France

Originally published: Sep-23-2011

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Official Name: French Republic

Internet Domain: .fr
International Dialing Code: +33

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Location and Size

The country of France, located in Western Europe, is bordered on the west by the Bay of Biscay and on the southeast by the Mediterranean Sea. Its land area is 640,427 sq. km., which is slightly less than the size of Texas.

Government

Republic with 22 metropolitan regions and 5 overseas regions, including French Guiana, Guadeloupe, Martinique, Mayotte and Reunion.

Executive Branch:

• Chief of State: President Nicolas Sarkozy
• Head of Government: Prime Minister Francois Fillon
• Cabinet: Council of Ministers appointed by the president at the suggestion of the prime minister

Legislative Branch: bicameral Parliament

• Senate - 348 seats; six-year terms; indirectly elected by an electoral college
• National Assembly – 577 seats; five-year terms; elected by popular vote under a single-member majority system

Judicial Branch: Supreme Court of Appeals, Constitutional Council, Council of State.

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Legal System

France has a civil law legal system. It has not submitted an International Court of Justice (ICJ) jurisdiction declaration. It does accept International Criminal Court (ICCt) jurisdiction.

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Ten Interesting Facts About France

1. With at least 75 million foreign tourists per year, France is the most visited country in the world and maintains the third largest income in the world from tourism.

2. France is the number 2 agricultural power in the world

3. In France, the practice of “bossnapping” is generally deemed acceptable as long as workers refrain from violence and release the executive within a couple of days. The police rarely intervene and workers usually do not face criminal charges.

4. The French are the world’s biggest consumers of psychotropic drugs. About one fourth of the population admits having taken anti-depressants or tranquillizers over the past year.

5. French was the official language of England for over 300 years (from 1066 until the early 15th century). It is still the official language of 30 countries worldwide.

6. France has hosted the Summer Olympic Games five times, the Winter Olympic Games three times, and the FIFA World Cup twice.

7. Famous French inventions include the adding machine, the hot air balloon, the airship, the parachute, the submarine, the ambulance service, photography, animation and cinema.

8. The French ‘Declaration of the Rights of Man and of the Citizen’ of 1789 is the world’s first universal declaration of human rights, applying not only to French citizens or “free men” (as opposed to slaves), but to all people in the world.

9. In the town of Chateauneuf-du-Pape in Provence, a municipal law of 1954 prohibits flying saucers from landing within the borders of the municipality.

10. The France-based Arianespace is the world leader in commercial space launch, with over 50% of the global market for launching satellites.

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Economy

France is the world’s fifth-largest economy.

It has substantial agricultural resources, a large industrial base, and a highly skilled work force. A dynamic services sector accounts for an increasingly large share of economic activity and is responsible for nearly all job creation in recent years. Government economic policy aims to promote investment and domestic growth in a stable fiscal and monetary environment. Creating jobs and reducing the high unemployment rate has been a top priority.

France is in the midst of transition from a well-to-do modern economy that has featured extensive government ownership and intervention to one that relies more on market mechanisms. The government has partially or fully privatized many large companies, banks and insurers, and has ceded stakes in such leading firms as Air France, France Telecom, Renault, and Thales.

France's leaders remain committed to a capitalism in which they maintain social equity by means of laws, tax policies, and social spending that reduce income disparity and the impact of free markets on public health and welfare.

France has weathered the global economic crisis better than most other big EU economies because of the relative resilience of domestic consumer spending, a large public sector, and less exposure to the downturn in global demand than in some other countries.

However, in September 2011 the International Monetary Fund (IMF) cut its expectations for French economic growth from 2.1% to 1.7% for 2011 and from 1.9% to 1.4% in 2012. According to government spokesperson Valerie Pecresse, France is sticking with its recent revisions down to 1.75% growth for both 2011 and 2012.

Leading Markets (2009): Germany 15.9%, Italy 8.2%, Spain 7.8%, Belgium 7.4%, UK 7%, US 5.7%

Leading Exports-commodities: machinery, chemicals, automobiles, metallurgy, aircraft, electronics; textiles, food processing; tourism

Leading Suppliers (2009): Germany 19.4%, Belgium 11.6%, Italy 8%, Netherlands 7.1%, Spain 6.7%, UK 4.9%, US 4.7%, China 4.4%

Leading Imports-commodities: machinery and equipment, vehicles, crude oil, aircraft, plastics, chemicals

Top Industries: machinery, chemicals, automobiles, metallurgy, aircraft, electronics; textiles, food processing; tourism

Top Agricultural Products: wheat, cereals, sugar beets, potatoes, wine grapes; beef, dairy products; fish

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Comparative Economic Indicators – 2010 est.

* July, 2011 estimates
** PPP – Purchasing Power Parity
*** 2010 Corruption Index: 10=Very Clean; 0=Highly Corrupt
**** 2011 Index of Economic Freedom: 100-80=Free; 49.9-0-Repressed

Economic Data from CIA World Factbook
2010 Corruption Perceptions Index, Tranparency International
2011 Index of Economic Freedom, Heritage Foundation

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Credit and Collections

ABC-Amega’s collection experience in France

Vanessa Bersani, Assistant Vice President, International Dept.:

Collection procedures in France are more formal than those in the U.S. To begin with, French companies require original invoices and do not accept photocopies or emailed PDFs.

Proper documentation is very important. Therefore, collection letters should be sent by certified or registered airmail with return receipt requested. Copies of all documents related to the debt, along with return receipts and any other proof that they were received by the debtor, should be kept.

Payments due from government entities, such as hospitals or schools, cannot be made directly by the debtor. The debtor must issue a mandat (mandate-order for payment) to the Trésor Public (Public Treasurer) and provide proof of the debt, including original invoices and necessary backup documents. The Trésor Public then reviews the request and issues the payment to the creditor.

According to one of ABC-Amega’s affiliate attorneys in France, the standard procedure used to follow-up on a past due account is to send a “prompt for payment” letter and then, a final demand letter.

Lawsuits: Before filing a suit, the creditor is under legal obligation to send the debtor a final demand letter. It’s best to have this letter drawn up and sent by an attorney, even if you have already sent such a demand. The attorney can include verbiage in the final demand that is necessary to claim late payment interest.

Court costs are dependent upon the size of the claim and the type of proceeding and requirements of the claim, for instance appraisals or translations. The minimum court cost is €200 with no guarantee deposit required. All documents presented in French courts must be in French.

Judgments by U.S. courts are not automatically recognized and enforceable in France.

More information on collecting in France:

• If late payment interest is not included in the contract, it can be claimed if a demand letter is sent or legal proceedings are initiated. The rate is fixed by the state and varies from year to year.

• Lawyers in France are forbidden to work on a contingency fee basis exclusively. They are allowed to apply an initial flat fee and additional contingency fee. However, in most cases, French attorneys work on an hourly basis.

Dispute Resolution

The judicial system is independent. Property and contractual rights are enforced by the French civil code. Judgments of foreign courts are accepted and enforced by courts in France once they have been "declared executor" by a French judge through "executor" proceedings. However, in some civil cases and in bankruptcy cases, foreign judgments are recognized and enforced by French courts without executor proceedings.

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Risk Assessment

Coface Country Rating: A2-- The political and economic situation is good. A basically stable and efficient business environment nonetheless leaves room for improvement. Corporate default probability is low on average.

Coface Business Climate Rating: A1 -- The political and economic situation is very good. A quality business environment has a positive influence on corporate payment behaviour. Corporate default probability is very low on average.

After initiating a decline, the payment incident index continued to ease to a very low level. Corporate bankruptcy rate has remained high compared to the years preceding the crisis. This trend, however, has been easing since September 2010.

Ducroire Political Risk: 1 – lowest risk
Ducroire Commercial Risk: B – moderate risk

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Business Climate

France offers quality infrastructures and public services, as well as a qualified workforce and high productivity.

Economic Freedom: France’s economic freedom score is 64.6, making its economy the 64th freest (out of 179) in the 2011 Index of Economic Freedom. It is ranked 28th out of the 43 countries in Europe and it’s overall score is higher than the world average. Under President Nicolas Sarkozy, France’s government has made some attempt to deregulate the economy, but significant reforms remain incomplete. Of the ten economic freedoms scored in the 2011 Index, France’s lowest results were for:

• Government Spending (16.4) – Total government expenditures is 52.8% of GDP
• Labor Freedom (51.4) - The labor market is burdened with rigid regulations and lacks the capacity to generate more vibrant employment growth.
• Fiscal Freedom (52.3). – France has relatively high tax rates.

Regulatory System: The French government has made considerable progress in recent years improving the transparency and accessibility of its regulatory system. Of most concern to foreign companies has been standards setting. With standards different from those in the U.S., rigorous testing and approval procedures must sometimes be undertaken before goods can be sold in France. Where EU-wide standards do not exist, specific French standards apply. The United States and the EU have negotiated mutual recognition agreements covering the testing and certification of certain specified regulated products.

Intellectual Property Rights: France is a strong defender of intellectual property rights and has highly developed protection for intellectual property. Under the French system, patents and trademarks protect industrial property, while literary/artistic property is protected by copyrights. By virtue of the Paris Convention and the Washington Treaty regarding industrial property, U.S. nationals have a "priority period" after filing an application for a U.S. patent or trademark during which to file a corresponding application in France. This period is twelve months for patents and six months for trademarks.

Currency Conversion and Transfer Policies: All inward and outward payments must be made by bank transfers through approved banking intermediaries. There is no restriction on repatriation of capital. Similarly, there are no restrictions on transfers of profits, interest, royalties, or service fees. Foreign-controlled French businesses are required to have a resident French bank account and are subject to the same regulations as other French legal entities. The use of foreign bank accounts by residents is permitted.

Corruption: France’s 2010 Global Corruption Perceptions Index (Transparency International) is 6.8 indicating a less than moderate perception of corruption. It’s rank among the 178 countries surveyed is 25.

Political Violence: Anti-American incidents are very rare. Nevertheless, as the economic downturn worsened during 2009, some laid-off workers “detained” the managers of several U.S.-based companies in a bid to secure better severance packages.

For more detailed information on these topics, visit the 2011 Investment Climate Statement – France, of the U.S. Department of State.

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Business Protocol in France

• French business behavior emphasizes courtesy and a degree of formality. Creating a wide network of close personal business alliances is very important.
• If you do not speak French, an apology for not knowing their language may aid in developing a relationship. It is always a good idea to learn a few key phrases, since it demonstrates an interest in a long-term relationship.
• The French will carefully analyze every detail of a proposal, regardless of how minute. Business is hierarchical. Decisions are generally made at the top of the company.
• Business dress is understated and stylish. Men should wear dark-colored, conservative business suits. Women should wear either business suits or elegant dresses.

More information on Business Protocol:

• Kwintessential
• Executive Planet

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Sources for further information on doing business in France

American Chamber of Commerce in France

Embassy of France in Washington

Embassy of the United States, Paris, France

FITA Country Profile France

French-American Chamber of Commerce in New York City (Note there are French-American Chambers of Commerce all over the United States.)

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including France. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Comparative Economic Indicators: CIA World Factbook

Risk Assessment information: Coface Country Rating and Ducroire/Delcredere.

Exchange Rates: OANDA.com The Currency Site.

Other information is provided by sites including FITA.