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Country Commercial Guides
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CHAPTER V. LEADING SECTORS FOR U.S. EXPORT AND INVESTMENT
LIST OF BEST PROSPECTS FOR AGRICULTURAL, INDUSTRY AND SERVICE SECTORS FOR U.S. EXPORTATERS TO FRANCE
(U.S. millions)
A. BEST PROSPECTS FOR NON-AGRICULTURAL GOODS AND SERVICES
Listed below are 16 industry sectors which the U.S. Embassy in France considers "best prospects" for U.S. busisness; they are ranked by forecast total imports from the U.S.
Rank TOTAL IMPORTS FROM U.S. SECTOR SYMBOL NAME 1 6,332 CSF 2 3,800 TRA 3 3,779 EMP 4 2,777 CPT 5 2,297 ELC 6 1,797 SEC 7 1,218 TXT 8 1,029 FRA 9 1,029 AIR 10 1,100 TEL 11 849 LAB 12 692 MED 13 618 POL 14 375 APS 15 354 TES 16 350 AUT
1 - COMPUTER SOFTWARE (CSF)
The French computer software market is expanding rapidly. Demand for software solutions are exploding because the liberalization of telecommunications, the development of Internet E-commerce sites, as well as Intranets among corporations, the rise in the corporate world of Windows-NT solutions, and the challenges represented by the switch to the Euro currency as well as the Y2K issue.
French companies tend to outsource a greater proportion of their software development than other European countries, thus making France the largest software market in Europe, with more than 6,000 software firms. Furthermore, French flagship firms such as Bull (leading hardware manufacturer) and Cap Gemini Sogeti (leading software and services company) have helped to ensure that adequate resources are invested in the software industry. The recent growth of the software industry at the expenses of the hardware industry has also led major hardware companies such as IBM, DEC, BULL and UNISYS to redirect their resources towards the software sector.
The ten largest firms dominating the French market for computer consulting, computer engineering, and systems integration are:
1. Cap Gemini ($807 million);
2. IBM Global Services (618 million);
3. Bull ($443 million);
4. Sema Group ($407 million);
5. Altran ($401 million);
6. Andersen Consulting ($392 million);
7. Unilog ($275 million);
8. GFI Informatique ($244 million);
9. C&S Communication & Systems ($221 million);
and CSC ($179 million).One of the most positive perspectives is that created by the development of Internet E-commerce and Intranet solutions, which will dramatically improve the way people communicate and work together. Only 27% of French organizations are in possession of an Internet site and great opportunities now exist for firms that offer products and services for the creation of Web Sites, Groupware, Videoconferencing, and Electronic Document Processing applications. For example, the French market for Intranet software and services is anticipated to exceed USD 4 billion by the year 2001, which includes USD 1.5 billion for Intranet software and USD 2.8 billion for Intranet services. The companies which are best positioned to take advantage of this opportunity are vendors, software services firms, and systems integrators. However, telecommunication operators are in the process of partenering with software developers in order to take a share of the market.
Seven of the ten largest packaged software firms in France are American. They are:
IBM Software Group($678 million);
2. Microsoft ($562 million);
3. Oracle ($228 million);
4. Computer Associates ($117 million);
and 5. Parametric Technology ($61 million).These firms offer a wide range of products, including databases, spreadsheets, CAD/CAM systems and word processing. They also represent the leading providers of Internet/Intranet E-commerce applications.
Demand is anticipated to rise sharply in the following areas:
- Integrated management software
- Telecommunications
- Client-relations software
- Logistics
- Tier-maintenance software1997 1998 1999 A. Total Market Size 34,394 38,658 43,915 B. Total Local Production 31,112 35,073 39,919 C. Total Exports 6,691 7,414 8,308 D. Total Imports 9,973 10,999 12,304 E. Total Imports from U.S. 4,892 5,524 6,332 F. Exchange Rate:USD 1.00 FF 5.75 FF 6.00 FF 6.10The above statistics are unofficial estimates. (Figures in US millions)
2 - TRAVEL AND TOURISM (TRA)
International travel and tourism to the United States is America's leading services export, creating a trade surplus of nearly USD 19 billion and injecting USD 91 billion in revenue into the U.S. economy in 1998.
Expenditures by Western European visitors set a record USD 30.2 billion with United Kingdom, France and Italy each setting records for arrivals.
Since 1985, the number of French tourists has more than tripled and has reached 1,013 million in 1998. North America (California, the U.S. National Parks, New York and Florida) remain the top choices among long-haul destinations. In 1997, total travel receipts from France registered in the U.S. represented USD 2,485 million (+7% over 1996 figures) with 978,000 visitors. France ranks Three among the top European international markets after the U.K. and Germany.
With a minimum of 5 weeks of statutory paid vacation per year, 23,7% of the 58.5 million French population traveled abroad in 1997. France outbound travel is highly seasonal. The French are very individualistic in their travel behavior; as a consequence, 21% only will buy travel packages. The average length of stay is approximately 15 nights. The daily visitor spending in the U.S. amounts to approximately USD 103.
Of the 4,000 some travel agents in France, the Visit USA travel trade in France represents about 2,300 retail agents, 50 tour operators and some 80 incentive, business and group specialists, mostly concentrated in Paris and its region (70% of the market). Over the past few years, French tour operators have adapted themselves to the needs of the market and concentrated on products offering plenty of opportunities for personal freedom to explore and satisfy individual interests. They have had to face the change in their distribution system, where Internet plays a more decisive role, as well as the introduction of the e-ticket in the French market. Thus, the French traveler is encouraged to by-pass the travel agents.
The Visit USA Committee/France, with over 100 members, is extremely active in the market reaching the French consumer through the various joint promotional activities, including the opening of an information center for the French consumer, organized with the support of the U.S. Commercial Service.
1997 1998 1999 A. Total Market Size 89,800 90,380 96,000 B. Total Local Production 101,400 102,000 108,300 C. Total Exports 28,400 29,800 31,500 D. Total Imports 16,800 18,100 19,200 E. Total Imports From U.S. 3,100 3,500 3,800 F. Exchange Rate: FF 5.75 FF 6.00 FF 6.10The above statistics are unofficial estimates. (Figures in US millions)
3 - EMPLOYMENT SERVICES (EMP)
Unemployment has been a major economic problem in France for the past few years. However, the rate has been steadily decreasing since December 1996 to reach 11.4 percent in April 1999. The employment services industry has been enjoying growth rates of approximately 7 percent for both recruitment firms and temporary employment agencies.
Recruitment firms announced 6 percent sales increase for the first quarter of 1999. Most assignments aim to fill commercial/marketing positions (24 percent), far ahead of technical positions (8 percent) and others. Currently, assignments for human resources directors and MIS director positions are in high demand with, respectively, a 75 percent and 57 percent increase since 1998. The services sector (41 percent), followed by the industrial sector (29 percent) lead demand for recruiting services.
France is the largest temporary help market outside the U.S. The temporary employment services industry reached 28 percent sales growth in 1998. It continues to grow. In 1998, the number of temporary help contracts increased by 20 percent. The most frequent users of temporary manpower remain the industrial (54.4 percent) and service sectors (26.6 percent).
Several big companies dominate the French market. ADECCO remains the leader in France and number 2 worldwide after the U.S. company MANPOWER, ranked second in France. Vendior-Bis is the third largest temporary employment services company in the world, and also ranks third in France. Synergie is the fourth largest French temporary help agency. This company hopes to benefit from the mergers in this sector by serving clients who do not wish to work solely with the giants of the industry.
American recruitment firms figure most prominently in executive search, where they represent some 25-30 percent of the market and account for about 40 percent of revenue. Almost all-major U.S. headhunter/recruitment companies are already present in France and enjoy a good reputation.
Access to the French employment services market is relatively easy as there are no trade barriers, and U.S. firms are subject to the same regulations and standards as local firms.
1997 1998 1999 A. Total Market Size 12,353 15,251 17,996 B. Sales by Domestic Firms 8,646 10,676 12,485 C. Export Sales 1,235 1,525 1,800 D. Sales by Foreign-owned Firms 3,582 2,897 3,532 E. Sales by U.S.-owned Firms 2,224 3,203 3,779 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10The above statistics are unofficial estimates. (Figures in US millions) 4 - COMPUTERS AND PERIPHERALS (CPT)
Estimated at USD 56 billion, the French IT market ranks second in Europe and fourth in the world. Since 1997, this market has experienced a dramatic growth rate of about 10% per year and is now about to catch up with Germany and Northern Europe in the adoption of the latest technologies, including those related to the Internet and E-commerce. This trend has been favored by the following factors:
1. A healthy economic environment with low interest rates and a low inflation rate (around 2%);
2. Investments related to the Y2K problem and the switch to the Euro currency;
3. French corporations catching up with delayed investments in new computer equipment;
4. A shortening of the technological cycles which makes the adoption of new technologies ever faster - four years for client/server systems, eighteen months for the internet, and nine months for Intranets.The combination of technological progress and sharp decreases in the price of machines and software have encouraged a significant rise in demand on the part of both professionals and non-professionals for the latest computer and peripheral technologies.
As with other Western nations, the French are embracing the Internet with enthousiasm. Nearly 9% of French households are already connected to the Net and we anticipate an adoption rate of 150% per year until Year 2002. Internet Service Providers (ISP's) are now offering subscription rates averaging $10 per month for unlimited use. Some large French retail chains have even started offering free access to the Internet.
Super-markets and large retail chains have created entire sections dedicated to the sale of multimedia PC's, peripherals, CD-ROM titles and DVD's with prices for multimedia PC's ranging between $800 and $1500.
The global replacement of proprietary mainframes by open-systems is also creating an increasing demand for servers, workstations and PC's, especially with the penetration of Windows-NT in the corporate world ($1.2 billion, with an annual growth rate of 27%). Unix-based workstations will nevertheless continue dominating the market for high-range applications, such as CAD/CAM, Videoconferencing, Electronic Document Processing and Groupware.
The five largest suppliers of hardware in France are IBM, Bull, Compaq-Digital, Hewlett-Packard and ICL. Three of these are American. The French PC market grew by 7% in 1998 ($6.6 billion), primarily in portables. The ten leading computer PC manufacturers in France are Compaq (13%), Hewlett-Packard (9%), IBM (8%), Apple (7%), Packard Bell (6%), Dell (5%), ZDS (4%), Toshiba (4%), Olivetti (3%), SNI (2%). The professional PC market is driven by the sale of servers and portables.
As mentioned previously, distribution channels for PC's and related items are now primarily represented by multi-purpose specialized stores (54 % of the market) and large hyper-market chains (12 % of the market). Dell and Gateway 2000 have also been able to compete effectively with other brands through the establishment of very efficient mail-order networks.
The best prospects for companies seeking to enter the French market include the following products:
- PC's with enhanced CD-ROM/DVD and Internet capabilities
- Video-conferencing equipment
- Electronic document processing equipment
- Flat monitors
- Portable computers including laptops, notebooks, and palmtops
- Ink-jet printers
- High-speed modems
- Wireless LAN communication equipment1997 1998 1999 A. Total Market Size 16,664 17,580 18,283 B. Total Local Production 9,931 10,530 11,004 C. Total Exports 813 841 859 D. Total Imports 7,546 7,891 8,138 E. Total Imports from U.S 2,488 2,647 2,777 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10 The above statistics are unofficial estimates. (Figures in US millions)5 - ELECTRONIC COMPONENTS (ELC)
The French electronics industry continues to demonstrate strong growth. With nearly 15% expected growth over the next year, the French market should offer numerous opportunities in the electronic components industry.
The telecom, automotive, consumer, and defense industries have all helped drive the electronics industry.
* French mobile telephone exports grew by 38% over the past year. As a result 18% growth is expected for electronic components used in the mobile telephone industry over the next year.
* Currently, electronic components account for 5% of the content of vehicles manufactured in France. This percentage is expected to increase to 20% within the next 5 years. Estimated growth for the automotive electronics industry should reach 7% this year.
* There is an increased demand for electronic components. Electronic components used in the Smart Card, the French microchip, which is used for all types of consumer transactions, is expected to grow by 20% this year.
* Although the Defense industry has contracted over the past several years, Prime Minister Jospin has announced that France's defense budget will remain constant for the next 4 years. Consequently, outlays for defense electronic procurements should remain constant, and offer a stable market for the electronic components.
1997 1998 1999 A. Total Market Size: 5,664 6,747 7,759 B. Total Local Production: 6,916 7,815 8,987 C. Total Exports: 6,957 7,861 9,040 D. Total Imports: 5,705 6,446 7,413 E. Total Imports from the US 1,826 2,127 2,297 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10 (in USD millions)6 - SECURITY AND SAFETY EQUIPMENT (SEC)
Please note that the statistics for security and safety equipment do not include security services (audit, engineering, security guards) technical control and information systems security.
1999 market estimates show a 8 percent growth over 1998. Overall, it is projected to continue at this pace over the next year, with some subsectors particularly buoyant. Overall, the security market should continue presenting good mid and long-term prospects. Security has become a national issue, mostly due to the continual significant rise in incidents of vandalism, crime, terrorism, theft and computer fraud. As a result, demand for advanced access controls and electronic surveillance equipment (video and telesurveillance) is projected to expand at an annual rate of 6 to 8 percent through the year 2000. Within access controls, after the year 2000, the most promising area will be biometrics, where American companies have the technical leadership. In addition, as information technology develops very rapidly, there is a strong demand for security measures to ensure the constant availability and integrity of information systems. The financial sector, in particular, represents the most mature market for security products such as encryption, identification techniques, and message verification equipment.
It is anticipated that imports from the U.S. will continue to strengthen, as American equipment of advanced technology, renowned for innovation, performance and reliability, exactly match the fastest-growth security segments. Best prospects remain in access controls, particularly in biometrics, electronic article surveillance (EAS) systems and sprinklers.
While continuing numbers of suppliers are entering the market, the security industry has continued to become more concentrated, with increased partnerships/alliances, mergers or acquisitions between suppliers.
1997 1998 1999 A. Total Market Size 6,440 6,718 7,457 B. Total Local Production 5,200 5,428 5,916 C. Total Exports 1,110 1,130 1,301 D. Total Imports 2,350 2,420 2,842 E. Total Imports from U.S. 1,122 1,420 1,797 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10The above statistics are unofficial estimates(figures in USD millions).
7 - TEXTILE (TXT)
In 1998, the French textile industry was made up of 4,500 companies, employing 230,000 persons, for a total sales volume of USD 47,540 million. The industry was divided into three sectors: - Apparel textiles (74%)
- Technical textiles (16%)
- Household textiles (9%)
The apparel textiles market was valued at USD 28,263 million, and was composed of the following sub-sectors: - Women's wear, representing 52 percent to reach USD 14,650 million
- Menswear, representing 33 percent to reach USD 9,283 million.
- Childrenswear, representing 15 percent to reach USD 4,330 million.France's major suppliers of textiles (including apparel, technical and household textiles) are EU countries including Italy (8%), Germany (4%), Belgium/Luxemburg (4%), the United Kingdom (2%), Portugal (2%), and Spain (2%), followed by China, Turkey and Morocco.
However, it is important to note that in the apparel industry, Asian countries hold an important share of the French market, followed by Tunisia and Morocco.
In 1998, American textile imports to Europe represented only 7.2% of total imports. These imports were mainly composed of technical textiles. American chemical and technical textile manufacturers have a strong reputation for technological know-how and a high level of sophistication. In addition, American companies are introducing innovative products (easy-to-use, easy-to-clean, and anti-bacterial textiles) which correspond to the needs of the French consumer. Furthermore, traditional fibers are being progressively replaced by new generations of fibers for new applications (i.e: clothes which are harmless to the environment, stain-resistant clothes, fabrics which moisturize the skin as a result of microencapsulation techniques, etc.).
In light of the above, there appear to be numerous opportunities for U.S. companies to successfully penetrate the French market and to gain market share.
1997 1998 1999 A. Total Market Size 37,739 37,850 38,228 B. Total Local Production 15,130 14,800 14,948 C. Total Exports 22,260 22,295 22,740 D. Total Imports 29,043 30,164 31,068 E. Total Imports from U.S. 1,452 1,206 1,218 F. Exchange Rate :USD 1.00 FF 5.75 FF 6.00 FF 6.10The above statistics are unofficial estimates.
(figures in US million)8 - FRANCHISING (FRA)
The French franchise industry is ranked third in the world and first in Europe. It has been growing steadily over the last several years, at an average annual growth rate of 9 percent. With 530 franchisors and 29,673 franchisees as of January 1, 1999, the French market is estimated at USD 32.1 billion, and accounts for 6% of total retail and service markets.
The main sectors of the industry include the commercial sector, the service sector and the hotel/restaurant sector. Changes in different areas of the French franchise market reveal consumer behavior trends, as well as best market prospects. The service sector currently has the highest recruitment rate. The specific markets showing the most potential are discount/consignment stores, hairdressing stores and candy stores. In the retail sector, traditionally independent shops have been closing to make room for franchise networks. While recently the hotel/restaurant sector has not been performing as well as other sectors, the increasing success of fast food and traditional restaurants is contributing to a revival of this sector. The current popularity of theme restaurants, in particular, demonstrates consumers' preference for a pleasant, slightly unusual restaurant atmosphere.
While French entrepreneurs are increasingly attracted to franchising and look to the U.S. for advanced, profitable, and innovative franchising formulas, French franchise formulas, mainly in the commercial sector, are still dominant in France. In terms of the foreign-owned franchise market, U.S. companies have 52% of total sales. All foreign-owned franchises in France are mainly in the services and hotel/restaurant sectors and were well established in their respective country before entering the French market. U.S. companies possess advantages with their superior know-how of network development, delivery speed, good service and competitive prices. Therefore, they can expect to do well in franchise sectors not yet exploited, as well as in competitive markets when offering a good price/quality ratio.
1997 1998 1999 A. Total Sales 32,521 32,666 34,300 B. Sales by Domestic Firms 30,645 30,781 32,321 C. Sales by Foreign-Owned Firms 1,876 1,884 1,979 D. Sales by U.S.-Owned Firms 976 980 1,029 E. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10The above statistics are unofficial estimates. (Figures in USD millions)
9 - AIRCRAFT AND PARTS (AIR)
While many parts of the world were directly affected by the Asian and Latin American crisis of 1998, the French aeronautics and space industries recorded a 20.6 percent increase over 1997, marking the fourth consecutive year that orders have exceeded sales. Overall sales provided a 9.1 percent increase to 161.4 Billion Francs. Indicators point to continued overall growth in the industry for 1999 and a stable aeronautic industry in Europe.
France was the first European nation to create a space program - 1961 - and is the premier European power in space, third in the world. The French aeronautic and space industry employs 96,300 people and in 1998 added 1,000 additional employees.
The civil aviation market represents 67 percent of the total aeronautic and space industry and produces 64 percent of the orders. There was a 14.5 percent increase in sales over 1997 for a total of 108.1 billion French francs. An increased demand for civil air and civilian space production contributed to the fifth consecutive year of profit for the civil sector, albeit with tax payer assistance. Exports in the civil market rose 23.2 percent in 1998, largely because of increased export orders for Airbus and Falcon, while the domestic sales market was down slightly, -1.3 percent.
Airbus received 556 orders worth $39 billion in 1998, which were divided amongst 36 clients. In 1998, 229 airplanes were delivered, a 26 percent increase from 1997. Dassault Falcon Jet is the world leader in business jets and in 1998 sold 99 compared to 74 in 1997. Eurocopter is the No. 1 global manufacturer of helicopter parts, and produces over 40 percent of global production.
As the U.S. aerospace industry experienced significant consolidation and downsizing over the past 10 years, European and French industries have begun a similar process. In 1999 Matra Hautes Technologies merged with Aerospatiale to create the world's fifth largest aerospace and defense company. With the largest industrial base in Europe for both civil and military aerospace, France will continue to be an important competitor and customer for U.S. firms.
1997 1998 1999 A. Total Market Size 6,622 7,412 8,296 B. Total Local Production 12,431 13,915 15,576 C. Total Exports 7,636 8,548 9,570 D. Total Imports 1,827 2,045 2,289 E. Total Imports from U.S. 822 920 1029,7 F. Exchange rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10The above figures are unofficial estimates based on information provided by GIFAS, the French Aerospace Association. (figures in USD millions).
10 - TELECOMMUNICATIONS EQUIPMENT (TEL)
With a telephone in 97 percent of French households, France is the world's fifth largest market for telecommunications equipment, after the United States, Japan, Germany, and United Kingdom. The French network uses digital, fiber-optic and terrestrial microwave systems and is generally considered to be one of the most advanced and reliable systems in operation.
As a result of current trends in liberalization and deregulation in the telecommunication market, the equipment telecommunications sector looks to benefit. This sector has been driven by the needs to create an infrastructure that can support France's broadcasting, telephony, and growing multimedia and Internet demands. Future market growth is expected to result as new telecommunication operators invest in infrastructure and equipment, existing operators continue to maintain and reinvest in their systems, and demands for high speed Internet access stimulate a need for new technologies.
Furthermore, France is one of the first EU member states to establish an independent regulatory authority, ART, that has made gprogress in establishing a pro-competitive regulatory environment.
Through intensified marketing efforts, American companies are finding the French telecommunications equipment market more accessible and filled with potential sales. In addition, American suppliers have a reputation for product reliability, quality, service and price, and thus have strong potential in this sector.
1997 1998 1999 A. Total Market Size 7,500 8,400 8,800 B. Total Local Production 10,400 11,300 12,400 C. Total Exports 5,700 6,600 7,500 D. Total Imports 2,800 3,700 3,900 E. Total Imports from U.S. 0,500 0,900 1,100 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.00(Figures in USD millions)
11 - SCIENTIFIC LABORATORY EQUIPMENT (LAB)
The private sector is currently the most dynamic area within the industry and is expected to experience improvements in the future. The following types of products represent best prospects for U.S. manufacturers of scientific laboratory equipment: Environmental and agricultural analytical equipment, pharmaceutical industry equipment and biotechnological equipment.
As France has traditionally placed a strong emphasis on micro-genetics research as a means to developing cures for diseases, a constant need for cutting-edge research tools is always present. New French environmental safety regulations, as well as the need to comply with European legislation, has also influenced demand for scientific laboratory equipment. In addition, stricter European directives are expected to continue to foster growth in the future.
France is one of the leaders in the agriculture and food industry, which alone is valued at USD 134.5 billion. With so much capital at stake, this industry takes extreme measures to guarantee the quality and safety of its products. As such, there has been a tremendous need for diagnostic equipment.
Currently the market for this equipment is valued at USD 50 million. This market has grown at a rate of 10 percent over the last few years, and accelerated growth is forecast for the next several years. Equipment that can conduct either traditional analysis sanctioned by the "AFNOR" (Association Francaise de Normalisation - National Institute for Standards)or alternative/rapid analytical testing is among the products most in demand.
1997 1998 1999 A. Total Market Size: 2,467 2,566 2,595 B. Total Local Production: 917 954 964 C. Total Exports: 713 741 749 F. Total Imports: 2,263 2,353 2,380 G. Total Imports from the US: 800 832 849 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10 (in USD millions)12 - MEDICAL EQUIPMENT (MED)
The French medical sector continues to grow, as it is closely linked with the general population increase and extended life expectancy. The emergence of new technologies, such as same day surgery, has generated a new market for home health care equipment. Approximately 70 percent of all French medical costs are reimbursed, a factor which has led to a widespread tendency to over-consume. Any attempt to control medical costs creates strong opposition from the public, and from all sector professionals. This is in spite of the fact that they would all agree that some savings must occur in order to save the Social Security system.
Since June 1998, as for the rest of Europe, all medical devices sold in France must bear the CE Mark. In France, the medical equipment sector is highly dependent on imports, mainly from the U.S., followed by Germany, Japan and Italy.
1997 1998 1999 A. Total Market Size 3,666 3,801 3,942 B. Total Local Production 3,340 3,440 3,543 C. Total Exports 1,578 1,657 1,740 D. Total Imports 1,904 2,018 2,139 E. Total Imports from U.S. 640 666 692 F. Exchange Rate : USD 1.00 FF 5.75 FF 6.00 FF 6.10The above statistics are unofficial estimates.
(Figures in US million)13 - ENVIRONMENTAL TECHNOLOGY EQUIPMENT & SERVICES (POL)
The French environmental technologies market is expected to grow by more than 4 % after several years of little growth. However, many sectors within the industry are forecast to experience strong growth over the next few years. This upswing in the market is partly due to an increase in investment by local authorities and postponed environmental projects currently being executed. In addition, most local governments are expected to incur large outlays through 2003 to conform to many European environmental standards scheduled to go into effect in 2002 and 2005.
The quality of air has remained a primary environmental concern for the French. In response to stricter European directives and public demand for cleaner air, new initiatives and laws have been put into place. The 1997 "Quality of Air and Efficient Use of Energy" law and regional programs will create standards that surpass current legislation. Three initiatives, which have been promoted by regional governments; "Regional Plan for the Quality of Air", "Protection of the Atmosphere", and "Plan for Urban Transportation", have addressed France's concern for cleaner air. This should ultimately result in a greater need for air pollution control equipment and services. In particular, measuring and monitoring equipment is expected to grow by 11%, while dust extractors and gas purification systems should experience an increase of 10%.
A greater need for water treatment equipment and services has occurred due to a rise in industrial activity over the past two years. Also, a continued public demand for safe and clean drinking water at affordable prices has motivated the water industry to develop effective water treatment technologies. Market reforms and the French Water Agencies' program should also stimulate the overall demand for products and services related to water treatment. Some sectors within the water industry, such as sewage treatment, industrial wastewaters and sludge treatment and analytical equipment could grow by as much as 60% over the next 5 years.
The waste management sector is currently undergoing change. New initiatives and government legislation encourage sorting, recycling and composting techniques and limit incineration and landfill processes. As France moves away from landfill and incineration techniques and places greater emphasis on sorting, recycling and composting, new market and investment opportunities will appear. Over the last 9 years, recycling of waste has increased from 4% to 10%. Currently, 20% of all glass is recycled. These percentages should continue to grow with future legislation, thus stimulating the demand for new waste management and solid waste treatment services.
1997 1998 1999 A. Total Market Size: 22,078 23,222 24,151 B. Total Local Production: 25,089 26,092 27,136 C. Total Exports: 8,066 7,527 7,828 H. Total Imports: 4,516 4,957 5,155 I. Total Imports from the US 541 594 618 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.1014 - AUTOMOTIVE PARTS AND SERVICE EQUIPMENT (APS)
In 1998, the original equipment market increased 9 % to reach USD 21 billion, driven by a particularly dynamic export market. European Union markets accounted for 85 % of French OEM exports, as vehicle production in E.U. countries increased over the course of 1998. Overall vehicle production throughout Europe is expected to remain at present levels in 1999, or show a slight increase. Domestic automobile production increased 10 % in 1998 to reach 2.8 million units, another strong sign for the OEM market.
Following global trends, OEM suppliers to the major automobile manufacturers are increasingly being required to provide full sub-assemblies, while continuing to cut costs and increase the quality and technology of the product. In order to compete, suppliers are locating production and logistic centers close to assembly plants, within a just-in-time supply logistics. With increasing price pressure in the industry, equipment suppliers are in turn requiring higher quality products at lower cost from the second tier suppliers.
In 1999, the aftermarket continued its decline of 3 to 4 %, largely due to overall improvements in equipment reliability and durability. In addition, ongoing price wars in this sector have contributed to lower total turnover in the aftermarket.
The manufacturer's network represents roughly one third of the aftermarket, as the independant network remains an important force in this area, with a two-thirds market share. Auto centers and hypermarkets have become important players in aftermarket distribution, increasing their respective market shares to 15%.
France represents the third largest import market in Europe for automobile parts. The overall import market increased 12% in 1998, and the first half of 1999 has confirmed this trend. European Union imports account for 85 % of overall imports while U.S. imports have a 3 % share.
1997 1998 1999 A. Total Market Size 29,152 30,555 31,350 B. Total Local Production 30,340 31,975 34,000 C. Total Exports 8,960 10,125 12,400 D. Total Imports 7,772 8,705 9,750 E. Imports from U.S. 322 334 375 F. Exchange Rate FF 5.75 FF 6.00 FF 6.10The above statistics are unofficial estimates (USD millions).
15 - TELECOMMUNICATIONS SERVICES (TES)
The global telecommunications market is growing at a rapid rate. Deregulations, privatization, and tariff reductions are expected to produce unprecedented growth in demand for new telecommunications services in France. The pace of deregulation has changed the European telecommunications market. The makeup of this sector has transformed from an overwhelming monopoly to liberalized market.
Mobile telecommunications services in France have developed somewhat slower than in other European countries. However, this trend is now reversing with a rapid increase in service offerings, decrease in tariffs, and increasing competition between the three cellular operators in France. France, Europe's second-largest economy behind Germany, lags behind many European nations in Internet adoption with 7% of the population on-line, compared with 8% in Germany, 15% in the United Kingdom, and 23% in the United States. Yet, Net use is surging, and last year for the first time, more than 1 million PCs were sold. To overcome what may be considered a "late start" for Internet adoption in the nation, France has unveiled a major new set of measures and policy goals to boost electronic commerce. Across Europe, the major impact of the newly liberalized market is forcing the national operators to conform to a more competitive environment. Telecommunications companies in France are adapting to the new rules by developing new offerings in services for both professional and private use. The competition will become sharper, as the number of new entrants, Cegetel, Worldcom, Bouygues and smaller entities such as Colt Telecom and Omnicom, and others, increases.
France Telecom (the national operator) as well as other telecom companies are joining forces in order to stay competitive. France is positioning itself to take advantage of the rapidly expanding telecom industry. American suppliers are successfully taking advantage of the growing French mobile and Internet sector through niche markets and joint ventures. France's push to keep up with these new technologies, are all factors which will bring more opportunities to American companies.
1997 1998 1999 A. Total Market Size 34,142 37,351 39,853 B. Total Local Production 31,785 34,640 36,960 C. Total Exports 841 949 1,012 D. Total Imports 3,198 3,660 3,995 E. Total Imports from U.S. 253 315 354 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10(Figures in US millions)
16 - AUTOMOBILES AND LIGHT TRUCKS (AUT)
The French automobile market is the fourth largest in Europe behind Germany, Italy, and the U.K. Yearly registrations average 2 million new vehicles, and currently, an estimated 26 million private automobiles are in circulation, with an additional 5 million light utility vehicles.
In 1998, the market recovered from the perverse effects of the ending of government scrapping schemes, as new registrations increased 14% to nearly 1.94 million. The first half of 1999 has confirmed this upward trend, as new car registrations continue to increase at this rate - largely the result of an upswing in overall economic indicators and car park renewal. The French Automobile Manufacturer's Association (CCFA) has revised their estimates upward, foreseeing 2 million plus registrations for 1999.
The two major French automobile manufacturers Peugeot-Citroen (PSA) and Renault account for 58% of new car registrations in France. Renault and PSA's market share has increased faster than the market, as both have re-designed popular mid- to small- size models. The U.S. automakers have roughly a 16% share of the French market, with Ford at 8.3% and General Motors 6.5% in 1999.
A noteworthy trend indicates an overall consolidation in the automobile distribution network, with many analysts expecting the number of dealerships to decrease three-fold. Existing dealerships will consequently become much larger, serving wider sales areas.
1997 1998 1999 A. Total Market Size 59,288 61,659 63,800 B. Total Local Production 65,881 68,516 71,300 C. Total Exports 28,352 29,486 31,500 D. Total Imports 21,758 22,628 24,000 E. Imports from U.S. 322 334 350 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10The above statistics are unofficial estimates (USD millions).
B. BEST PROSPECTS FOR AGRICULTURAL PRODUCTS
New market opportunities (or current opportunities which need to be heavily targeted) for high value products in France for U.S. agricultural exporters exist in a number of areas: fruit juices and soft drinks (including flavored spring waters), dried fruits and nuts, fresh fruits and vegetables (particularly tropical and exotic), frozen foods (both ready-to-eat meals and specialty products such as pizza and ice cream), snack foods, tree nuts, "ethnic" products featuring distinctive themes and flavors such as Tex-Mex, Cajun or California-style cuisine, seafood (particularly salmon), innovative dietetic and health products, organic products, soups, breakfast cereals and pet foods. In addition, niche markets exist in France for candies, chocolate bars, wild rice and kosher foods which showed a rising demand since 1980.
Market opportunities for U.S. exporters also exist for oilseeds, protein meals and other feeds, as well as for wood products and grains.
Listed below are ten agricultural sectors which the Office of Agricultural Affairs considers "best prospects" for U.S. business (figures in USD millions for CY 1998):
RANK TOTAL IMPORTS SECTOR SYMBOL NAME FROM U.S. - 138 OILSEEDS & SEEDS - 118 FRESH & DRIED FRUITS; INCLUDING NUTS - 115 PROTEIN MEALS & OTHER FEEDS - 107 FISH & SEAFOOD, FRESH OR FROZEN - 86 WOOD - 81 PROCESSED FRUITS & VEGETABLES, INCLUDING FRUIT JUICES - 68 GRAINS - 43 BEVERAGES, INCLUDING MINERAL WATER, BEER, WINE & SPIRITS - 29 MEAT & OFFAL - 29 FRESH AND DRIED VEGETABLES Rank: n/a Name of Sector: OILSEEDS AND SEEDS HS Code: 12 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size 1,092 1,111 1,166 B. Local Production 1,746 1,798 1,887 C. Total Exports 1,298 1,363 1,431 D. Total Imports 644 676 710 E. Total Imports from U.S. 138 152 157 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10 Rank: n/a Name of Sector: FRESH AND DRIED FRUITS, INCLUDING NUTS HS Codes: 08 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size 3,870 3,826 3,778 B. Total Local Production 2,757 2,771 2,785 C. Total Exports 1,424 1,495 1,570 D. Total Imports 2,537 2,550 2,563 E. Total Imports from U.S. 118 128 132 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10 Rank: n/a Name of Sector: PROTEIN MEALS AND OTHER FEEDS HS Code: 23 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size 11,503 12,103 12,163 B. Total Local Production 11,286 11,885 11,944 C. Total Exports 1,298 1,304 1,310 D. Total Imports 1,515 1,522 1,529 E. Total Imports from U.S. 115 121 127 F. Exchange Rate: USD 1.00 FF 5.75 FF 6.00 FF 6.10 Rank: n/a Name of Sector: FISH & SEAFOOD, FRESH OR FROZEN HS Code: 03 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size 2,750 2,809 2,870 B. Total Local Production 1,015 1,066 1,119 C. Total Exports 903 908 913 D. Total Imports 2,638 2,651 2,664 E. Total Imports from U.S. 107 110 113 F. Exchange Rate FF 5.75 FF 6.00 FF 6.10 Rank: n/a Name of Sector: WOOD HS Codes: 44 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size N/A N/A N/A B. Total Local Production N/A N/A N/A C. Total Exports 2,108 2,118 2,128 D. Total Imports 1,741 1,750 1,759 E. Total Imports from U.S. 86 92 95 F. Exchange Rate FF 5.75 FF 6.00 FF 6.10 N/A = Not Available Rank: n/a Name of Sector: PROCESSED FRUITS AND VEGETABLES, INCLUDING FRUIT JUICES HS Codes: 20 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size 6,276 6,307 6,338 B. Total Local Production 5,499 5,526 5,553 C. Total Exports 982 987 992 D. Total Imports 1,759 1,768 1,777 E. Total Imports from U.S. 81 85 89 F. Exchange Rate FF 5.75 FF 6.00 FF 6.10 Rank: n/a Name of Sector: GRAINS HS Code: 10 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size 4,277 4,298 4,320 B. Total Local Production 7,907 7,946 7,986 C. Total Exports 4,072 4,092 4,112 D. Total Imports 442 444 446 E. Total Imports from U.S. 68 70 72 F. Exchange Rate FF 5.75 FF 6.00 FF 6.10 Rank: n/a Name of Sector: BEVERAGES, INCLUDING MINERAL WATER, BEER, WINE & SPIRITS HS Codes: 22.01 to 22.06 and 22.07 + 22.08 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size 8,928 9,053 9,178 B. Total Local Production 16,156 16,237 16,318 C. Total Exports 9,000 9,045 9,090 D. Total Imports 1,772 1,861 1,950 E. Total Imports from U.S. 43 44 46 F. Exchange Rate FF 5.75 FF 6.00 FF 6.10 Rank: n/a Name of Sector: MEAT AND OFFAL HS Code: 02 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size 5,534 5,561 5,588 B. Local Production 6,030 6,060 6,090 C. Total Exports 3,368 3,385 3,402 D. Total Imports 2,872 2,886 2,900 E. Total Imports from U.S. 29 38 46 F. Exchange Rate: FF 5.75 FF 6.00 FF 6.10 Rank: n/a Name of Sector: FRESH AND DRIED VEGETABLES HS Code: 07 1998 1999 2000 (Jan-Dec) (P) (F) A. Total Market Size 3,375 3,391 3,407 B. Total Local Production 3,216 3,232 3,248 C. Total Exports 1,340 1,347 1,354 D. Total Imports 1,499 1,506 1,513 E. Total Imports from U.S. 29 38 46 F. Exchange Rate FF 5.75 FF 6.00 FF 6.10 (P) = Preliminary (F) = ForecastSource: French Customs/SCEES - French Ministry of Agriculture
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