France Country Report 2016

Presented by

Discovery Reports

Bright outlook ahead for bilateral trade

Exports from the country rise, while HK continues to appeal to French firms. Reports by Ed Peters

PUBLISHED : Tuesday, 15 March, 2016, 2:36pm
UPDATED : Tuesday, 29 March, 2016, 5:23pm

Country Business Reports interviews and articles by Discovery Reports

France and Hong Kong can look back on a prosperous year's trading, as bilateral trade increased by 6.8 per cent in 2015, compared to a drop of 5.8 per cent in 2014. And the prospects for the future are looking good too.

French exports to Hong Kong bounced back, mainly due to wine and alcoholic beverage exports, which were up by 17.2 per cent, and electronic components, which almost doubled - growing by an impressive 93.6 per cent.

There was mixed performance in luxury goods. Leather and jewellery exports fell slightly, but cosmetics were up by 18.5 per cent, while shoes and clothes rose 4.6 per cent. Although less dynamic than in 2015, aeronautics remained the leading sector, accounting for 15 per cent of French exports, valued at €659 million (HK$5.6 billion).

Hong Kong's exports to France remain low and mainly correspond to products previously imported to the city from other Asian countries.

"The reasons why French trade with Hong Kong remains buoyant are mainly down to the SAR's traditional role as a trade hub," says Eric Berti, France's consul general to Hong Kong and Macau, who was posted in July last year after three years at the French consulate general in Australia.

Other factors boosting French trade include the importance of tourists - particularly mainlanders - eager to buy French products in Hong Kong. Hong Kong is France's 57th-ranked supplier (0.16 per cent of France's imports) and its 18th-ranked client (1.02 per cent of its exports).

"We immensely value Hong Kong's welcoming business environment, which is the condition for our thriving bilateral trade - exports have more than doubled in five years," Berti says. "In particular, the abolition of taxes on imports of wine in 2008 has been very profitable for us as well for lifting Hong Kong as a major wine hub in Asia. And the rule of law is a key competitive advantage of Hong Kong." Berti notes that in spite of the rather gloomy global outlook, the regional trend appears to be well-oriented. "China's growing middle class and shift towards domestic-driven growth will benefit our two countries, because China will need more consumer goods, and items related to the environment, health, quality food and urban services. French companies are world leaders in this sector and will continue to use Hong Kong as a hub to China and Asia."

Some 800 French companies are operating in Hong Kong, ranging from major players such as BNP Paribas and Air France, to smaller enterprises set up by a recent influx of French immigrants - especially those under age 30 - keen to try their luck in Asia. French companies looking for growth outside Europe are also taking advantage of the rosier economic climate in the region. Hong Kong's French companies employ an estimated 33,000 staff - local and French - and generate around HK$110 billion per year. As far as China itself is concerned, the major enterprises continue to hold a significant place in bilateral trade relations, as shown by the successes of Airbus and Eurocopter, and Areva in the civil nuclear energy sector.

French-Chinese cooperation in the nuclear field is a telling demonstration of the long-term industrial partnership successfully forged between the two countries.

These ties were further strengthened in 2010 by a decision to set up a full partnership covering all stages of the nuclear fuel cycle and by the adoption of a joint statement on civil nuclear energy cooperation last year.

For more than 20 years, French industry has played a major part in the construction of civil nuclear power plants in China, principally Daya Bay and Ling Ao. The construction of two evolutionary power reactor plants in Taishan has helped strengthen this partnership over the long term. The long-standing cooperation in this area rests on the efficiency of France's nuclear power industry, in terms of performance and the security of nuclear facilities.

Investment by French businesses in China includes setting up numerous joint ventures. Many French businesses have embarked on such partnerships, with Alstom, Michelin, Veolia, Citroën and Lafarge being the prime examples.

And China's investment in France continues at a steady pace.

Dalian Canglong Optoelectronic Technology - part of the FiberHome Technologies Group, a major Chinese state-owned enterprise specialising in the manufacturing of optical fibre and cable products for the information technology and telecommunications industries - recently acquired 70 per cent of the equity interests in French hi-tech company Almae Technologies SAS.

Canglong Optoelectronic - a relative newcomer to the global trading scene - was advised during the acquisition by Gide, France's oldest international law firm, which was founded in 1920.