In France these days, every new industrial investment is welcomed with open arms, so when the Japanese machine-tools manufacturer Amada announced in mid-September that it was putting an additional $50 million into its existing production facilities, no fewer than two government ministers showed up for the signing ceremony. Much to their embarrassment, however, the chief executive officer of Amada, Mitsuo Okamoto, gave an interview that morning to a national French daily in which he castigated the national business climate, and said that if the company hadn’t already been in France for 40 years, “we would think twice about investing here for the first time.”
Chalk it up, one more time, to France’s investment paradox. Okamoto is just the latest example of a foreign CEO who moans and groans about the difficulties of doing business in France, even as he pours in money, in the form of fresh investment.
There’s certainly a lot to complain about. The law reducing the official workweek to 35 hours, passed in 2000, is still on the books. The outsized labor code that governs hiring, firing and everything in between is regularly cited by organizations from the World Bank to the World Economic Forum as a significant impediment to doing business; its printed version runs to 3,371 pages, or more than three times the size of the German equivalent. Unions are famously feisty, and labor costs, already high, have continued to rise at a faster rate than productivity, even after the 2007-08 financial crisis.
Yet France — at least until now — has weathered the criticism with panache. For years, it has enjoyed a flood of direct investment that has made it a regular fixture near the top of the list of recipient nations in the world, alongside the U.S., China and the UK. According to estimates by the United Nations Conference on Trade and Development, France received $59 billion in incoming investment in 2012, far ahead of larger nations such as Australia or Russia, and just behind Britain and Brazil. According to the government’s Invest in France Agency, whose job is to woo potential foreign investors, there were almost 700 new investment projects in 2012, which together created or safeguarded about 26,000 jobs.
But 17 months after the election of Socialist President François Hollande, there are some signs that this French paradox is now being sorely tested. The most startling is a survey by consultants Bain and Co. for the American Chamber of Commerce in France, released this week, that shows an utter collapse in U.S. corporate sentiment about France as a place to invest.