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France has many connections in the Asia-Pacific (APAC) region. The country has several territories in the Pacific, such as New Caledonia, Mayotte and La Réunion islands, and the Scattered Islands. France also has a sizable exclusive economic zone (EEZ) in the region. Around 1.5 million French people live in the APAC region.
In 2018, French President Emmanuel Macron made acting as a stabilizing power one of France’s goals for the APAC region. The country’s involvement in the Asia-Pacific area means that it’s an ideal location for French companies looking to enter the international market. If you’re interested in growing your business, take a look at some of the best Asia-Pacific countries for French startups and more established companies.
Why is the APAC a good business opportunity for France-based companies?
The Asia-Pacific region is a strategic location that’s long been attracting considerable attention from European countries. France is already well-situated in the region, as it has several territories there. The country has also started funneling more money into the area to increase partnerships in the region.
France’s renewed interest in the APAC means there are more opportunities for France-based companies that want to grow. Here are some of the reasons why the area is beneficial for French businesses:
- Market size: The APAC market is sizable. Approximately 60 percent of the world’s population — more than 4 billion people — resides in APAC countries. China and India, two of the most populated countries globally, are located in the region. The size of the market in the area means there are opportunities for French companies that want to make inroads into the APAC. The large population can also mean that companies that move into the area will have an easier time finding employees.
- French connections: Around 93 percent of France’s EEZ is located in the APAC. The country also has many territories in the region and more than 1.5 million French citizens. France’s connections to the APAC can mean that companies from France are more likely to feel at home when they move into a particular area.
- Defense and military presence: France has made its military connections to the APAC well-known. The country has a permanent military presence in the region, which is currently home to 8,000 members of the French armed forces. The military also helps to increase the stability of the region.
- Economic connection: France sends more than one-third of its non-EU exports to APAC countries and has directly invested more than 320 billion euros in the region since 2008. There are already more than 7,000 French companies in the region. Those companies have seen their revenues increase by 40 percent between 2010 and 2016.
- Aligned values: France has an interest in many of the issues that concern APAC countries, such as the impact of climate change, the importance of infrastructure, and providing health care and education to all.
- Potential: APAC countries are a source of considerable economic potential. The area is expected to have a compound annual growth rate (CAGR) of 7.6 percent between 2020 and 2027.
The top APAC countries for French businesses
When you decide to grow your France-based business in the APAC region, you have several countries to choose from. Some of the factors to consider when choosing a country are its most popular industries, the presence of other France-based companies there, and the process of employing people. Here are some of the best Asia-Pacific countries for French startups and other businesses.
Singapore is made up of 63 islands. It’s part of the Commonwealth, which it joined in 1965 after gaining independence from the Federation of Malaysia. For many years, the primary industries in Singapore were oil refining and electronics. Starting in the 1970s, the country’s government focused on export-led growth. Since that time, financial services, pharmaceuticals, and electronics have become the country’s primary industries.
After gaining its independence, Singapore quickly shifted from being a low-income country to a high-income one. Its per-capita income is $54,530. The country’s gross domestic product (GDP) has a growth rate that’s among the highest in the world. Singapore has a free market. Its economy is praised for being very business-friendly and is considered one of the least corrupt in the world.
France has an ongoing relationship with Singapore. Between 2016 and 2017, trade between the two countries increased by 7.5 percent. A significant portion of the trade growth comes from the export of French perfume, agrifood products, leather goods, and aerospace deliveries.
More than 715 French businesses have a presence in Singapore. Several manufacturers have built research and development centers in the country, such as Airbus and Thales. Around 200 French researchers and engineers reside in Singapore.
The two countries also have security and defense relationships. The ministers of defense for France and Singapore meet about twice a year, building on a high level of established trust between the two countries.
2. South Korea
South Korea is part of the Organisation for Economic Co-operation and Development (OECD) and is the target=”_blank” rel=”noopener”most industrialized country in the group. Its three primary industries are telecommunications, automotive production, and electronics.
France and South Korea have an excellent relationship with each other, formed based on four priorities:
- A dialogue on significant issues, such as climate change and support for free trade
- Cooperation in the areas of security, defense, and diplomacy
- A hope to deepen economic relations
- Cooperation in areas such as culture, sports, education, and science
South Korea is France’s third-largest partner in trade in Asia. Both countries want to be centers for the creative economy and innovation and are developing technological and industrial cooperation. In 2018, France’s foreign direct investment in South Korea was 4.9 billion euros, 15 percent higher than it was in 2017.
France-based research institutes find South Korea particularly attractive. There are several joint research institutes in South Korea, such as the Institut Pasteur Korea. The French National Centre for Scientific Research also has three partner laboratories in the country.
3. Hong Kong
The Hong Kong Special Administrative Region of the People’s Republic of China is an international hub for trade, business, and the financial sector. Hong Kong is often considered the gateway to Mainland China for international investors.
Hong Kong has an open economy with a simple tax regime, efficient market, and free flow of capital. It also has an ongoing relationship with France. France was the third-largest trading partner of Hong Kong in 2020 and the third-largest export market for Hong Kong. By the end of 2019, France was the largest EU investor in Hong Kong. Likewise, Hong Kong was the second-largest investor in France.
France and Hong Kong both prioritize innovation. In 2016, France established a French Tech Hub in Hong Kong to help French startups integrate into the regional environment. The Tech Hub also aims to highlight the attractiveness of French systems to Hong Kong-based startups.
France and Australia have a relationship that dates back to the First World War. It’s a relationship established by shared values and interests, such as peacefully settling disputes and defending the law and multilateralism.
More than 600 French companies have already set up subsidiaries or branch offices in Australia. Thirty-five of the 40 companies on the Cotation Assistée en Continu (CAC) 40, a benchmark stock market index, have a presence in Australia. French companies employe 70,000 people living in Australia.
5. New Zealand
Australia’s neighbor, New Zealand, also presents an excellent opportunity for France-based business expansion into the APAC area. The country’s economy rose more than expected in the second quarter of 2021. Its economy was also ranked as the second-freest globally in 2021.
Among the top industries in New Zealand is agrifood. Dairy products are its biggest export, accounting for 21 percent of all exported goods.
France and New Zealand have a strong relationship, which was made more robust in 2018 when the French president and New Zealand’s prime minister adopted a declaration that focused on topics of mutual concern, such as climate change and multilateralism. Every year, around 10,000 French youth travel to New Zealand on working holiday visas.
Trade between the two countries focuses on the aviation sector. France typically exports industrial, transport, and agricultural equipment to New Zealand. Its main import from New Zealand is agrifood products. A common bond between the two countries is also found in the research sector and language. More students in New Zealand learn French than any other foreign language.
Many French companies that have set up operations in New Zealand focus on banking and healthcare software, telecommunications, or high-end food and drinks.
Malaysia is an upper-middle-income developing country. Since it became independent in 1957, it has diversified its economy, shifting away from an agricultural and commodity-based model. Today, the manufacturing and oil sectors are the top industries in the country.
The country is very open to trade, and about 40 percent of jobs in Malaysia are connected to exports. Its economy has seen an average annual growth of 5.4 percent since 2010.
Malaysia is France’s second-largest market among members of the Association of Southeast Asian Nations. Nearly 300 French companies have a presence in Malaysia. Those companies employ around 25,000 people.
France has also established a presence in the education system in Malaysia. Around 100 French research centers and higher education institutions participate in cooperation programs with Malaysian institutions. One example is Hibiscus, a Hubert Curien Partnership. The Malaysian and French governments finance the collaboration. The program aims to promote scientific cooperation between France and Malaysia. Additionally, more than 100 public secondary schools in Malaysia teach French.
What do France-based companies need to grow internationally into the APAC market?
Before you set up operations in an APAC country, there are a few areas your company needs to understand. Careful research will help you choose the country that’s the best fit for your company. You’ll need knowledge of:
- The market: Get to know the market of the country you want to move into to see if it’ll be a good fit for your business. Consider the most popular industries in the country and the consumer demand for your company’s products or services. You should also find out if there are competitors in the area and consider how you can make your company stand out from them.
- Local laws and customs: The rules for setting up a business and employing people can vary from country to country. Find out what licenses are required of your company and how long it generally takes to get set up in the country. It’s also important to understand employment laws, such as any minimum wage rules, required benefits, and working hours. Keep in mind that you may need to go beyond legal requirements to meet local expectations and compete in the market.
- Local taxes: Your company will most likely need to pay taxes in the new location. Find out what the rules are concerning business income taxes as well as the requirements for withholding taxes from employee income.
You may also need to set up a subsidiary or work with an Employer of Record (EOR) that already has one in your country of choice. An EOR can onboard employees in the new country and manage payroll for your team, ensuring your company remains compliant. With an EOR, you don’t have to worry about setting up a subsidiary or waiting to get your business license in your new country. You can get your operations up and running in days rather than months.
Globalization Partners can help your company grow into the APAC region and beyond
If you’re ready to take the first step toward international growth and want to set up operations in an APAC country, Globalization Partners can help as your EOR. Once you’ve identified the people you want to hire, we’ll onboard them and put them on our payroll. You can focus on your company’s growth while we focus on the region-specific human resources and other compliance concerns. To learn more about how we can work for you, request a proposal today.