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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, La Réunion, and the Scattered Islands. France also has a sizable exclusive economic zone (EEZ) in the region. Around 1.5 million French people live in APAC member countries.
In 2018, President Emmanuel Macron highlighted the French strategy for the APAC region, which was to act as an inclusive and stabilizing mediating power. The country’s involvement in the Asia-Pacific area means that it’s an ideal location for France-based 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 France-based startups as well as established companies.
Why is APAC a good business opportunity for France-based companies?
The Asia-Pacific region is a strategic location that’s long been attracting European attention. 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 local partnerships.
France’s renewed interest in APAC means there are more opportunities for France-based companies looking to expand. Here are some of the reasons why the area is beneficial for France-based businesses:
- Market size: The APAC market is sizable. Approximately 60 percent of the world’s population — more than 4 billion people — resides in this region. China and India, two of the most populated countries globally, are among APAC member countries. Expanding to an ample market means there are opportunities awaiting for France-based companies that want to expand their offering. The region’s large population provides a vast talent pool, making it easier to find qualified candidates.
- Local connections: Around 93 percent of France’s exclusive economic zone (EEZ) is located in APAC. The country also has many territories in the region and more than 1.5 million French citizens. France’s connection to APAC means 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 APAC well-known. The country has a permanent military presence in the region to help increase its stability.
- Economic ties: France sends more than one-third of its non-EU exports to APAC countries and has directly invested more than EUR 320 billion in the region since 2008. There are more than 7,000 France-based companies in the area. Those companies saw 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.
Top APAC countries for France-based 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 worth researching are the country’s most popular industries, the presence of other France-based companies there, and the local employment process. Here are some of the best Asia-Pacific countries for France-based startups and other businesses.
1. Singapore
It’s been part of the Commonwealth since 1965, joining after gaining independence from the Federation of Malaysia. For many years, the primary industries in Singapore were oil refining and electronics. However, 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 USD 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 France-based 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 of France and Singapore meet twice a year, establishing a high level of trust between the two countries.
2. South Korea
South Korea is part of the Organization for Economic Co-operation and Development (OECD) and is the most industrialized country in the group. Its three primary industries are telecommunications, automotive production, and electronics.
France and South Korea share an excellent relationship, based on four main principles:
- An open dialogue regarding 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 trade partner in Asia. Both countries want to be centers for creative economy and innovation through technological and industrial cooperation. In 2018, France’s foreign direct investment in South Korea was EUR 4.9 billion, 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 Hong-Kong’s third-largest trading partner and export market in 2020. By the end of 2019, France was the largest EU investor in Hong Kong. Likewise, Hong Kong was the second-largest investor in France.
As of 2019, more than 800 France-based companies have a presence in Hong Kong. Of those, 94 have their regional headquarters in Hong Kong.
France and Hong Kong both prioritize innovation. In 2016, France established a French tech hub in Hong Kong to help France-based startups integrate into the regional environment. The tech hub also aims to highlight the attractiveness of French systems to Hong Kong-based startups.
4. Australia
Australia’s economy is the 12th-largest in the world . The country has the third-freest economy in the world.
France and Australia have a relationship that dates back to the First World War. It’s relationship was established due to shared values and interests, such as peacefully settling disputes and defending the law and multilateralism.
More than 600 France-based 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. France-based companies employ 70,000 people 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 in the world 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 strengthened 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 primarily revolves around the aviation sector. France typically exports industrial, transport, and agricultural equipment to New Zealand. Its main import from New Zealand is agrifood products. A shared interest among the two countries is the research sector and language. More students in New Zealand learn French than any other foreign language.
Many France-based companies that have set up operations in New Zealand focus on banking and healthcare software, telecommunications, or high-end food and drinks.
6. Malaysia
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.
Malaysia 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 APAC members. Nearly 300 France-based 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 France-based 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 the two nations. 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 familiarized with the target country’s market to see if it’s 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 research if there are competitors in the area to determine how you can make your company stand out.
- 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 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 the minimum requirements to meet local expectations and compete in the market.
- Local taxes: Your company will 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 that already has one in your country of choice. An Employer of Record can onboard employees in the new country and manage payroll for your team, ensuring your company remains compliant. With an Employer of Record, you don’t have to worry about setting up a subsidiary or waiting to get a 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 Employer of Record. 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 day-to-day operations while we handle region-specific HR and other compliance concerns. To learn more about how we can help your company, request a proposal today.
