European states have made every effort to lure UK-based businesses in the wake of the Brexit vote, and France is no exception. After the referendum on June 23, 2016, the country openly called on such companies to move part or all of their operations to France.
The Ile-de-France region, which includes Paris, took the lead. Ross McIness, a Franco-Australian citizen and chairman of French engineering company Safran, launched a new team to attract British businesses. Made up of business leaders and politicians, the team targets companies in the financial, industrial, mining, energy and service sectors.
Paris itself is thinking big. Chiara Corazza, general director of the Greater Paris Investment Agency, says the objective is to become a top location for the headquarters of multinational companies.
“We already have a number of Chinese, Indian or even American businesses with their headquarters here,” she says. “But, until now, some companies that wanted to have a presence in Europe picked London as a destination to establish their decision-making centre. If the UK leaves the EU, they may reconsider their choice and may want to move to Paris. This is probably where we have a card to play.”
A channel to cross
There is still a long way to go before investors move from London, though. A new study conducted by Ms Corazza’s team shows that despite the Brexit vote, investors around the world still see the UK capital as the top destination for doing business.
This is mainly due to the fact that Paris has failed to launch large-scale marketing strategies to publicise its strengths, she says. “Unlike the Brits, who have done a remarkable job at communicating and promoting London to global investors, France has been weak,” she says. “So there is a lot more we should do in terms of marketing.”
Many investment agencies around the country have reached the same conclusion. This is the case for Nord de France Invest, which promotes the city of Lille and its surrounding area. “The priority for us is to communicate on the region and its strengths,” says Yann Pitollet, general director of the agency. “So we recently launched a digital campaign, specifically targeted at the British business community. Beyond that, we will also travel regularly to the UK this year to meet with entrepreneurs and CEOs who may want to do business in France.”
However, Mr Pitollet remains cautious about the message he wants to put across. For him, the uncertainty around Brexit needs careful handling. “We still don’t know the conditions under which the UK will leave the EU,” he says. “So, not knowing what will happen in the coming years, we wouldn’t take the risk of telling CEOs to leave the UK. What we are simply saying in our communication campaign is that if they can have one foot in the UK and one foot in Continental Europe, then they should consider Lille and the region.”
Silvia Ferrari, deputy director at Invest in Toulouse, echoes this sentiment. “Our communication plan is still in its infancy stage,” she says. “But what I can say for sure is that we will not encourage British companies to relocate to Toulouse. This would send the wrong incentives. Having said that, if they are willing to open a manufacturing plant in the city to keep a foot in Continental Europe, then we will be there to help.”
One drawback remains, though. Investment agencies point out that British entrepreneurs often associate France with complexity and bureaucracy. On that front, the presidential elections in May this year may change the game, and a series of measures aiming to soften France's labour code or even implement tax incentives may be introduced depending on the elected government.
After all, the stakes are high for France. In a country where reversing the unemployment trend has become a recurrent electoral promise, new FDI is always welcome as it is a source of job creation.
On that front, the UK is already playing an active role. In 2015, the country was the fourth largest foreign investor in France with 81 new projects, just below the US, Germany and Italy. British investments helped maintain or create 2833 jobs, according to data from Business France, the national agency supporting international development of the French economy.
In the Haut de France region alone, 130 British companies currently employ more than 7000 people. But Mr Pitollet at Nord France Invest believes more can be done. “If we look at the FDI in the region, we currently have 250 German companies,” he says. “This is almost twice the number of British companies. So I think there is still room for improvement and we could easily reach 200 British companies in the years to come.”
Two main sectors will be targeted, he adds, the first being financial services. Unlike Paris, which is focusing on large international firms, Haut de France is looking at back-office activities.
“We don’t have the ambition to become an alternative to major financial places such as Paris or Frankfurt,” he says. “We clearly don’t play in the same ground and we have no intention to do so. But back-office companies could be interested in our region, based on our geographical proximity to the major financial centres in Europe, the relatively low operational costs and our capacity to provide the right labour force.”
Haut de France is also targeting the pharmaceutical industry. The city of Lille and the Conseil Régional (the general assembly supervising the region) are competing with destinations in Europe to become the new home of the European Medicines Agency, currently based in London. If Lille were to welcome the agency, British pharmaceutical companies could be tempted to open new sites in the region, according to Mr Pitollet.
Toulouse's healthy outlook
Further south, Toulouse has also identified a number of key sectors, including the healthcare industry. “We believe our new cancer centre will help attract more FDI,” says Invest in Toulouse’s Ms Ferrari.
The site, called the Oncopole, comprises a hospital, a public cancer research centre, a centre of advanced technologies for life sciences, a start-up incubator and innovation hub in biosciences, as well as pharmaceutical and medical companies.
The major upside, according to Ms Ferrari, is that Toulouse benefits from a brand new R&D laboratory within the Oncopole. Originally built by pharmaceutical giant Sanofi Aventis, the laboratory was left partly unoccupied after the company launched a global restructuring plan and cut back its activities in 2015. “The laboratory is still managed by Sanofi,” she says. “And it’s now open to companies seeking to conduct their R&D activities.”
Another key sector Toulouse intends to develop is its space industry. Holding 25% of the European workforce in this sector, the city is hoping to attract British companies looking to retain access to the European market.
“Given that the majority of mandates in Europe come from the European Space Agency, if the UK were to leave the EU, we think that some companies working in that field may want to keep a footprint in Continental Europe,” says Ms Ferrari.
She adds that Toulouse has been “good” at developing the right infrastructures to build spatial engines but the UK “has always been ahead of the curve in terms of space apps”. “So that’s what we will target,” says Ms Ferrari.
According to a report entitled 'The Size and Health of the UK Space Industry 2016', and commended by the British government, consultancy firm London Economics found that the UK space industry grew in value to be worth £13.7bn ($17.3bn) by the end of 2015, with space applications providing for 74% of the total income.
But Toulouse is not the only city eyeing the UK space market. “Paris and its area are already active in the field and we believe we have the capacity to welcome more activity,” says Ms Corazza.
Meanwhile, Lyon and Strasbourg have also entered the race to grab the European Medicines Agency. In addition, all major cities are also fighting to get their share of the digital market, with some offering young entrepreneurs accommodation and brand new offices to grow their businesses.
Evidently, competition will be fierce. But Ms Corazza looks on the bright side. “Having some kind of competition between us is not necessarily a bad thing,” she says. “It’s actually a good way of learning from others and developing best practice.”