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Doing business in France: the most important strengths and weaknesses

A1

low risk for businesses

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financial risk

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financial risk

The French economy has its own characteristics. What is striking is that in addition to the business community, the government also plays an important role. Government involvement is high in sectors such as healthcare, transport and energy. The French government is a much greater participant in the economy than in the Netherlands, Belgium or Germany.

The French government is trying to steer the economy with support programmes. Partly because of this, France is an attractive location for tech companies. The French government invests heavily in the development of the technology sector. This also applies to sustainability. France offers additional opportunities for entrepreneurs who offer innovative solutions in the field of sustainability.

There are also bottlenecks that are typically French. For example, it can be complicated for foreign entrepreneurs to deal with the French bureaucracy. Another stumbling block may be the French language.

Decentralized economy

The French economy is decentralized and there are major differences between the regions. This creates an extremely diverse picture; a patchwork of widely varying sectors. From aviation to the wine industry, from tourism to agriculture. Each region has its own characteristics and strengths:

  • Île-de-France: You could call the region around the capital Paris the heart of the French economy. This region has many multinationals, banks and insurance companies. The banking sector plays a leading role. Also, a lot of technology, media and fashion. Paris itself is a major global financial centre.
  • Auvergne-Rhône-Alpes: This region in the south-east of France is best known for its strong industries such as automotive, aviation, and machinery. Lyon, France's second largest city, is an important hub for the chemical and pharmaceutical industries. The region is also an important centre for scientific research and innovation.
  • Nouvelle-Aquitaine/Occitanie: this region in south-western France has a strong agricultural sector, including the wine industry in Bordeaux. The area around Toulouse has a thriving aerospace industry. The tourism sector is important on the Atlantic coast.
  • Provence-Alpes-Côte d'Azur: located on the Mediterranean coast, it includes cities such as Marseille and Nice. It is known for its tourism sector, but also has a thriving arts and cultural scene. And also, oil and gas industry.
  • Hauts-de-France: this region in the north of France is mainly home to manufacturing industry. Think of industrial cities such as Lille, Roubaix and Tourcoing.

Labour force

The education level of the French working population is high. In 2023, 78% of 25 to 64 year olds had a higher education diploma. On the other hand, the unemployment rate is also relatively high. In 2023 7.4%. Yet companies have difficulty finding suitable staff with the right (appropriate) training. This is partly due to low labour mobility. Employees do not easily change sectors or regions.

The labour market in France is sometimes perceived as rigid due to strict labour legislation and collective labour agreements. This can make companies reluctant to hire, especially because of the difficulty in firing employees. This is in line with the extensive social provisions that France has. Partly because of this, labour costs in France are relatively high. This can discourage companies from hiring new staff. Especially in times of economic uncertainty like now.

Infrastructure

France has one of the most extensive networks of roads and highways in Europe (including toll roads). The flow is not the same everywhere. The roads in the big cities in particular are often overcrowded. The maintenance of some roads, especially in rural areas, also sometimes leaves much to be desired. The railways offer an excellent alternative. The major cities are easily accessible by high-speed trains. Furthermore, France has a large number of airports, ranging from large international airports to smaller regional and local airports. Some airports are among the busiest in Europe.

Tourism

France is an important destination for tourists from all over the world. Tourism contributes significantly to the economy, with French culture, history and culinary traditions as major attraction factors.

Strengths and weaknesses

  • High-quality infrastructure
  • Many multinationals
  • Strong increase in technological start-ups
  • Diversified economy
  • Numerous nuclear power plants make France less vulnerable to energy shortages
  • Qualified engineers and strong export-oriented services
  • Declining productivity growth
  • Relatively few large SMEs
  • Government bureaucracy
  • High government debt
  • Tax burden

Import & Export 

Exports are important for the French economy. In 2023, the total value of French exports amounted to €584.4 billion. This accounts for 30.4% of France's GDP. France is the sixth largest exporter in the world. The import is even more extensive. In 2023, the total value of French imports amounted to 640.8 billion euros. This accounts for 33.4% of France's GDP.

Main countries for imports and exports are:

(% of total, 2022)

Export Position Import
Germany 13.5%
1
15.5% Germany
Italy 9.0%
2
11.4% Belgium
Belgium 8.2%
3
8.8% Netherlands
Spain 7.5%
4
8.1% Spain
United-States of America 7.1%
5
8.0% Italy

Main exported/imported products

Export

  1. Aeroplane and spacecraft
  2. Cars
  3. Machines
  4. Chemical products
  5. Foods and drinks

Import

  1. Energy (oil, gas, coal)
  2. Machines
  3. Chemical products (medicines, fertilizers and plastics)
  4. Foods (fruits, vegetables, meat and dairy products)
  5. Consumer items (furniture, clothing and electronics)
export-to-france

Political Gridlocks and Tight Fiscal Policy

Following the July 2024 elections with no absolute majority, political uncertainty in France is weighing on the economy. The lack of a stable government has reduced policy predictability, leading businesses and households to delay or scale back investments. Financial conditions are tighter, with rising interest rate spreads between French and German bonds and a weak French stock market. This is slowing the recovery in the housing market, where mortgage rates have only slightly declined. Additionally, tight fiscal policy amid high debt and deficits is pressuring the construction sector through subsidy cuts.

French GDP is expected to stagnate in 2025 before moderate growth in 2026. Geopolitical and trade uncertainties, weak external demand, and rising Chinese competition are slowing exports and the industrial sector.

Monetary easing is lowering borrowing costs, encouraging slightly looser credit standards and reducing incentives to save, although savings remain high. Reducing uncertainty will be key to boosting consumption, supported by low inflation and a still-resilient labor market.

Corporate bankruptcies reached historic highs in 2024 due to heavy debt, energy costs, and shifting consumer behavior. This elevated level is expected to persist in 2025 and 2026 but with a slight decline.

How do you do business in France?

Just like in Germany, the hierarchy within French companies is still quite traditional. Power relations are often clearly defined. The boss is the boss. You have to connect with that and go along with it. Make sure you know how to contact the right person: the one who can make decisions or the one who is as high as possible in the hierarchy. That is the level at which you do business in French culture. If you want quick results, you are in the wrong place in France. You need patience to win a deal. It can take quite some time before a decision has passed through the necessary stations in the organization. The French are no strangers to some bureaucracy.

Above all, take the time to build a relationship. This is necessary to gain trust. If you don't try to handle important decisions efficiently via email, you'll miss the point. Make an appointment, make sure you look good. Not sloppily dressed, but preferably elegant and stylish. As far as the French are concerned, your appearance reflects your success and social status.

Go out for dinner together and show interest in the well-being of your French business partner. Do not immediately bring files with you to the first meeting. Just small talk. This does not necessarily have to be in French, although it is an advantage.

Need help with your export plans to France?

If you want to do business in France, the country offers plenty of opportunities, although you must take numerous considerations into account when making decisions. What conditions do you apply to the agreements you make? You need thorough insight into markets, customers and local economic developments. And that is exactly where trade credit insurer Allianz Trade can help you.

With over 100 years of international expertise, we help you (further) develop your business abroad. We specifically focus on companies that do business internationally, including in France. We owe our unique knowledge of the local market to our extensive database of financial data and the expertise of our analysts. With our offices and colleagues in France we will provide you with the necessary expertise to securely develop your business in France.