Could French tech pose a threat to Silicon Valley?

France has an image as a relatively traditional country, keen to protect its history and culture. What you may not know is that its industries are rapidly evolving, in a calculated response to present and future demands. Technology is driving a new wave of business innovation, putting France at the forefront of continental and international development.

It may not be time to challenge Silicon Valley just yet. But 2017 could well be the year when the global balance begins to shift. As the Bay Area bemoans President Trump’s policies on immigration and traditional industry, France is making a serious effort to steal its crown as the best place to start a tech company.

Industry of the future

The foundation for France’s rapid rise to tech prominence is the ‘Industry of the Future’ project. This ten-year plan, drafted in 2013 and formally launched in 2015, focuses on boosting areas of current expertise and expanding into growing niches. Existing capabilities in precision manufacturing, IT and energy services are being transferred to fields as diverse as robotics, smart grids and super fast transport.

Through a combination of increased support and the fading financial crisis, French manufacturing has started to regain some of its lustre. With the country losing 750,000 jobs in the previous ten years, 2016 began with the largest increase in the Purchasing Managers’ Index (PMI) for ten years, and a solid six months of rises.

The adoption of Germany’s ‘Industrie 4.0’ vision for automation, centring on the introduction of ‘smart factories’, has been a huge boost. Seeking to reduce French reliance on cheap Chinese imports, the government wants to keep production local. Developments in research and development and data collection should serve to complement this, keeping the entire conception and production process inside the country.

The end goal is to become Europe’s leading destination for constructing high quality and intricate electronics and other equipment. The country’s geographic position is also naturally well suited to distributing these kinds of ‘luxury’ goods throughout Europe and further afield.

The government has also worked to foster smaller scale tech startups. The French Tech accreditation has recognised 15 cities and several regions for their tech-friendly ecosystems, as well as launching a scheme to promote French-made goods. Eight major retailers now actively promote French tech goods with special signage in their stores, and stocks are growing rapidly.

Supplying top talent

When it comes to tech startups, France has a few notable advantages over its chief competitors. Its position in the EU is obviously one of them. Freedom of movement allows France to easily source high class talent from across the continent. An employee can be scouted in the Netherlands, interviewed and hired in weeks, with none of the hassle of securing a visa.

The government isn’t just content with European talent, however. A new French Tech Visa introduced in January 2017 aims to fast-track skilled non-EU workers, avoiding the fees and red tape that normally hold up applications. Unlike similar examples from the UK and others, the visa is also uncapped, meaning that companies no longer have to worry whether their application will breach an arbitrary quota.

An obvious opportunity also exists to poach talent from the UK after Brexit. France may be an pragmatic destination for companies who wish to trade within the EU, and continue to apply its standards in data sharing and standardisation. But it may also appeal and citizens who want to retain the benefits of an EU passport, and who may go on to gain French citizenship.

Much of that talent is going into research and development. France benefits significantly from the EU Horizon 2020 fund, making 80bn euros available for R&D projects between 2014 and 2020. But the country also has excellent tax credits, offering 30% of expenses up to 100m euros, or 20% up to 400,000 euros and a year’s exemption from corporate income tax for innovative projects.


Startup climate

Talent is one thing, but encouraging businesses to form in the first place is a bigger hurdle. France has sometimes been accused of being too accommodating to workers, making its businesses less competitive. To help address this, a suite of labour reforms were introduced last year. These transferred some of the power from unions back to companies, letting them make redundancies without paying ruinous severance fees.

This is still a contentious issue in France, and the country can stand to update its general business practices. France is 29th on the most recent Doing Business report, a source of some consternation. But it’s telling that the recent ‘right to disconnect’ law, requiring that workers have hours when they cannot answer emails, do not apply to startups. Reforms are also not likely to stop, with favourite Presidential candidate (and author of the labour reforms) Emmanuel Macron keen to go much further.

Most telling is the amount of investment in France’s tech scene. National investment bank BpiFrance poured 2.72bn euros into tech businesses in 2016, more than any other single investor in Europe. France also saw the most investment deals struck of any country that year. This trend has continued, with investments this January including 28m euros in appointment booking service Doctolib, and a Hyperloop research facility in Toulouse.

Those investments are starting to bear fruit, too. For the past two years running, France has boasted the largest foreign delegation at the major Consumer Electronics Show. Alongside companies like Internet of Things pioneer Sigfox (150m euros of funding in 2016) and wearables maker Withings (bought by Nokia) are up-and-comers like stadium food app Digifood, VR hardware 3DRudder and the pollution detecting Plume Labs. WIth investment set to rise again and a tech supporting potential President, the future of La French Tech is looking magnifique.

This article was also posted on BusinessZone.

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