The Interpreneur survey: Understanding mid-market business trends in France
Europe has shown a mixed bag of economic improvement in 2024, however France, which sits in the middle of the pack, has recently downgraded its GDP growth forecast from 1.4% to 1%, due to a variety of factors, including the Ukraine war, supply chain challenges and austerity.
These challenging times have undoubtedly given businesses looking to expand internationally pause for thought.
To understand how this landscape is affecting mid-market businesses, we recently surveyed 1,400 C-suite business leaders in 14 countries, in private sector companies earning up to £300m a year that have expanded internationally. We call these CEOs ‘interpreneurs’.
We have analysed the French data against the global outlook to get a better understanding of what drives French interpreneurs, despite a challenging landscape.
Global business: Do French business leaders believe more businesses will expand overseas in the next 12 months?
Overseas business expansion prediction is conservative
| Significantly increase | 26% |
| Moderately increase | 49% |
| No change | 16% |
| Moderately decrease | 5% |
| Significantly decrease | 1% |
| Not sure | 3% |
France, like the other European countries surveyed, were overall less confident than the rest of the world in forecasting a significant increase in international expansion. The most confident countries, Nigeria and South Africa sit at 98% and France at 75%, indicating a more cautious approach to international business.
Which markets do French businesses prefer to expand into?
| Which, if any, of the following regions or countries would you / your business considering expanding to? (Select all that apply) | |
|---|---|
| Western Europe (e.g. Germany, France, UK, etc) | 61% |
| North America (e.g. USA, Canada, Mexico, etc) | 43% |
| Eastern Europe (e.g. Poland, Hungary, Romania, etc) | 36% |
| North Asia (e.g. China, Japan, Korea, etc) | 21% |
| South America (e.g. Brazil, Chile, Colombia, etc) | 16% |
| Africa | 11% |
| South Asia (e.g. Thailand, Vietnam, Singapore, etc) | 11% |
| Middle East | 10% |
| Australia/New Zealand | 7% |
| Not sure/ none in particular | 2% |
| Other | 1% |
Western Europe is France’s number-one choice for global expansion
France’s results reflect the global sentiment and look close to home for expansion in Western Europe. Interestingly, French business leaders were more likely to consider expanding into America at 43% than other European countries. Spain scored the lowest at 25%.
What makes a country more attractive to French businesses looking to expand globally?
| Which, if any, of the following would make a country most attractive for international expansion? [Select up to five] | |
|---|---|
| Future economic growth prospects | 39% |
| Favourable tax policies | 34% |
| Favourable trade agreements (e.g. free trade zones, diplomatic partnerships, or preferential tariff treatment) | 29% |
| Geographic proximity to existing operations | 25% |
| Skills and talent (e.g. availability of local talent and openness to skilled talent immigration) | 25% |
| Transparent regulatory environment | 25% |
| Government support (e.g. grants, incubators, and mentorship programs) | 24% |
| Tech infrastructure and digitalisation | 23% |
| Alignment with long-term growth strategy (e.g. regional investment into specific industries) | 19% |
| Cultural and language similarity to existing operations | 14% |
| Not sure | 2% |
Economic growth prospects primary attractor for French CEOs
France was fairly evenly spread across the attractive elements they look for in a country, however they scored the lowest out of all the countries in alignment with long-term growth strategy.
What motivates French interpreneurs to expand internationally?
| What were the primary motivators for your business expanding internationally? [Select up to three] | |
|---|---|
| Market growth opportunities: Accessing new customer segments | 44% |
| Diversification: Reducing dependence on any single market | 31% |
| Competitive advantage: Gaining a foothold in new markets before rivals | 28% |
| Access to digital technologies and innovation | 26% |
| Resourcing: Manufacturing, supply chain or other resourcing opportunities | 24% |
| Cost optimization: Leveraging lower production/resource costs | 21% |
| Talent acquisition: Recruiting skilled employees from a broader pool | 21% |
| Existing personal network abroad | 17% |
| Government incentives in host country (including regulatory framework and tax incentives) | 16% |
| Not sure | 2% |
France clearly felt market growth was a primary motivation and tracked very similar answers to the UK across all options.
What are the biggest international expansion challenges in 2024 according to French Interpreneurs?
| Top 3 biggest challenges during international expansion process | |
|---|---|
| Adapting logistics and supply chain issues (e.g. managing international shipping, distribution, and communication) | 37% |
| Managing economic volatility (e.g. currency fluctuations, inflation and or low growth) | 37% |
| Navigating global tax regulation (e.g. transfer pricing, double taxation, VAT) | 37% |
Logistics, economic volatility and global tax regulation all equally challenging when doing business internationally say French CEOs
In current economic conditions, it is no surprise that French business owners have been dogged by the Red Sea supply chain challenges and the sluggish growth of both Germany and China, both close trading partners. Finding the right local partners (e.g. building reliable and trustworthy relationships) was the next highest challenge at 33%.
Risk: What do French CEOs think are the biggest risks to global business expansion in 2024?
How much of a risk do the following pose to your business’s international expansion or planned international expansion?
| Escalating geopolitical tensions and instability | Disruptive risk | 15% |
| Significant risk | 20% | |
| Moderate risk | 35% | |
| Minimal risk | 18% | |
| No risk | 8% | |
| Not Sure / Not applicable | 4% | |
| Economic slowdown or recession | Disruptive risk | 12% |
| Significant risk | 27% | |
| Moderate risk | 38% | |
| Minimal risk | 11% | |
| No risk | 8% | |
| Not Sure / Not applicable | 4% | |
| Financial market and foreign exchange volatility | Disruptive risk | 11% |
| Significant risk | 24% | |
| Moderate risk | 30% | |
| Minimal risk | 21% | |
| No risk | 11% | |
| Not Sure / Not applicable | 3% | |
| Cybersecurity threats and data breaches | Disruptive risk | 13% |
| Significant risk | 24% | |
| Moderate risk | 32% | |
| Minimal risk | 18% | |
| No risk | 9% | |
| Not Sure / Not applicable | 4% | |
| Talent shortages and skilled labour gaps | Disruptive risk | 13% |
| Significant risk | 26% | |
| Moderate risk | 24% | |
| Minimal risk | 24% | |
| No risk | 9% | |
| Not Sure / Not applicable | 4% | |
| Technological disruption from AI and new technologies | Disruptive risk | 4% |
| Significant risk | 16% | |
| Moderate risk | 40% | |
| Minimal risk | 21% | |
| No risk | 16% | |
| Not Sure / Not applicable | 3% | |
| Environmental disruption and extreme weather | Disruptive risk | 7% |
| Significant risk | 20% | |
| Moderate risk | 31% | |
| Minimal risk | 26% | |
| No risk | 11% | |
| Not Sure / Not applicable | 5% |
Economic slowdown biggest risk to French businesses
39% of respondents felt economic slowdown or recession poses a disruptive or significant risk to their business’s international expansion or planned expansion.
The highest score for a disruptive risk to global expansion went to geopolitical tensions and the lowest disruptive risk score was for technological disruptions changing the industry.
Private Equity vs Venture Capital: Which is the preferred international expansion funding source for French businesses?
| Venture capital or private equity | 38% |
| Private investors (including HNWIs) | 28% |
| Debt | 28% |
| Government funding | 26% |
| Capital markets (i.e. IPO) | 22% |
| Crowdfunding | 20% |
| Employee equity schemes | 18% |
| Management buyout | 17% |
| None of the above | 3% |
Venture capital offering mature French businesses best way to fund international expansion
Venture capital is the number one choice for expanding business in France, however France was the country globally the most likely to consider debt for financing expanding overseas at 28%, with Brazil the lowest at 5%.
Understanding global tax: Is the C-suite ready for a global tax threshold?
| How confident are you in your understanding of the global international tax rules (for example transfer pricing, VAT) that govern multinational businesses? | |
|---|---|
| Extremely confident: I have a deep understanding of global tax rules and their implications for multinational businesses | 26% |
| Confident: I have a good grasp of key principles and can navigate common scenarios, but may seek external guidance for complex situations | 58% |
| Not very confident: My understanding of global tax rules is limited, and I rely heavily on external advisors for guidance and analysis | 14% |
| Not confident at all: I lack knowledge of international tax regulations and rely entirely on external advisors for their advice, guidance, and/or decision-making | 2% |
Better local experts could be the answer for global taxation for French businesses
France is only one of five countries that considered themselves lacking the knowledge needed to understand international tax regulations. The French respondents also were one of the least likely to feel extremely confident in their understanding of the implications of global tax rules, only behind Japan at 9%. At the other end of the scale was the US, with 64% of respondents feeling confident in their understanding of global tax, over double the French results.
The growing importance of ESG for French investors and interpreneurs
| We do / would prioritise ESG | 15% |
| We do / would value ESG, but it wouldn’t be our top priority | 31% |
| We do / would consider ESG practices but if only if they don’t interfere with our other priorities | 40% |
| We don’t / wouldn’t strongly consider ESG practices | 9% |
| We don’t / wouldn’t consider ESG practices at all | 2% |
| Not sure | 3% |
France not placing ESG as a top priority when expanding internationally
It is interesting to note that the countries at the heart of ESG regulations in Europe had the lowest scores for the prioritising of ESG practices when expanding globally. Only Spain scored lower than France with 14% agreeing that they do prioritise ESG.
The benefits of AI in international business operations
| To what extent do you agree or disagree with the following statement: ‘I feel prepared to harness the benefits of AI in global business operations within the next two years? | |
|---|---|
| Strongly agree | 33% |
| Somewhat agree | 50% |
| Neither agree nor disagree | 14% |
| Somewhat disagree | 1% |
| Disagree | 2% |
French businesses confident about the use of AI in global operations
France was one of the least convinced in their abilities to harness the use of AI in global business operations of all the countries surveyed. The higher-than-average “neither agree nor disagree” perhaps indicates some hesitance around their responses.
