Russian Investment in France: The Stakes for the Winners
- By Rusina Shikhatova
- Jun. 18 2015 00:00
Director Invest –† Russia Business France
France is a growing destination for Russian investors: according to the Banque de France, the reserve of Russian investment in France has skyrocketed, jumping from €342 million in 2011 to €745 million in 2014. How is the situation developing in today's context? Do these investment projects need to be reconsidered?
According to BUSINESS FRANCE's annual report on the state of foreign investment in France, some 40 Russian companies currently have a presence in France. A total of 8 new Russian investments were established in 2014, and Business France, a government agency supporting the international development of the French economy, has been monitoring around 10 new investment projects since the start of 2015.
These figures testify to Russian investors' steadfast interest in France. Other than an emotional attraction, their motivation is absolutely pragmatic: the potential to open themselves to the European market. "The objective of these Russian investors in France is to gain new customers and to make themselves known in France, and then to import into Russia products made in France," said Jérôme Clausen.
Clausen said that the private sector contributes significantly to the intensification and diversification of Russian investment in France: tourism and luxury hotels remain the preferred sphere of investors.
But there is a growing number of projects relate to agri-food, transportation, mechanical equipment and high technology. Leading Russian IT security companies have chosen France, like Kaspersky and Doctor Web, which have set an office in Paris and even European headquarters in Strasbourg respectively. Which sectors do Russian investors need to avoid? Only some areas that are strategic for the French government; this would be the case for any other country.
For its part, the Russian government is helping to bolster international cooperation. An example is the 2012 buyout of GEFCO, a French logistics and transport firm, by Russian Railways for €800 million. The May 2014 purchase of Sodetal, a French metallurgy factory, by the private Russian industrial group AWT made it possible to save half the jobs at the deficit-plagued company.
"These days, Russian investors in France are viewed as an opportunity, and no longer as a threat," said Clausen. He noted that the amount of time needed for a Russian company to get set up in France is being reduced to three weeks. In the end, the number of openings of subsidiaries by Russian companies in France is now approaching to the number of Russian buyouts of existing French firms.
The most recent example of an installation is Le Confetti Gourmand, a Russian SME that specializes in importing and marketing food products (pastries, candy) and that created its first European subsidiary in December 2014 in Brest. This step enables the company to get closer to its network of suppliers while expanding its sourcing activities, and to optimize the logistics and distribution flows in Europe. Le Confetti Gourmand plans to create 10 jobs over 3 years.
However, some Russian investors are experiencing an unfavorable economic turnaround; this is the case of the metallurgical giant Uralvagonzavod, which had to adopt a transfer plan for its Sambre and Meuse steelworks in northern France. Because the items produced at the steelworks are intended mainly for the Russian market, the ruble's depreciation has made importing unprofitable.
A number of Russian entrepreneurs have temporarily suspended their plans to invest in Europe, often forgetting that playing a role in the development of a foreign economy also makes it possible to invest in their own country. "If a Russian company acquires a French company, it will gain French expertise and later it may potentially create a subsidiary in Russia — that's a reinvestment of quality," said Jérôme Clausen. Thanks to Russian investment in France, exports abroad were valued at €6 billion in 2014.
Despite the political climate, France continues to encourage and make it easier for foreign investors to stay in the country. In particular, the special residence permit, which is valid for 10 years and states that it is for "exceptional economic contribution," is granted to foreign nationals who agree to invest at least €10 million in France and to create or save at least 50 jobs.