Wednesday 28 September 2016

Revolution in SME culture increases appeal of the French markets

Sinead Lonergan

Published 12/06/2016 | 02:30

Sinead Lonergan is Enterprise Ireland manager in Paris
Sinead Lonergan is Enterprise Ireland manager in Paris

While recent news from France has not been very positive - floods, terrorism, strikes - the winds of change are blowing through the business community in Paris and throughout the regions.

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This market of more than 65m people is expanding again, with the OECD projecting around 1.5pc economic growth this year and next.

France is the world's fifth largest economy and the third most important destination for Irish exports. It is the largest market in Western Europe for agricultural machinery (€5bn) and second largest for pharmaceuticals (€26.4bn), medical technologies (€10.9bn) and retail (€424bn). It is also the second largest construction market in the Eurozone (€124bn).

There's more. Its industrial subcontracting market is the second largest in Europe (€75bn) and its aerospace and defence sector will be worth about €40bn this year.

France is also eighth globally for attracting FDI, according to global consultancy AT Kearney. Recent arrivals include the retail wholesaler Costco and shopping channel QVC.

So there is plenty for Irish exporters to aim at. Freefoam, Combilift, Venn Lifesciences, Athlone Extrusions, Aerogen and Prodeico are among over 500 Irish companies exporting to France and there is ample room for innovative companies to break into the market.

The path to France may be well worn but there are important understandings needed for success. Start by pushing aside stereotypes. Notions of difficult markets, lengthy decision making and challenging culture discourage many entrepreneurs. But what often happens is that companies jump in unprepared and get a cold response. Quelle surprise!

Understanding French business culture can be the deciding factor for closing a deal. The French take great pride in their cosmopolitan approach and their respect for individuality translates into business. They have low tolerance for uncertainty and are quite risk averse.

When exporting to France, benchmark your competitors and understand where you fit in your prospects' value chain, particularly when targeting corporates.

It is also important to spend time in the market building relationships, particularly in the regions where you will get more time with influencers and better understand their needs. In many cases they have the power to buy independently of headquarters in Paris.

Over the past three years, Enterprise Ireland Paris has been reaching out nationally, building networks for Irish companies with sector clusters and SMEs, the Irish diaspora, economic development agencies, accelerators and large industrial players.

Key centres include Lyon, Lille and Bordeaux, while some cities are becoming established as sectoral clusters such as St Etienne (medtech), Montpellier (digital/ehealth) and Nantes (transport).

When entering the market, recruiting a French team is preferable, and hiring a local lawyer is essential. Employee, customer and representation contracts need to be in French and respect French law.

France is becoming more pro-business too. The start-up ecosystem is flourishing and transforming how business is done.

Corporates are recognising that working with innovative start-ups helps them stay competitive. Companies such as Airbus, Total, Transdev and Credit Agricole all have lab divisions scanning the start-up community for the 'next best thing'. Start-ups working to a lean-product management approach should be aware that French companies expect the offering to be ready to go, or close to it.

The government has also introduced hiring subsidies for SMEs along with training opportunities for the unemployed. Reforms relating to dismissals and flexible working hours are afoot and if passed are expected to lead to French companies expanding.

With unemployment touching 10pc, there is significant availability of skilled employees. While the market for sales executives with 10 years' experience is tight, a good recruitment agency will help. Doing business in France is very rewarding both professionally and personally.

French partners can bring significant technical know-how and creativity to an Irish company as they develop business together.

Sinead Lonergan is Enterprise Ireland manager in Paris

Sunday Indo Business

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