Companies looking to thrive in the international market have ample
opportunities in France. But the advantages of doing business in France—like
its connection to the wider EU market—also carry some caveats, like high labor
costs.
If your business is considering expanding into France or hiring in France, it’s
crucial that you weigh all of the advantages and disadvantages.
Pros of doing business in France
Let’s explore four key benefits of entering the French marketplace.
1. Considerable consumer access
Companies that expand into France can take advantage of one of the country’s
most attractive selling points—its large consumer population. Frances's
economy boasts impressive statistics:
- The French economy is the third largest in Europe
- The buying force is populated by 67.3 million domestic consumers
- French residents have buying power, with consumer expenditures rising each year
- The unemployment rate is low and steady, ensuring large-scale cash flow
It’s also important to note that businesses expanding into France also have
access to the wider European Union market. But an increased resident pool
isn’t the only benefit of EU commerce:
- The Euro is a strong, stable currency recognized throughout the world market
- Ongoing EU reforms continue to improve economic strength and stability
- EU citizens are diverse, and brands can market to numerous consumer profiles
Thus, companies that expand into France will be met with a large, monied
potential client base, increasing the likelihood of profits and widespread
brand exposure.
2. Transportation infrastructure
France’s transit system renders it highly accessible. Both domestic and
international travel are well-developed and reliable, giving residents and
foreigners alike significant power to travel and ship goods when needed.
Both French employees and businesses can benefit from this EU country’s
highly developed infrastructure
for travel
and transportation. France touts a number of impressive transit metrics:
- Second-largest rail network in Europe
- Third-largest road network in Europe
- Highly active seaports
- 18 major international airports
France’s transportation systems don’t just move people throughout the country
and abroad—they give businesses the ability ship, import and export goods with
ease.
In addition, France’s public transit network increases its economic health,
creating three significant results:
- Ample job opportunities for transit workers help to stimulate France's economy
- Residents have substantial access to a wide geographic range to seek work
- French citizens can use public transit to seek brick-and-mortar marketplaces
3. High-quality social services
When employees have access to social safety nets and public services, they
benefit from increased financial stability. French spending on social
services is the
highest in the world, and the government prioritizes equal, nationwide
availability of high-quality social infrastructure.
French citizens benefit from countless public and government-funded services,
including:
- A social security system that provides health insurance, maternity and paternity leave pay, pension contributions, unemployment protections and benefits, and family allowances (financial support for families with children)
- Job training opportunities
- Free public education system for children ages 3 to 18
- Subsidized, low-cost higher education
- Free online and brick-and-mortar libraries
- Sliding scale costs for nurseries
Such large-scale public benefits are a boon for French employers. Because
French workers largely don’t have to worry about healthcare costs, financial
strains of childcare, or education access, their wage concerns don’t have to
accommodate an expensive cost of living.
4. A diverse, skilled workforce
Employers hiring in France can benefit from the country’s population diversity
and highly skilled workforce.
French law prohibits public censuses from distinguishing citizens based on
race, largely preventing the government from compiling data on racial
characteristics. But private survey organizations
estimate that
over 10% of the French population identifies as a racial or ethnic minority.
As of 2010, 27% of newborns in metropolitan areas were born to at least one
foreign-born parent.
Inclusive hiring can be a benefit for employers because:
- Employees from different backgrounds bring unique ideas and perspectives to the table
- Diverse workplaces help foster tolerance and healthy working relationships
- Employees from various backgrounds can help businesses sell to a diverse market
If your company begins hiring in France, you’ll likely also notice the
generally high skill levels and qualifications of French employees. France regularly invests in its workforce training infrastructure, most recently allocating €15 billion to employment efforts and
skills acquisition systems. But barring ongoing investments, French workers
are set up for success because they have access to:
- Free, robust public education systems during childhood
- High-quality government services, including job training opportunities
- Low-cost higher education, which can provide in-depth industry knowledge
France takes pride in its diverse, skilled workforce, continuing to develop
improved initiatives and systems that prepare French residents for the
domestic and global job market.
Cons of doing business in France
While doing business in France certainly offers benefits, there are also
drawbacks. Let’s explore four potential hurdles for businesses looking to
expand into France.
1. Language barriers
France is not primarily English-speaking, and multilingualism isn’t widespread
in the country. So, if businesses and employers that operate in the country do
not speak French, they will need to consider a few specific elements that
contribute to language barriers:
- The official language of the EU is English, but the French population generally exhibits language pride, primarily speaking the French language in both personal and professional contexts
- There are at least 75 regional languages spoken in France, and French dialects can significantly vary depending on an employee’s home region
- Only about 37% of the French population speak English, putting primarily English-speaking countries at a disadvantage if they’re not equipped to translate or otherwise facilitate multilingualism in their operations
Before hiring in France, companies that don’t currently employ any French-
speaking workers should create a plan for conquering potential language
incompatibilities.
2. High labor costs
Hiring in France can be an expensive proposition for the following reasons:
The workforce is highly skilled. The more qualified a worker is, the more
valuable they are to a company’s operations. This reality can lead to higher
base wages for French workers since the country’s education and job training
initiatives are so impactful.
Taxes are high. While widespread benefits reduce employees’ financial
strain, taxation foots the bill for these extensive protections. Employers
must account for high individual taxes when determining employee wages.
Employee benefits. Employers must provide a slate of employment benefits
to their French workers, and these can come at a significant cost. Some
examples include maternity and paternity leave, vacation pay, sick leave and
death insurance.
French employees are entitled to significant public services and mandatory
benefits, both of which can make it considerably expensive to hire workers in
France.
3. High business tax rates
Businesses also contribute significantly to the country’s tax base, paying a
relatively high corporate income tax rate compared with the rest of the world economy, at 28.4%. In comparison, other countries’ corporate tax rates are as follows:
- 21% in the U.S.
- 19% in the U.K.
- 25% in China
- 20% in Russia
- 26.47% in Canada
- 35% in Argentina
- 9% in Hungary
In addition to corporate taxes, French businesses must pay other taxes,
including:
- Property taxes
- Payroll taxes
- Consumption taxes for goods and services
These high taxes can add up, potentially cutting into a business’s bottom
line. If your company is looking to expand to a country with relatively low
corporate tax requirements, France may not be your ideal market.
4. Foreign businesses face complicated establishment laws
Business entity establishment laws in France can be complex, and companies looking
to expand in the country should be mindful of two nuances:
- An entrepreneur or company must open a bank account to operate a business in France and corporate banks require minimum capital investments
- Establishment and employment are very tightly regulated, creating significant red tape
In addition, France imposes specific regulations on niche industries like
hairstyling, modeling and medicine. Employers should be prepared to fully
understand how compensation in France works and submit extensive licenses and
qualifications before they can begin the establishment process.
The complexity of entity establishment doesn’t have to be a deterrent,
however. If a company wishes to hire employees in France, they can partner
with an employer of record, a third-party company that will employ international workers on their behalf.
Expand your global business to France
Doing business in France gives foreign companies access to a prosperous
market, but it can come at a cost. Fortunately, companies with global
ambitions can tap into the French workplace without establishing a legal
entity by using a France employer of record.
An employer of record can streamline your international hiring in the
following ways:
- It can legally employ workers around the globe, bypassing your company’s need to establish an entity
- It hires, onboards and (when necessary) terminates international employees per specific home country requirements, ensuring HR compliance
- It helps employers manage international hiring complexity like payroll and benefits requirements, even processing payroll using each employee’s home currency
Instead of establishing an entity in France, businesses aiming to increase
their international impact or global employment in France should consider
using an employer of record in France.
Want to learn more? Speak with a global solutions adviser today
to learn how an
employer of record like GEO can help you navigate international and remote
hiring.
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