In what has been an extremely dramatic few weeks in global politics, we take a closer look at the surprise electoral results in France, and, on the eve of Paris 2024, what that might mean for the landscape and leaders of the consumer businesses.
At the beginning of July, France was home to a shock election result that is now reshaping its political landscape. New Popular Front (NFP), a left-green alliance, emerged with 188 seats, outpacing President Emmanuel Macron’s party, which secured 161 seats, and Marine Le Pen’s far-right National Rally, which obtained 142 seats. This unexpected outcome has led to a hung parliament, and will force a coalition government – perhaps not unusual across other European countries, but certainly a new dynamic for the French political community to contest. Just on Thursday however Macron’s ally Yaël Braun-Pivet has won a surprising re-election as the national assembly speaker. But what does this mean for business, for talent, and for France as an investment destination?
France is, after all, a critical player in the global consumer-facing sectors. The country is well-known for its thriving consumer goods industry, its rich drinks history, its innovative beauty landscape, and its centuries-old heritage as the beating heart of the global fashion sector. Home to multinational giants Danone, Pernod Ricard, L’Oreal, LVMH, Kering, and Carrefour, to name just a few, over the years it’s been interesting for us at MBS to work alongside organisations in France and consider the nuances of the region as a business hub and talent destination.
“Home to multinational giants Danone, Pernod Ricard, L’Oreal, LVMH, Kering, and Carrefour, to name just a few, over the years it’s been interesting for us at MBS to work alongside organisations in France and consider the nuances of the region as a business hub and talent destination.”
In the last decade, for example, France has become a magnet for foreign investment. Since 2019, the country has consistently ranked at the top spot for foreign investment in Europe, and today it has the highest concentration of Fortune 500 companies in the region. In May of this year, it was announced that Amazon would be investing an extra €1.2bn in France which could create 3,000 new jobs, while healthcare companies Pfizer and AstraZeneca also unveiled plans to inject a combined sum of nearly $1bn in the country. Morgan Stanley is also expanding its French operations, with plans to raise its overall headcount in Paris to 500 by 2025.
None of this activity has happened by accident.
Under Macron’s government, France implemented an array of measures to boost its business-friendly credentials, including a competitive corporate tax rate, generous R&D tax credits, and the ambitious “France 2030” innovation plan. Crucially, the country also took steps to encourage the movement of talent and make it easier for executives to relocate to Paris. In 2017, the multi-year “passeport talent” residence permit was created to allow four-year stays for foreign employees and their families. Whether these are rolled back by the new coalition remains unknown.
“Under Macron’s government, France implemented an array of measures to boost its business-friendly credentials, including a competitive corporate tax rate, generous R&D tax credits, and the ambitious “France 2030″ innovation plan.”
Despite these progressive initiatives, for foreign executives, leading in France comes with an array of challenges – notably the language barrier. While English is spoken widely, leading teams, influencing others, negotiating and engaging with key stakeholders requires leaders to speak excellent French, immediately discounting or presenting roadblocks for the majority of the global senior talent pool.
Indeed our executive search mandates for business leaders in France is much tighter in its focus for French-speakers versus that in many other countries with their own local languages. One might argue this inhibits the disruption, and therefore evolution, of French business practices without being able to introduce as many international perspectives as you might be able to do in another market. One counter option is to rely on the French diaspora learning different market dynamics elsewhere and then returning to their home territory to implement and disseminate.
However, some leading French global businesses, such as L’Oreal, LVMH and Danone, are phenomenal training grounds and institutions whereby they foster not just the next generations of top French business leaders, but indeed on a global scale and give the option for international talent to take up global roles in France and gain a degree of local exposure. That said, these individuals will still have limited access to frontline dynamics and will not be as close to the negotiations with an Auchan or Casino for example.
Looking ahead though, it will be interesting to see how the French consumer-facing sector evolves under a new government. How will the coalition government approach business and attract investment?
At present, key pledges from the alliance include reversing recent pension reforms and lowering the retirement age to 60, increasing public sector wages, and introducing measures to combat the rising cost of living. The NFP also aims to implement a wealth tax for high-income earners while reducing income tax and social security contributions for lower earners.
On the social front, the alliance has committed to funding 500,000 new childcare places and capping prices on essential goods and utilities. Environmental policies feature prominently in their agenda, with a commitment to legislate for carbon neutrality by 2050 and overhaul the EU’s common agriculture policy.
While these proposals aim to address pressing social and environmental concerns, they also raise questions about their potential impact on France’s fiscal policy and its attractiveness to international investors. The business community will be closely watching how the new government balances its agenda with the need to maintain France’s competitive edge in the global market.
“The business community will be closely watching how the new government balances its agenda with the need to maintain France’s competitive edge in the global market.”
Speaking to the French business community as recent events have unfolded, some are expressing measured optimism. Consumer confidence remains high, inflation feels more controlled, and actually with a coalition government in place, drastic reforms are unlikely. In reality no major political change, through forced compromise, lends itself to stability much more than if one of the hard-right or hard-left parties had gained a majority.
The importance of French exports remains a top priority. More so than many other countries, the ‘Frenchness’ of consumer brands is a critical part of a brand’s identity, heritage and consumer appeal. Good business management in French consumer goods will see adherence to a derisked omnichannel approach, with good international distribution breadth.
Following Brexit, there was a notable and saddening strain of discomfort within the international expat community in the UK feeling unwelcome. Hopefully, with a hung French parliament, France and its international hub of talent will not feel so similar.
The Paris Olympics kick off next week and France will become a global stage. It will be a huge opportunity for the country to showcase what is has to offer, and will be a major boost for consumer businesses. The longer game is unknown though, but please do let us know your thoughts – we’d love to hear from you.
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