly terminated. This indemnity is based on the size and importance of the clientele created by the statutory representative.
Nonstatutory Salaried Representatives:
Representatives who are subordinate to their employers and who do not fulfill the requisites for statutory representative status fall into a separate category and are considered regular employees.
Finding a Partner
The Department of Commerce's International Trade Administration offers several services to help the would-be exporter identify potential foreign representatives. The three primary services available from the Commercial Service in France are the Gold Key Service, the Agent Distributor Service (ADS) and Industry Targeted Mailings. To request any one of these services, firms should contact the nearest U.S. Department of Commerce District Office.
Contacting and Evaluating Potential Representatives
Once the U.S. company has identified several potential representatives, it should contact them directly in writing. Just as the U.S. firm is seeking information on the French representative, the representative is interested in corporate and product information on the U.S. firm. The U.S. firm should provide full information on its history, resources, personnel, the product line, previous export activity, and all other pertinent matters.
At the same time the firm is providing information on itself, it should also engage in a thorough investigation of the potential representative. Following is a list of important facts the firm should endeavor to find out:
- Current status and history, including background on principal officers - Personnel and other resources - Sales territory covered - Current sales volume - Typical customer profiles - Methods of introducing new products into the sales territory - Names and nature of U.S. firms currently represented - Trade and bank references - Assessment of whether U.S. firm's special requirements can be met - View of in-country market potential for the U.S. firms products
The U.S. firm should not hesitate to ask potential representatives or distributors detailed questions; exporters have the right to explore the qualifications of those who propose to represent them overseas.
In addition, the U.S. firm is advised to obtain at least two supporting business and credit reports to ensure that the distributor or representative is reputable.
The French agency of Dun & Bradstreet offers this service.
Dun & Bradstreet France
Service Renseignements de Notoriete
Immeuble Defense Bergeres
345, avenue Georges Clemenceau
92100 Nanterre
France
Tel: (33) 1.41.35.18.98
Fax: (33) 1.41.35.19.20
Negotiating an Agreement with a French Representative
Once the U.S. firm has selected a prospective representative, the next step is to negotiate a foreign sales agreement. The content of this agreement is extremely important, as it will determine the legal basis for any relationship between the exporter and the representative. Although U.S. Department of Commerce District Offices can provide counseling to firms planning to negotiate agreements with French representatives, engaging a French lawyer is strongly advised.
In drafting the agreement, special attention must be paid to safeguarding the exporter's interests in cases in which the representative proves less than satisfactory. Procedures and conditions for terminating the relationship should be clearly defined. Furthermore, any right to indemnification on the part of the exporter or distributor should be specified.
C. Franchising
France is the strongest market for U.S. franchise development within the EU. Out of a total of 34 foreign franchises in France, 18 are American, accounting for 4.2 percent of the total franchise market. The market size in 1995 was USD 37.1 billion. The estimated annual growth rate for 1995-1997 is 6 percent. U.S. exports reached USD 8.9 billion in 1995; the estimated average annual growth rate for U.S.-owned firms is 10 percent. The franchising industry has stayed strong despite unfavorable economic conditions. Fast-food has been the most successful sector, but is now very competitive. However, there remains potential for specialty restaurants. The greatest potential for U.S. franchisors lies in sub-sectors yet to be fully exploited, such as computer education and services, for example renovation services.
D. Direct Marketing
Direct marketing in France is a fast growing industry with sales evaluated at USD 7.1 billion in 1995. This figure includes expenses for all Direct marketing media: mailings, catalogs, telephone marketing, targeted and non-targeted fliers, press and television.
The market is expected to grow at the rate of 4.5 percent per year. Some media have experienced tremendous growth in volume and in value over the past 10 years. For example, non-targeted fliers have increased in volume by over 15 percent in 1994, while targeted fliers or catalogs only increased by 2 percent. However, catalog sales remain a good opportunity for U.S. companies. The French market for mail order products reached USD 9.1 billion in 1995. Catalog sales represent 80 percent of this market. U.S. companies rank second after German companies in mail order sales in France with USD 245 million in sales. The best prospects in this sector remain apparel, followed by books and records as well as entertainment videos.
E. Approaches to the French Market
American companies have prospered in the French market and will continue to do so if special attention is paid to their approach to the market and the products/services they offer. As outlined above, the best "first step" is to appoint an agent or distributor; however, expansion in the market can take various other forms, depending on the product/service.
Joint Venture/Licensing
A joint venture with a French firm having similar commercial interests is one recommended approach. The French government encourages this type of investment and offers a wide range of incentives. In selecting a joint venture partner, the American company must carefully analyze its strengths and weaknesses and search for a firm that offers the appropriate support. Traditionally, a French joint venture partner strengthens the marketing activities of an American firm with its in-place distribution system. In certain industries, French manufacturers have skills that augment those of the American partner. Financing is also of special concern. Each joint venture proposal requires special analysis and conditions if it is to be successful. A joint venture with a French firm that has full French government support can be beneficial as long as manufacturing decisions can be made independently of government involvement. Recognizing the differences in each market is essential for success; consequently, it is recommended that companies interested in forming joint ventures consult with the Embassy in Paris before making any entangling alliances.
Steps to Establishing an Office
Establishing a subsidiary/branch office in France is also an advisable approach for some industries. The French government encourages the formation of new enterprises and, in conjunction with the Paris Chamber of Commerce and other Chambers throughout the country, offers extensive counseling and assistance to those wishing to set up an office in France. Detailed "how to" guides are available not only from the various chambers of commerce, but also from the Commercial Service and the numerous American consulting firms present in France.
F. Selling Factors/Techniques
Selling your product or service in France is similar to the United States. Buying decisions are made on the basis of quality, price and after-sales service. The principal difference in France is, in fact, the language. Since August 1994, the "Loi Toubon" requires that all advertising, labeling, instructions and promotional programs be in French. Consequently, we strongly recommend close contact with the Commercial and Agricultural sections in the Embassy and arranging for local legal representation.
Advertising and Trade Promotion
There are far too many newspapers, magazines and technical journals to list; however, judicious use of the media is an important part of any and all promotional programs. Below is a list of the most prominent French newspapers and magazines:
Le Figaro
37, rue du Louvre
75081 Paris Cedex 02
France
Tel: (33) 1.42.21.62.00
Fax: (33) 1.42.21.64.05
Yves de Chaisemartin, President and Managing Director
Franz-Olivier Giesbert, Editor
Le Monde
21 bis, rue Claude Bernard
75005 Paris
France
Tel: (33) 1.42.17.20.00
Fax: (33) 1.42.17.21.21
Jean Marie Colombani, President and Managing Director
Alain Fourment, General Secretary
L'Express
61, avenue Hoche
75411 Paris Cedex 08
France
Tel: (33) 1.40.54.30.00
Fax: (33) 1.40.54.34.40
Christian Bregou, President and Managing Director
Denise Jeanbar, Editor
Liberation
11, rue Beranger
75154 Paris Cedex 03
France
Tel: (33) 1.42.76.17.89
Fax: (33) 1.42.72.94.93
Serge July, Publisher
France Soir
37, rue du Louvre
75002 Paris
France
Tel: (33) 1.44.82.87.00
Fax: (33) 1.44.82.88.45
Yves de Chaisemartin, President and Managing Director
Mr Maureaud, Editor
Le Parisien
25, avenue Michelet
93400 Saint-Ouen
France
Tel: (33) 1.40.10.30.30
Fax: (33) 1.40.12.90.90
Philippe Amaury, President and Managing Director
Fabrice Nora, Managing Director
International Herald Tribune
181, avenue Charles de Gaulle
92200 Neuilly Sur Seine
France
Tel: (33) 1.41.43.93.00
Fax: (33) 1.41.43.93.38
Richard McLean, Publisher
John Vinocur, Vice-President
Le Nouvel Observateur
8, rue Aboukir
75002 Paris
France
Tel: (33) 1.44.88.34.34
Fax: (33) 1.44.88.34.28
Claude Perdriel, President and Managing Director
Jean Daniel, Editor
Le Point
140, rue de Rennes
75006 Paris
France
Tel: (33) 1.49.54.10.10
Fax: (33) 1.45.49.30.20
Bernard Wouts, President and Managing Director
Denis Jeambar, Editor
Les Echos
46, rue la Boetie
75381 Paris Cedex 08
France
Tel: (33) 1.49.53.65.65
Fax: (33) 1.45.61.48.92
Mr. de la Barre de Nanteuil,
President and Managing Director
Nicolas Beytout, Editor
L'Expansion and La Vie Francaise
Groupe Expansion
25, rue Leblanc
75842 Paris Cedex 15
France
Tel: (33) 1.40.60.40.60
Fax: (33) 1.40.60.41.22
Christian Bregou, President
Fran‡ois Roche, Editor
La Tribune Desfosses
Cote-Desfosses
42-46, rue Notre Dame des Victoires
75002 Paris
France
Tel: (33) 1.44.82.16.16
Fax: (33) 1.44.82.17.16
Pierre-Antoine Gailly,
President and Managing Director
Jacques Jublin, Editor
Le Nouvel Economiste
10, rue Guynemer
92130 Issy les Moulineaux
France
Tel: (33) 1.41.09.30.00
Fax: (33) 1.41.09.30.98
Mr Nijdam, President and Managing Director
Vincent Beaufils, Editor
G. Pricing Product
The U.S. exporter can usually determine the export price of his/her manufactured product using 70% of the domestic price (after deduction of all local marketing costs). This will allow the French importer to price his imports from the U.S. on the same price level as his American counterpart. A simple way of comparing U.S. and French retail prices consists of taking the net U.S. retail price and comparing it with the French retail price without Value Added Tax (V.A.T.) currently 20.6%. The French consumer is generally willing to pay a maximum of 10-15% over the American retail price.
When determining the export price, it is important to consider that if prices are FOB, the French importer will have to pay for transportation, insurance, customs duties, value-added tax and fixed fees per shipment.
Terms of Payment
For U.S. exporters, what is called "the financing of export sales" is not basically different from financing domestic sales. The fundamental concern in both cases is that one is paid in a timely manner for the goods and/or services delivered.
France's modern banking system offers a full range of payment means, the most significant of which are:
- commercial letters of credit - sight and time drafts - bank transfers - certified checks
Although bank transfers and certified checks are fairly self- explanatory methods of payment, commercial letters of credit and sight and time drafts may be less familiar to the would-be exporter but are potentially attractive terms of payment.
H. Sales service/Customer support
Although less developed than in the U.S., French businesses also provide all kinds of services such as after sale service, home delivery, maintenance contracts, warehousing facilities, hot lines or toll free numbers for any technical assistance. For some products such as electrical appliances, e.g. T.V., replacement service is available.
I. Selling to the Government
The French Government generally pursues procurement policies in accordance with EU regulations, which call for non-discrimination vis-a-vis foreign firms. In France, procurement regulations do not usually present barriers to entry for foreign firms. However, local political pressure and administrative procedures often said to favor French companies.
French Government procurement comes under the jurisdiction of the Ministry of the Economy and Finance. The "Commission Centrale des Marches" (CCM), or Central Procurement Board, has overall responsibility for monitoring compliance with procurement regulations.
France, as a member of the EU, is obliged to follow EU public works regulations which require government purchasing entities to publish tender notices for all public works projects valued at over ECU 5 million, or approximately USD 5.75 million. Tender notices that exceed this threshold must be published in the Official Journal of the European Union, as well as in the French Bulletin Officiel des Annonces des Marches Publics. In the case of Telecommunications, however, a European Community Utilities Directive (January 1, 1993) requires France to give EU bidders a three percent price preference and gives France the option to reject bids with more than 50 percent non-EU content. Certain defense-related industries are also excluded from regular procurement rules. In addition, public projects must conform to the following requirements:
- a minimum of 52 days is required for bid submissions after an offer is announced. - the reason for a bid's rejection must be provided upon request. - the values of the winning bids must be publicly disclosed.
For information on French Government procurement regulations and procedures, contact:
CCM
Tour de Lyon
139, rue de Bercy
75012 Paris, France
Tel: (33) 1.44.87.17.17
Fax: (33) 1.53.17.87.04
Information on current and past French and EU procurement tenders and bids may be obtained through France's MINITEL service, an on-line information bank. This service offers up-to-date information and immediate access.
MINITEL Services Company
888 Seventh Avenue, 28th Floor
New York, NY 10106
Tel: (212) 399-0080
Fax: (212) 399-0129
Access to procurement tenders and bids may also be obtained by
subscribing to the Official Journal of the European Union (OJEU),
or the Bulletin Officiel des Annonces des Marches Publics (BOAMP).
However, these publications often do not arrive from overseas
in a timely manner. OJEU can be ordered from:
UNIPUB
4611F Assembly Drive
Lanham, MD 20706-4391
Tel: (800) 274-4888
Fax: (301) 459-0056
For subscriptions to BOAMP, contact:
BOAMP
Direction des Journaux Officiels
26, rue Desaix, France
75727 Paris Cedex 15, France
Tel: (33) 1.40.58.77.58
or (33) 1.40.58.75.00
J. Protecting your Product from IPR Infringement
Intellectual property consists of industrial property as well as literary/artistic property. Under the French intellectual property rights regime, industrial property is protected by patents, trademarks, and designs and models, while literary/artistic property is protected by copyrights.
By virtue of the Paris Convention and the Washington Treaty regarding industrial property, U.S. nationals are entitled to receive the same protection of industrial property rights in France as French nationals. In addition, U.S. nationals have a "right of priority period" after filing a U.S. patent, trademark, design or model, in which to file a corresponding application in France. This period is twelve months for patents and six months for trademarks, designs and models.
Patents
There are two types of patents: patents of invention (Brevets d'Invention) and certificates of utility (Certificats d'Utilit‚). Patents of invention cover all inventions. Certificates of utility cover all inventions except those of a pharmaceutical nature which are covered by complementary certificates ( Certificats Compl‚mentaires de Protection).
In order to qualify for patent protection, the invention must:
Duration: Patents for inventions have a twenty-year life span, after which they become part of the public domain. Certificates of utility have a six-year, non-renewable life span.
Patent Registration: Applications for patent registration must be filed with the French National Institute for Industrial Property, the Institut National de la Propriete Industrielle (INPI), before the invention is publicly disclosed. INPI receives applications, examines their validity, and registers the patents. After the application for a patent is filed, INPI conducts a check for comparable inventions. Upon approval and registration, a patented invention may be manufactured, operated, used or sold only with the authorization of the patent's owner. The owner can transfer, or sell the patent, or grant a license for others to use it. A patent must be used to be retained. Applicants can consult INPI's library to check for the existence of similar inventions prior to filing.
INPI
Division des Brevets
26 bis, rue de Saint-Petersbourg
75800 Paris Cedex 08, France
Tel: (33) 1.42.94.52.52
Fax: (33) 1.42.93.59.30
Patent protection in France may also be obtained through ownership of a European Patent, which is filed through the European Patent office in Munich:
Office Europeen des Brevets
Erhardtstrasse 27
8000 Munich 2, Germany
Tel: (49) 89 23 990
Fax: (49) 89 99 4465
Patent registration in France requires a French address, which may be obtained through a legal representative in France. A list of patent advisors who can act as legal representatives can be obtained from the French Association of Patent Advisors, Compagnie Nationale des Conseils en Propriete Industrielle:
CNCPI
92, rue d'Amsterdam
75009 Paris
Tel: (33) 1.53.21.90.89
Fax: (33) 1.53.21.95.90
Certificate of Utility Registration:
Certificates of Utility are also granted by INPI (see above). However, in this case, INPI does not conduct a check for comparable inventions.
Fees:
* Patents for Inventions
The annual renewal fee is calculated each year on a sliding scale.
* Certificates of Utility
Trademarks
Trademark protection can apply to both goods and services. In a general sense, trademarks recognize and protect indicators which serve to distinguish one product or service from similar products or services. In the French regime, trademarks:
Duration: A trademark has a ten-year life span and is renewable every ten years.
Trademark Registration: Applications must be filed with INPI,
which receives applications, examines their validity, and registers
trademarks. After registering the trademark, it must be publicly
and unequivocally exploited for five consecutive years, or all
trademark rights are forfeited. It may be sold totally or partially,
by product or service category.
INPI
Division des Marques
32, rue des Trois-Fontanot
92016 Nanterre, France
Tel: (33) 1.46.92.58.00
Fax: (33) 1.49.01.07.37
Registration of trademarks, as in the case of patents, requires a French address, which may be obtained through a legal representative in France. A list of trademark advisors who can act as legal representatives can be obtained from CNCPI, whose address is listed above.
Fees:
* Application fee (first registration or renewal): USD 245 for up to three product/service categories; USD 50 for each additional category protected.
For designs and models specifically:
* For each photographic reproduction:
-in Black and White: USD 30
-in Color: USD 60
* For a renewal: USD 35
Designs and Models
Designs and models have the following characteristics:
Although some designs and models can be protected under patent or copyright procedures, others fall into a category which requires special treatment. Designs or models having an industrial function follow patent procedures, while designs or models having a purely ornamental function follow copyright procedures. Those designs or models which have both a practical and an ornamental function are subject to the following:
Duration: Infringement protection has a 25 year life span, and is renewable for another 25 years.
Registration: Exclusive proprietary rights to the design or model are acquired through the act of creation itself. Registration merely serves as proof of that creation. Designs and models are to be registered with the INPI:
INPI-Designs and Models Section
26 bis rue de Saint Petersbourg
75008 Paris, France
Tel: (33) 1.42.94.52.52
Fax: (33) 1.42.93.59.30
To prove the date of creation of a design or model without formal registration, a designer may wish to use a special envelope (enveloppe speciale) for a USD 11 fee. The date of creation begins when the envelope is received by the INPI.
Copyrights
Copyrights cover artistic works, literary works and software. In the French IPR regime, in order to qualify for a copyright, the language used to express the idea must be original, not the idea itself.
Duration: Copyrights are valid for 50 years after the death of the author, with two major exceptions: music copyrights are valid for seventy years after the death of the composer, and software copyrights are valid for 25 years after creation. Contrary to other copyrights, software designed by a salaried employee belongs to the employer.
Registration: Artistic and literary works are automatically protected once created and fixed in tangible form. Therefore, registration is not required, but nonetheless recommended.
For musical works, including songs, instruments, poems, sketches under 20 minutes, monologues, and other musical audiovisual productions, applications must be filed with the French Society for Musical Authors, Composers and Editors:
Societe des Auteurs, Compositeurs et Editeurs de Musique (SACEM)
225, avenue Charles de Gaulle
92521 Neuilly sur Seine, France
Tel: (33) 1.47.15.47.15
Fax: (33) 1.47.45.12.94
Membership acceptances are restricted to reputable applicants who are already known for the quality of their works. If not qualified for SACEM, applications must be filed with the National Association of Musical Authors and Composers:
Syndicat National des Auteurs et Compositeurs de Musique (SNACM)
80, rue Taibout
75009 Paris, France
Tel: (33) 1.48.74.96.30
Fax: (33) 1.42.81.40.21
For theatrical works, including plays, operas, operettas, musical
comedies, films and theatrical scripts, applications must be file
with the Society for Theatrical Authors and Composers:
Societe des Auteurs et Compositeurs Dramatiques (SACD)
11 bis., rue Ballu
75442 Paris Cedex 09, France
Tel: (33) 1.40.23.44.44
Fax: (33) 1.45.26.74.28
For literary works and software, applications must be filed with the French Literary Society:
Societe des Gens de Lettres (SGDL)
38, rue du Faubourg Saint-Jacques
75014 Paris, France
Tel: (33) 1.40.51.33.00
Fax: (33) 1.43.54.92.99
For documentary and educational works, applications must be filed with the Civil Society for Multimedia Authors:
Societe Civile des Auteurs Multimedia (SCAM)
38, rue du Faubourg Saint Jacques
75014 Paris, France
Tel: (33) 1.40.51.33.00
Fax: (33) 1.43.54.92.99
K. Need for Local Attorney
Establishing an entity to do business in France is not a good occasion for a "do it yourself" approach. A lawyer with experience in France should be retained as soon as the establishment of a French business entity is contemplated. The American Embassy in Paris maintains a list of American Lawyers practicing in France, which is available upon request. More detailed information about professional backgrounds can be obtained from the Martindale-Hubbell Law Directory and for the Bar Register of Pre-eminent Lawyers. Lawyers and bankers in the United States also will normally have means of recommending lawyers in France.
France has two major categories of legal practitioners:
Avocats An "avocat" must be a lawyer. "Avocats" may render legal advice on all matters, draft agreements and contracts, handle commercial disputes and collection cases, and plead and defend civil and criminal cases before the French courts to which they are admitted.
Notaries (Notaires) A French "notaire" is a public official appointed by the Ministry of Justice, and not the equivalent of a public notary in the United States. The number of "notaires" in each jurisdiction is limited, and their fees fixed by law. Their functions include the preparation and recording of notarial acts (wills, deeds, acts of incorporation, marriage, contracts, etc.), the administration and settlements of estates (excluding litigation in court) and serving as the repository of wills.
They are not lawyers, but very specialized members of the legal profession. They may not plead in court.
V. LEADING SECTORS FOR U.S. PRODUCTS
AND SERVICES
A. BEST PROSPECTS FOR NON-AGRICULTURAL GOODS AND SERVICES
Listed below are 20 industry sectors which the U.S. Embassy in
France considers "best prospects" for U.S. business;
they are ranked by increasing forecast total imports from the
U.S.
| RANK | TOTAL IMPORTS FROM U.S | SECTOR SYMBOL NAME |
| 1 | 3,800 | TRA |
| 2 | ,210 | ICH |
| 3 | 3,146 | CSF |
| 4 | 2,706 | EMP |
| 5 | 1,672 | ELC |
| 6 | 1,594 | CPT |
| 7 | 1,420 | INS |
| 8 | 1,087 | SEC |
| 9 | 980 | EPS |
| 10 | 790 | LAB |
| 11 | 645 | AIR |
| 12 | 536 | FLM |
| 13 | 466 | MED |
| 14 | 460 | APG |
| 15 | 419 | POL |
| 16 | 398 | APS |
| 17 | 315 | AUT |
| 18 | 175 | TEL |
| 19 | 143 | AGM |
| 20 | 142 | TES |
1 - TRAVEL AND TOURISM (TRA)
Industrial activity in Europe has continued to slow down. Budgetary policies have progressively hardened as the 1997 and 1999 target dates set out in the Maastricht treaty approach. This has led many countries, including France, to put forward restrictive budgets for 1996. As a result, the tax rate in France is one of the highest amongst OECD countries.
According to a 1996 survey by IFOP (French Opinion Polling Institute) of 1,000 French households, one third of those polled indicated they would not take any vacations during summer 1996. With a minimum of 5 weeks of vacation per year, 24% of French employees will travel abroad in 1996, compared with 20% in 1992. Seventy-two percent are expected to stay in France. Aside from the Mediterranean countries which attract 9% of French travelers, the United States remains the top choice (3%) among long-haul destinations. However, heavy competition is anticipated from other destinations such as Canada, the French Caribbean or Pacific islands, Australia and South Africa which are starting intensive promotional campaigns in France.
More than 930,000 French are expected to visit the United States
in 1996. The French are highly individualistic in their travel
behavior. As a consequence, only 30% will buy travel packages,
10% of which involve fly-drive arrangements. The VISIT USA travel
trade in France consists of roughly 2,500 retail agents, 40 wholesalers/tour
operators, 20 incentive specialists and some 120 business and
group specialists. The travel agent's customer is becoming more
and more demanding, searching for niche products: culture, genuineness,
health and adventure are main concerns. This need is reflected
in the catalogs of major tour operators who have to find new gimmicks
to attract this type of customer who will, in addition, require
a very high level of services. The second category of traveler
will be looking for low cost transportation and will take care
of his own land arrangements. This type of travel is encouraged
by the diversification of the special airline fares in this market
(which will become even more critical with the implementation
of deregulation in 1997).
1995 1996 1997
A. Total Market Size 84,600 86,300 88,400
B. Total Local Production 98,400 101,400 103,800
C. Total Exports 28,200 29,600 30,300
D. Total Imports 13,800 14,500 14,900
E. Total Imports from U.S. 3,400 3,700 3,800
F. Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
2 - INDUSTRIAL CHEMICALS (ICH)
The French chemical industry is ranked fourth in the world, preceded only by the United States, Japan, and Germany. With 48% of its total sales occurring in the international marketplace, France is the third largest chemical exporter in the world, with only Germany and the United States exporting more chemical products than France.
Economic growth in the chemical industry has slowed from a 6.7% growth rate in 1994 to only a 2% growth rate in 1995. Moreover, the economic results in 1995 vary according to industry sectors. Between 1994 and 1995 the growth rate fell from 7.1% to 0.4% in the inorganic chemical sector and from 9.7% to 1.5% in the organic chemical sector. This negative economic growth trend started in the second semester of 1995 after some initial first semester growth in basic chemicals. The principal reasons for this slowdown are:
- summer 1995: China stops its imports; - strike actions in December: production and deliveries delayed; - monetary devaluations within the European Union: Spain, Great-Britain and Germany able to increase their production.
In the para-chemical sector the slow down occurred in the first few months of the first semester, thus appearing less brutal; however, the growth rate then decreased strongly from a positive 7% growth rate in 1994 to zero in 1995. The only sector which showed a positive growth rate between 1994 and 1995 was the pharmaceuticals sector; a 1.8% growth rate in 1994 to a 5.5% growth rate in 1995.
These negative growth rates created price fluctuations not only in the European chemical market, but also in the worldwide chemical market. These price fluctuations were limited to para- chemicals, pharmaceuticals, and to a much greater extent, basic chemicals. Despite the economic slow down, the negative growth rate in the chemical market was confined to the second semester because of the influence of the strong American chemical market. Globally the market price for basic chemicals increased by 15% in 1995 when compared to the market price in 1994.
Volume in the chemical industry should increase by 3% in 1996 (1994/95: 2% increase; 1996/97: 3% projected increase). This recovery should become more apparent after the middle of 1996, and basic chemicals should benefit more from this recovery than para-chemicals or pharmaceuticals because basic chemicals experienced less previous market fluctuations
The growth potential of the chemicals industry is far from being
exhausted and it is one of the strongest sectors in Western Europe,
and particularly within the European Union (it accounts for more
than 2% of European GDP).
1995 1996 1997
- Total Market Size 42,611 43,888 45,643
- Total Local Production 50,733 52,312 54,465
- Total Exports 38,192 39,336 40,909
- Total Imports 30,070 30,912 32,087
- Total Imports from U.S. 3,010 3,109 3,210
- Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
3 - COMPUTER SOFTWARE (CSF)
The recessionary environment of the early 90's had a strong negative impact on French companies' budget policies for computer expenditures, and French firms continue to be focused on savings at the expense of computer improvements. In addition to this, heightened competition among computer software vendors caused them to drop their prices at an accelerated pace. In spite of these challenges, the French computer software market should continue to present positive long-term perspectives, with the introduction of the latest generation of micro-computers, the development of telecommunications, the interconnection of heterogeneous systems, the creation of value-added networks, and the opportunities provided by the world-wide development of the Internet.
French companies tend to outsource a greater proportion of their software development than in other European countries, thus making France the largest software market in Europe, with over 6,000 software firms. Furthermore, French flagship firms such as Bull (leading hardware manufacturer) and Cap Gemini Sogeti (leading software and services company) have helped ensure that adequate resources are invested in the software industry. The recent growth of the software industry at the expense of the hardware industry has also led major hardware companies such as IBM, DEC, BULL and UNISYS to redirect their resources towards the software sector. One of the most positive perspectives is that created by the development of Internet and Intranet solutions, which will dramatically improve the way people communicate and work together, regardless of their location across the planet. Great opportunities now exist for firms that offer products and services for the creation of Web Sites, Groupware, Videoconferencing, and Electronic Document Processing applications.
American firms control the French packaged software market with products for databases, spreadsheets, CAD/CAM systems and word processing. They also represent the only world-providers of Internet/Intranet applications, with widely popular products such as Netscape. The increasing availability of sophisticated off- the-shelf products as replacements for more expensive custom-made software is shifting the market toward packaged software products. The U.S. technological edge in these areas, coupled with the anticipated growth of the PC software market and the Internet, should facilitate a continued strong American presence in the French market.
1995 1996 1997
Total Market Size 21,368 23,063 24,584
Total Local Production 19,459 21,200 22,684
Total Exports 4,228 4,522 4,612
Total Imports 6,137 6,385 6,512
Total Imports from U.S. 3,027 3,085 3,146
Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates. (figures in USD millions)
4 - EMPLOYMENT SERVICES (EMP)
Unemployment, currently 11.9 percent of the working population, remains a major economic problem and is expected to increase before the end of 1996. However, after going through very difficult times between 1990-1993, the employment services industry has been recovering since 1994 and enjoying growth rates of approximately 10 percent for recruitment firms, and over 20 percent for temporary employment agencies.
Recruitment firms announced a 7 percent sales increase for the first quarter of 1996. Professionals are optimistic and expect 1997 to be a profitable year. Most assignments aim to fill commercial/marketing positions (34 percent), far ahead of technical positions (18 percent) and others. Assignments for CEO positions have increased by 29 percent since last year. The industrial sector (28 percent), followed by the services sector (25 percent) leads demand for recruiting services. The current industry trend shows that recruitment firms are trying to diversify, mainly towards human resource consulting.
The temporary employment services industry increased its sales by 25 percent in 1995. The most frequent users of temporary manpower remain the industrial and services sectors.
France is the largest temporary help market outside the U.S. Four major companies account for 50 percent of the temporary employment services market. The leading employment services company, ECCO, is French, followed by the U.S. company MANPOWER, the French company BIS, and the Swiss company ADIA. Number three in the world, the French company ECCO is expected to merge with Switzerland's Adia, number two, in order to form the world's largest temporary help company ahead of Manpower. The merge is expected to take place in July 1996 and the new company will then have 2,400 agencies in 36 countries.
American recruitment firms figure most prominently in executive search where they represent some 25-30 percent of the market and account for about 40 percent of revenue. Almost all major U.S. headhunter/recruitment companies are already present in France and enjoy a good reputation.
Access to the French employment services market is relatively
easy as there are no trade barriers, and U.S. firms are subject
to the same regulations and standards as local firms.
1995 1996 1997
A. Total Market Size 11,302 12,557 13,952
B. Sales by Domestic Firms 9,028 10,030 11,144
C. Export Sales 1,264 1,404 1,560
D. Sales by Foreign-owned Firms 3,538 3,931 4,368
E. Sales by U.S.-owned Firms 2,193 2,436 2,706
F. Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
5 - ELECTRONIC COMPONENTS (ELC)
The statistics below are based on official trade statistics for electronic components, both passive and active. Part of the difficulty in interpreting local production figures results from:
1) sales of components by French manufacturers provided by a professional trade association. These sales figures are often consolidated by the manufacturers to include sales of foreign subsidiaries, and
2) production from U.S. firms, including Motorola Semiconductors and Texas Instruments France, are included in local production statistics.
Officially, the United States accounts for 32 percent of active component imports and 11 percent of passive component imports. Also, imports from the U.S. as released by French customs reflect direct imports only and under-estimate the real penetration of the French market by U.S. firms. Many U.S.- made products transit through third-party countries before reaching France, and do not appear as U.S. origin imports.
Total French demand for electronic components is distributed among the following products: 31 percent for semiconductors, 17 percent for printed circuits, 10 percent for connectors, 9 percent for passive components, 8 percent for tubes, 4 percent for hybrids and 21 percent for other miscellaneous components.
Semiconductor investments in France in 1995 totaled nearly USD 4 billion, and additional new investments in semiconductor manufacturing by European manufacturers as well as American or Asian "transplants" in France, were announced. These investments are driven by the global demand for telecommunications equipment, multimedia equipment, PC's for standalone and Internet applications, automobile applications, smart card chips, and anticipated needs for DAB (Digital Audio Broadcasting) equipment. Semiconductor manufacturing equipment, including the construction of clean rooms, represents a strong growth sector.
As reported by the monthly SEMICONDUCTOR INTERNATIONAL "...Europe will manufacture an increasing proportion of its semiconductor requirements, but production will remain well below consumption for the foreseeable future...".
1995 1996 1997
A. Total Market Size: 6,154 6,168 6,385
B. Total Local Production: 6,652 7,088 7,797
C. Total Exports: 6,658 7,130 7,844
Total Imports: 6,160 6,210 6,432
Imports from U.S.: 1,416 1,553 1,672
F. Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates (figures in USD
millions)
6 - COMPUTER AND PERIPHERALS (CPT)
France is the second largest information technology market in Europe, and the fourth largest computer market in the world. This reflects the high priority given by the French government to the computerization of the country's institutions.
PC's and workstations will be the fastest growing segment of the French computer and peripheral market, rising 10 percent annually between 1996 and 1998. This dramatic shift in demand is due to a combination of technological progress and substantial decreases in prices. Systems equipped with powerful microprocessors such as the Pentium chip and Power PC chips, and which run on sophisticated operating systems such as Windows'95, have become widely accepted both by professionals and private consumers. These trends have created an explosion in computer sales among small businesses (i.e. Small Office Home Office - SOHO) and private consumers.
Distribution channels have also evolved to satisfy public demand for PC's equipped with the latest multimedia features. Whether such PC's could only be purchased from specialized distributors a few years ago, they are now available at multi-purpose specialized stores (54 percent of the market) and even at hypermarkets (8 percent of the market). On the other hand, Unix- based workstations continue dominating the market for high-range applications, such as CAD/CAM, Videoconferencing, Electronic Document Processing and Groupware. The widespread acceptance of the Internet should also greatly benefit both PC and workstation markets.
Although the concept of "Network Centric Computing," presented by IBM in the fall of 1995 has favored the sale of a new generation of mid-range and mainframe systems, including the AS/400, this growth is anticipated to continue being modest until such products become fully integrated to Client-Server solutions.
The six largest suppliers of hardware in France are IBM, BULL, DIGITAL, COMPAQ, ICL and APPLE. Four of these are American. Although large companies still dominate the micro-computer industry, smaller organizations are entering the market through innovative marketing methods such as mail-order and telemarketing. Because of the blurring price difference between brand-name PC's and their clones, major American computer companies have regained full control of the microcomputer market while clone manufacturers from Asia have experienced major losses.
In terms of product choice, the widespread acceptance of Windows, and especially Windows'95, the operating systems developed by Microsoft, has shifted the market toward IBM-compatible products and away from Apple products. However, Apple products continue to enjoy an excellent reputation because of a loyal customer-base, especially among desktop publishers. Apple products also continue being considered more user-friendly than PC-based ones. The meteoric rise of the Internet, with its vast array of multimedia on-line services and groupware applications, should also create a great increase in demand for computer products, both for professional and personal use. This is further demonstrated by the fact that the providers of Internet applications have already started advertising their products through commercials on French TV and through advertisements in the local press and magazines.
1995 1996 1997
A. Total Market Size 9,330 9,647 10,901
B. Total Local Production 5,593 5,774 6,405
C. Total Exports 469 483 487
D. Total Imports 4,206 4,356 4,983
E. Total Imports from U.S. 1,387 1,430 1,594
F. Exchange Rate USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
(figures in USD millions)
7- INSURANCE SERVICES (INS)
The French insurance industry went through a difficult period in 1994 because of hazardous investments in the financial and real estate markets, while both sectors were going through a crisis. As a consequence, the industry has since concentrated on its core activity and reached a stable situation in 1995.
The French insurance industry is ranked fifth in the world after the United States, Japan, the United Kingdom, and Germany. The French companies UAP and AXA are among the ten leading insurance companies worldwide.
While recovering, the industry has continued its development with an approximate overall growth rate of 6 percent. France, with an estimated market size of USD 67 billion, is the leading market in Europe for life insurance. This sector, having enjoyed a growth rate of approximately 20 percent for several years, dropped to 7.8 percent in 1995, mainly due to new government fiscal measures, which led consumers to delay purchases of life insurance.
After suffering major losses for the last few years, the non-life insurance sector is on an upward trend with growth of 5.3 percent in 1995.
Many analysts have high expectations for pension funds, which are pending government approval. Although the current government is supportive of a reform of the pension system, a debate is underway and agreements between all parties are difficult to establish. However, when adopted, U.S. companies could certainly benefit from such a decision.
The French market is highly competitive, however foreign companies can access it through a branch or a subsidiary, subject to approval by the French Ministry of Economy and Finance.
1995 1996 1997
A. Total Market Size 139,928 148,859 158,362
B. Sales by Domestic Firms 128,335 136,526 145,242
C. Export Sales 1,668 1,774 1,888
D. Sales by Foreign-owned Firm 13,261 14,107 15,008
E. Sales by U.S.-owned Firms 1,254 1,335 1,420
F. Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
8 - SECURITY AND SAFETY EQUIPMENT (SEC)
Please note that the statistics for security and safety equipment do not include security services (audit, engineering, security guards) and technical control.
Despite the current economic recession, the French security and safety industry has continued to increase but at a slower rate than that expected by industry. In 1995, the market was estimated at USD 5.6 billion, representing a 4 percent increase from 1994. It is predicted to grow at a 6.5-7.5 percent rate over the next three years.
Due to the recent Pasqua Law authorizing the use of video cameras in public places (hospitals, administration buildings, hotels, etc.), rapid growth is expected to continue in demand for video surveillance. Demand for access controls will also maintain its growth in the coming years.
Mandatory application of government directives regarding security in French school buildings has generated increased expenditures for fire detection and extinguishing equipment. However, over the next three years, the maintenance of fire security equipment will represent a greater potential. On the other hand, sales of locks, armored equipment and security services have suffered a significant set back.
Overall, severe competition characterizes the current domestic
market. Best prospects for American companies remain in sophisticated
electronic surveillance equipment, biometric systems, fire extinguishing
agents, and sprinklers.
1995 1996 1997
A. Total Market Size 5,655 5,937 6,224
B. Total Local Production 4,560 4,840 5,009
C. Total Exports 1,055 1,076 1,097
D. Total Imports 2,150 2,173 2,312
E. Total Imports from U.S. 1,033 1,053 1,087
F. Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
9 - ELECTRICAL POWER SYSTEMS (EPS)
The French market for electrical power systems is expected to experience growth of 1.8 percent in 1996, and should not exceed 2 percent over the next three years.
State-owned Electricite de France (EDF) which presently enjoys a monopoly on production, transmission, and distribution of electricity does not plan any construction of power plants before the turn of the century. Consequently, only the replacement/maintenance and upgrading market sustains demand for electrical power systems.
Success for U.S. companies is likely to be limited to niche products such as process controls instrumentation and predictive maintenance.
In addition, cogeneration, or combined heat and power which is a dynamic sector, offers promising opportunities for growth. Although the market for cogeneration systems is not very significant compared to Germany and Scandinavia, it is predicted to increase drastically. The strongest demand will come from waste burning and incineration plants, airports and hospitals.
With an expected change in EDF's monopoly in the short-mid term
as a result of the EU's energy liberalization policy, 25 percent
of the French electricity production and distribution market should
open up to competition from foreign companies, according to industry
sources.
1995 1996 1997
A. Total Market Size 11,160 11,360 11,570
B. Total Local Production 12,450 12,690 12,920
C. Total Exports 6,930 7,000 7,030
D. Total Imports 5,640 5,670 5,680
E. Total Imports from U.S. 970 980 980
F. Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
10 - LABORATORY SCIENTIFIC INSTRUMENTS (LAB)
The French market of laboratory equipment is experiencing steady growth due to several factors: public insistence on improved environmental programs, an increased emphasis on technological training, and an increase in research and development spending by the private and public sectors.
An advantage for U.S. products is their reputation for state-of- the-art technology. This is often the primary purchasing criteria for French buyers in this sector. In addition, a large number of French scientists have been exposed to U.S. made equipment while studying in the U.S. American made products account for 35 percent of total imports but there is strong competition from Germany, the United Kingdom, Switzerland, Japan, Italy and Spain.
1995 1996 1997
A. Total Market Size: 2,267 2,342 2,412
B. Total Local Production: 851 872 898
C. Total Exports: 681 701 722
D. Total Imports: 2,097 2,171 2,236
E. Total Imports from U.S.: 737 767 790
F. Exchange rate USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
11 - AIRCRAFT AND PARTS (AIR)
Overall French aerospace industry results in 1995 showed a continuation of the downward trend begun in 1992. On a sector by sector basis, only French equipment manufacturers were able to declare an increase in revenues (2.4% versus an inflation rate of 3%). 1995 figures indicate that aircraft and missile manufacturers saw revenue losses of 6.5% while engine manufacturers saw sales drop 8%. Upon closer analysis, it's clear that even equipment suppliers faced revenues down 4.9% in the civil sector, buoyed by military sales up 8.3%.
Civil aircraft sales by Airbus Industrie (France, through Aerospatiale, holds a 37.9% share of this consortium) declined from 125 aircraft in 1994 to 106 in 1995. This compares with Boeing aircraft sales in 1995 of 346 aircraft. In 1995 Airbus created a new branch whose purpose is to develop the consortium's first military aircraft, the Future Large Aircraft (FLA). The future of this project is questionable as France has officially reduced its line item budget support for this program in its downsized military program projections of the future. As a consequence of the reduction of direct French financial support, the FLA is looking for alternative financing possibilities and may become the consortium's first privately financed program.
The strong international market for regional aircraft led to the January 1995 creation of AI(R), Aero International (Regional), Europe's new regional air transport consortium composed of Aerospatiale of France, Alenia of Italy (both members of the ATR consortium) and British Aerospace of the UK. This new consortium will act as the marketing organization for a range of European regional aircraft in the 20 to 120 seat range. Effectively AI(R) now handles all sales for the ATR, Avroliners and Jetstream aircraft and projects 1996 sales of approximately 100 aircraft. Prior to the creation of this new consortium, ATR alone registered regional transport sales in 1995 of 50 aircraft.
France's other major aircraft manufacturer, Dassault Aviation, showed a decline in the sales of its Falcon jet family of business aircraft to 39 firm orders from 45 in 1994, but still retains about half of the world market for high-end business jets.
1995 and 1996 have been critical years for the French aerospace industry, as the country finally awoke to the reality of diminishing national military budgets and international overproduction capacity in the aerospace sectors. The French Government has declared a mandatory joining of publicly owned Aerospatiale and privately owned Dassault Aviation to be completed by 1998 and announced the privatisation of equipment manufacturer Thomson by the end of 1996. The downsizing from this industry restructuring has already led to a 3% reduction in sector employment with a further significant reduction projected over the next 4 years.
France's aerospace revenues remain export dominated with 53% of the industry's revenues coming from export activities. In 1995, French aerospace exports in the defense sector increased by 4.3% while civil aerospace exports were down 10%.
For 1996 total aerospace revenues are expected to be over USD 19,6 billion, an increase of almost 2% over 1995. The 1994 aerospace industry surplus of USD 6,21 billion makes it one of the top industrial contirbutors to the Frence balance of trade. Its 1995 export/import ration of 300% was the highest of any industrial sector of the French economy.
Source: Groupement des Industries Francaises Aeronautiques et
Spatiales (GIFAS)
1995 1996 1997
A. Total Market Size 2,308 2,343 2,413
B. Total Local Production 5,539 5,622 5,790
C. Total Exports 4,616 4,685 4,825
D. Total Imports 1,385 1,406 1,448
E. Total Imports from U.S. 623 633 645
F. Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
Please note that the figures above are unofficial estimates.
(figures in USD millions)
12 - FILMS, VIDEOS AND OTHER RECORDINGS (FLM)
After decades of decline, the number of films produced in most European countries, including France, climbed in 1995. In France, 129 films were produced in 1995, up from 111 in 1994. Total investment in French produced films amounted to USD 698 million.
France is Europe's largest movie-goer market with a total of 4,235 movie theaters. Admissions in 1995 were 130 million, up from 122 million the previous year. U.S. films were seen by 70.3 million people, representing 54.2 percent of the market. French films were viewed by 46 million people, up 31 percent from 1994.
The French video market has been flourishing since 1989. Last year, video cassette sales amounted to USD 646.53 million, up 13.9 percent from 1994. Laser disks represented 3.8 percent of video sales, up 37.8 percent from 1994.
In 1995, video sales were broken down as follows: French films accounted for 6.5 percent, and foreign films for 36.5 percent (as opposed to 44.5 percent in 1994). Reflecting the worldwide boom in TV programs for the young, special videos for children represented 46 percent of total video sales in 1995, up 35 percent from 1994.
Sales of U.S. films should continue to expand in France as major
French industry players continue to emphasize the importance of
promoting business to revive the film and video industry, as opposed
to introducing quotas.
1995 1996 1997
A. Total Market Size: 778 798 814
B. Total Local Production: 251 258 263
C. Total Exports 76 78 80
D. Total Imports 603 618 630
E. Total Imports from the US 514 526 536
F. Exchange Rate: USD 1.0 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
13 - MEDICAL EQUIPMENT (MED)
The French medical sector continues to grow as it is closely linked with the general population increase and extended like expectancy. Increased life expectancy, combined with the emergence of new technologies permitting same day surgery, has created a new market for home health care equipment. As up to 70 percent of all French medical costs are reimbursed, there is a tendency to over consume. In the past, any attempt to control medical costs created strong opposition from the public. Today, we notice a more responsible attitude as all professionals involved agree that some savings have to occur in order to save the French national health system. The medical equipment sector depends highly on imports, mainly from the U.S., followed by Germany, Japan and Italy.
1995 1996 1997
A. Total Market Size 2,142 2,235 2,325
B. Total Local Production 1,031 1,046 1,052
C. Total Exports 541 577 605
D. Total Imports 1,652 1,766 1,878
E. Total Imports from U.S. 417 440 466
F. Exchange Rate USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
14 - AVIONICS AND GROUND SUPPORT EQUIPMENT (APG)
The United States is France's leading foreign supplier of avionics and ground support equipment with over 40 percent of the import market.
This position should be maintained in the years ahead as air navigation moves from systems based on communications, navigation and surveillance (CNS) towards globally accessible automated air traffic management (ATM). The heavy investment price tag attached to the development of this new technology will provide U.S. companies with opportunities to develop trans-atlantic partnerships at a time when French firms are faced with a major industry restructuring.
American firms are already major suppliers to Airbus Industrie, accounting for over 35 percent of each aircraft's overall content.
As ICAO requirements for new global Navigation Satellite Systems (GNSS) and Global Positioning Systems (GPS) become effective, U.S. suppliers of ground collision avoidance equipment, navigation and approach sensors, automated cockpit assistance systems, switching and network administration systems and space systems expertise will find French firms with compatible technology interesting, though occasionally reluctant, partners.
Soon-to-be-privatized Thomson-CSF grouped it's capabilities into a single structure, Thomfans, able to provide a global approach to European CNS/ATM requirements. France's other major avionics suppliers, Dassault Electronique and Sextant Avionique, have also positioned themselves to agressively pursue world markets. In each case, technology sharing agreements with U.S. companies have facilited U.S. access to the European market. Litton, Boeing, Hughes, TRW, Allied Signal, Rockwell and Honeywell are only a few of the American firms who have led american sub-contractors into the European market for future technologies.
American firms should also find increasing market possibilities in the airline satellite communications sector as the sales of new aircraft continues to increase.
1995 1996 1997
A. Total Market Size 1,839 1,867 1,923
B. Total Local Production 4,413 4,479 4,613
C. Total Exports 3,677 3,732 3,843
D. Total Imports 1,103 1,120 1,153
E. Total Imports from U.S. 440 447 460
F. Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The figures above are unofficial estimates.
(figures in USD millions)
15 - POLLUTION CONTROL EQUIPMENT & SERVICES (POL)
The French market for pollution control equipment and services will continue to grow steadily over the long term, albeit at a slower pace than expected due to a stalled economy and differed investments by municipalities. French legislation and European Directives will continue to drive the market. The difficulty in evaluating an industry composed of so many, often unrelated, markets (ie. analytical instruments, trash containers, incineration ovens or bio-remediation chemicals), is that most manufacturers of equipment for use in environmental applications also produce a broad range of unrelated products. Sales figures from these firms used in statistics are, however, consolidated.
Landfill management techniques (biogas, leachate, and odor control), waste incineration, recycling methods, bio-remediation and other methods of cleaning up contaminated sites, air pollution control and monitoring, are all important issues being addressed by the Ministry for the Environment.
As a result of European directives, French authorities have developed a long-term plan to bring France's environmental protection up to a level comparable to that of other European countries. Massive investment programs in water distribution and waste water treatment infrastructure, equipment and services will be spent over the next ten to fifteen years.
New areas of interest include:
Those U.S. exporters that are competitive in France are providing high-tech, innovative and unique solutions to pollution control. Competition from nearby European countries is exceptionally keen, coming mostly from Germany, the U.K., Sweden, the Netherlands and Switzerland.
The pollution control equipment sector includes the production
of goods and services for measuring, preventing, limiting, or
treating environmental damage including the pollution of water,
air, land, and as a result of noise pollution, and waste.
1995 1996 1997
A. Total Market Size: 13,240 13,913 14,607
B. Total Local Production: 20,368 20,765 21,801
C. Total Exports: 10,387 10,382 10,682
D. Total Imports: 3,259 3,530 3,488
E. Imports from U.S.: 325 353 419
F. Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
(figures in USD millions)
16 - AUTOMOTIVE PARTS AND SERVICE EQUIPMENT (APS)
French automobile equipment industry sales amounted to 12.5 billion dollars in 1995. This amount represents a slight increase over 1994, partly due to the extension of governmental purchasing incentives through this year.
In 1995, the market share of the automotive parts sold by independent networks, agents, and distributors was 63.2 percent, while those sold by manufacturers amounted to 36.8 percent. These results represent a 1 percent decrease over the previous year and reaffirm the decrease in importance of the manufacturers network as compared to the independent reseller. Because of lower overhead costs, auto centers have become very popular with DYI car repairers as part prices are very competitive and on-the-spot servicing is also available. There has been an increasing development of auto centers specializing in tire and oil replacement in large supermarkets and malls.
In the next few years, the opportunities for independent networks
will lie in their capacity to help the average car user at a reasonable
price. The advantage lies in the fact that compared to the manufacturer's
network, an independent is able to perform changes to parts within
a defective system while the manufacturers would replace the entire
system. By keeping this cost advantage the networks will also
keep and increase their role in car parts replacement.
1995 1996 1997
A. Total Market Size 12,499 12,749 12,717
B. Total Local Production 15,557 15,868 15,833
C. Total Exports 10,889 11,107 11,090
D. Total Imports 7,831 7,988 7,974
E. Imports from the U.S. 391 400 398
F. Exchange Rate USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
17 - AUTOMOBILES AND LIGHT TRUCKS (AUT)
In 1995, the French vehicle fleet represented approximately 30,040,000 automobiles. France manufactured 3,050,929 passenger cars in 1995, a 3.9 percent decrease from 1994. Of these, 1,852,053 were exported. During the same period, France imported (and registered) 783,570 vehicles, representing 41 percent of the country's 1,930,504 registered vehicles. Industry experts expect car sales to stabilize in 1996 to around a 1 to 1.5 percent increase in quantity.
1995 was in every aspect the most unstable of the auto market, as the year was full of fluctuations due to government subsidies and the car maker's price wars. For example, a growth rate of 45 percent was registered for the month of June, as compared to the same period in 1994. December, on the other hand, saw a decrease of 18.6 percent. Considering the volatility of the market in 1995, the final result of - 2.2 percent was not as bad as some experts predicted.
Over a ten year period (1985-1995), in a market that has grown by 9 percent in volume, the share of the French manufacturers has dropped from 64 percent to 59.4 percent. The "large" exporters (Italian, American and German) are all below the 10 percent market share. This relative stagnation did not benefit Japanese car manufacturers even though they are no longer restricted by quotas, as their sales volume has also dropped by 15 percent since 1991. The winners this year are mostly the niche sales; luxury cars (+ 48.7 percent) and Korean manufacturers (+ 43.3).
Growth opportunity for the next few years lies in specialized
niche markets such as roadsters, urban vehicles (electric and
hybrid propulsion) and low priced-vehicle with an increased equipment
level.
1995 1996 1997
A. Total Market Size 55,944 57,008 57,863
B. Total Local Production 62,160 63,348 64,298
C. Total Exports 26,728 27,262 27,671
D. Total Imports 20,512 20,922 21,236
E. Imports from the U.S. 304 310 315
F. Exchange Rate USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
18 - TELECOMMUNICATIONS EQUIPMENT (TEL)
In the early 1970's, only fifteen percent of the French population subscribed to the telephone system. Since that time, large investments have created one of the most modern and sophisticated telecommunications systems in the world.
The number of telephone lines in France climbed to 32.4 million in 1995, including Numeris-ISDN Access lines. All of these lines are now connected to fully digital electronic switches with nearly 90% using time-division switching technology.
France is currently the world's fourth largest market for telecommunications equipment, behind the United States, Japan, and Germany. In the coming years, several good sales prospects will continue to expand in the equipment division of telecommunications. In addition to the GSM terminals and modems, network management software, terminal accessories, and value added services management software in the mobile telephony domain, optical fiber, satellite antennae, telephone sets, and Internet development should make for one of the world's most attractive markets.
France Telecom, the major national telephone operator, is not a manufacturing enterprise. It counts on the private sector to provide it with technologically advanced and economically efficient software and hardware. France Telecom, to maintain a fast pace of modernization, devotes a large portion of its resources to the purchase of industrial equipment and systems. It is also a major buyer of customer premises equipment (CPE), although private companies currently dominate this market.
French buyers import equipment mainly from Europe, Asia, and the
United States; basing their purchases on four main criteria: product
reliability, quality, service, and price. American manufacturers
of telecommunications equipment are in a strong competitive position
in terms of the technological sophistication of their products.
French buyers believe that American made products are of high
quality and are backed by reliable after- sales service. France's
rapidly developing telecommunications market should provide great
opportunities for American telecommunications companies.
1995 1996 1997
A. Total Market Size: 3,840 3,881 3,985
B. Total Local Production: 4,935 5,010 5,210
C. Total Exports: 1,860 1,970 2,167
D. Total Imports: 765 841 942
E. Total Imports from U.S.: 146 159 175
F. Exchange Rate: USD 1.00=FF 5.00 5.10 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
19 - AGRICULTURAL MACHINERY (AGM)
With more than 55 percent of its land area under cultivation, France is the leading agricultural producer in Western Europe. Although France is the largest market for agricultural machinery in Europe, it is only the fourth largest European manufacturer of agricultural machinery; domestic production is dominated by foreign firms. The increase in agricultural machinery sales observed in 1995 can be explained by a 11.5% increase in French agricultural income in 1994.
Domestic production for the tractor market is highly concentrated, but less concentrated than for other industrial machinery. After 5 years of sharp recession and an average stagnation, the number of new tractors registered has increased by 17% (32,235 tractors) and the average engine power has increased by 5 horsepower between the years 1994 and 1995.
The four leading tractor manufacturers represent 85 percent of the sales volume. The leader is Renault Agriculture with 16.52% of the domestic market (5,326 tractors), and the second being John Deere with 14.08% (4,538 tractors). In 1996, Renault Agriculture and John Deere plan to launch new tractors which should confirm their leading position. Global growth in total sales for 1996 and 1997 should remain high around 7/8%.
The production of agricultural machinery among the large domestic firms is marked by strategic alliances and subcontracting relationships. American firms may find some success in providing subcontracting services for this significant network of large companies. In this sector, the United States ranks among France's top four suppliers behind Germany, Italy, and the United Kingdom. American agricultural machinery represents about 8 percent of the French import market and also has a leading position in the domestic market.
Excellent business opportunities exist for American manufacturers. Indeed, the general French agricultural equipment industry does not have a large market share in Europe, and the rate of foreign penetration in the French market is relatively high. American businesses have a well-established distribution network in France and a strong brand image due to the reliability and sophisticated technology incorporated in their agricultural machines.
The best sales opportunities for American exporters in farming
machinery and equipment are:
1995 1996 1997
- Total Market Size 1,808 1,952 2,088
- Total Local Production 1,495 1,630 1,761
- Total Exports 1,265 1,366 1,462
- Total Imports 1,578 1,688 1,789
- Total Imports from U.S. 127 135 143
- Exchange Rate: USD 1.00 FRF 5.00 FRF 5.10 FRF 5.10
The above statistics are unofficial estimates.
(figures in USD millions)
20 - TELECOMMUNICATIONS SERVICES (TES)
The French telephone network is one of the world's most advanced and reliable telecommunications systems. Currently the world's fifth largest market for telecommunications services, after the United States, Japan, Germany, and the United Kingdom, France has made modernization of these services a high priority in current years.
The General Directorate of Posts and Telecommunications (DGPT) handles licensing and is working to prepare the French market for deregulation. France Telecom is the sole provider of basic telephone services to the general public, but its competition is growing rapidly. For example, there are now two additional providers of mobile telephony services, Societe Francaise de Radiotelephone, and newcomer Bouygues Telecom. Both companies have partnered with numerous companies in hopes of strengthening themselves against growing competition in this field.
Additionally, American companies like Sprint, MCI, EDS, and MFS have all carved out niches in the French telecommunications services market, a trend that can only continue as France Telecom loses its monopoly as the sole service provider. U.S. companies have also managed to establish footholds in paging and global satellite networks.
France actively supported the European Council of Telecommunications Ministers' decisions of June 1993 and November 1994 which determined that telecommunications services and infrastructure shall be opened to competition by January 1, 1998. France has already made national law most of the European Union Directives in the field of telecommunications and has adopted in advance a number of European decisions. As the service market is deregulated, the number of servers will multiply and provide equipment suppliers with a greater number of potential customers.
With the forthcoming deregulation of the telecommunications market, France is currently positioning itself to take advantage of the rapidly expanding telecommunications industry. Across Europe, telecommunications companies, restricted to their traditional markets in the past, are now looking for merger opportunities. France Telecom, which is currently studying the process of privatization, will therefore will be looking for more merger deals with companies from Europe, the United States, and Asia in order to win a position in the global marketplace.
1995 1996 1997
A. Total Market Size: 23,961 24,794 25,739
B. Total Local Production: 21,650 22,443 23,300
C. Total Exports: 75 77 78
D. Total Imports: 2,386 2,428