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Enterprise and Industry

FRANCE
2013 SBA Fact Sheet









In a nutshell
The SME sector in France was hit hard by the global recession in 2008-09 and subsequently
experienced a brief period of recovery, which lost momentum in 2012. Employment in French SMEs
grew less rapidly between 2008 and 2012 than that in large companies, while value added was more or
less stable for both groups.
French SMEs continue to benefit from good framework conditions for trade, an administration that is
fairly responsive to the needs of the small businesses, comparatively fast transposition of EU law and
good access to state aid and public procurement opportunities. Nevertheless, the countrys overall
performance on the SBA grid continues to be hampered by below-average results when it comes to
exploiting the opportunities offered by new green markets and a somewhat lower intensity of
entrepreneurial activity.

About the SBA Fact Sheets
1

The Small Business Act for Europe (SBA) is the EUs flagship policy initiative to support small and medium-
sized enterprises (SMEs). It comprises a set of policy measures organised around ten principles ranging
from entrepreneurship and responsive administration to internationalisation. In order to improve the
governance of the SBA, the 2011 review of the Act called for improved monitoring. The SBA Fact Sheets
are published annually and aim to improve understanding of recent trends and national policies affecting
SMEs.
Since 2011, each EU Member State has appointed a high-ranking government official as its national SME
envoy. SME envoys spearhead the implementation of the SBA agenda in their countries.

2013 SBA Fact Sheet France 2

1. SMEs in France basic figures
EU27 EU27 EU27
Number Share Share Number Share Share Billion Share Share
Micro 2,334,664 93.8% 92.1% 4,167,624 28.6% 28.7% 223 26.1% 21.1%
Small 128,552 5.2% 6.6% 2,735,962 18.8% 20.4% 149 17.5% 18.3%
Medium-sized 20,628 0.8% 1.1% 2,204,603 15.2% 17.3% 128 15.0% 18.3%
SMEs 2,483,844 99.8% 99.8% 9,108,188 62.6% 66.5% 501 58.5% 57.6%
Large 4,470 0.2% 0.2% 5,439,018 37.4% 33.5% 355 41.5% 42.4%
Total 2,488,314 100.0% 100.0% 14,547,206 100.0% 100.0% 856 100.0% 100.0%
These are estimates for 2012 produced by London Economics, based on 2008-10 figures from the Structural Business Statistics
Database (Eurostat). The data cover the 'business economy', which includes industry, construction, trade, and services (NACE Rev. 2
sections B to J, L, M and N), but not enterprises in agriculture, forestry and fisheries and the largely non-market service sectors such
as education and health. The advantage of using Eurostat data is that the statistics are harmonised and comparable across countries.
The disadvantage is that for some countries the data may be different from those published by national authorities.
Number of enterprises Number of employees Value added
France France France
The French SME sector, mirroring the sector in
Europe as a whole, comprises an overwhelming
majority (99.8 %) of the enterprises in the business
economy. SMEs contribution to employment (63.2 %)
is also significant, though lower than in the EU in
general, where 67 % of private sector employees work
for SMEs. French SMEs account for almost 60 % of
the 861 billion of economic value added produced by
all private firms.
The French SME sector has changed radically in the
past 15 years: the proportion of SMEs belonging to a
group increased from 21 % to 49 %. As a
consequence, employees in SMEs not belonging to a
group accounted for less than half of the labour force
in the business economy in 2009, and SMEs not
belonging to a group accounted for 44 % of the added
value of the business sector. These percentages
relate to a total of 2 691 million businesses in France
in 2009.
The SME sector in France was hit hard by the global
recession of 2008/09 and subsequently experienced a
brief period of recovery, which lost momentum in
2012. Companies in construction have been dealing
with significant difficulties and, while the crisis has
shaken the entire sector, SMEs remain much more
vulnerable than the large construction companies,
which in 2012 succeeded in generating value added
above the 2008 pre-crisis levels. This may be
because large French construction firms have a solid
position on the global markets, while small firms
remain more focused on local markets. Also, they
often act as subcontractors to large firms and are thus
under strong cost pressure when it comes to winning
contracts.
The respective growth trends for SMEs and large
enterprises in the business economy differ in a
number of ways. For example, employment in French
SMEs grew more rapidly between 2008 and 2012
than that in large companies (by slightly above 12 %
as against less than 8.4 %), while value added
remained more or less stable for both groups. Hence,
the efficiency of French SMEs, measured by labour
productivity (here defined as value added per head),
has deteriorated more rapidly since 2008.
Worth noting is also the strong growth of SMEs in
the professional, scientific and technical sector
between 2008 and 2012 in terms of value added
(more than 15 %), employment (about 30 %) and
number of firms (about 30 %). There are several
explanations for this trend. The first is the tax credit
given in 2009 to companies investing in research and
development, which gave a strong boost to the sector.
Also, the French government launched a 35 billion
programme (the Programme Investissement dAvenir
PIA) which is stimulating new company set-ups in
areas of innovation such as science and research,
technology transfer, etc. Finally, the fact that large
companies increasingly opt to subcontract their
activities (even R&D) has contributed to the
development of small firms in the sector.
The development of business demographics is
multifaceted. The dynamic of enterprise creation and

2013 SBA Fact Sheet France 3

liquidation over past four years has been significantly
affected by the introduction of auto-entrepreneur
status by the government in 2009. This measure,
which has proved highly successful, was aimed at
reducing the taxes and other costs of running a small
business or being self-employed in France. By 2010,
the number of business registrations in France
peaked at 622 000, of which about 200 000 were auto-
entrepreneurs. However, the government announced
that it would be changing the auto-entrepreneur
arrangements by the end of 2012 and the number of
business registrations decreased to about 550 000
new firms in 2012. About 53 000 insolvencies a year
were registered over this period.
As regards Frances intra-EU trade in goods, SMEs
accounted for 41 % of total trade value in 2010
(though only 17.5 % of the total trade value, if one
excludes SMEs belonging to a group). International
trade involving French SMEs shrank by 15 % in the
period 2008 to 2010. The number of exporting SMEs
also decreased (by 7 %). Large enterprises results
were better, with growth rates of -3 % in terms of trade
value and -2 % in terms of number of exporting
companies.
The high-tech manufacturing and knowledge-intensive
sectors are considered key for restoring the
competitiveness to the European economies and kick-
starting sustainable growth. In France, these sectors
are relatively smaller than in Europe as a whole, but
their contribution to value added still matches the
average.




2013 SBA Fact Sheet France 4


SME trends in France
2



2013 SBA Fact Sheet France 5

2. Frances SBA profile


France maintained its average SBA profile in 2012.
On the one hand, the French SME sector continued to
benefit from good framework conditions for trade, an
administration that is fairly responsive to the needs of
small business, comparatively fast transposition of EU
law and access to state aid and public procurement
opportunities. On the other hand, the countrys overall
performance on the SBA grid continues to be
hampered by below-average results when it comes to
exploiting the opportunities offered by new green
markets and a somewhat lower intensity of
entrepreneurial activity.
Indicators measuring various aspects of SME policy
and performance point to stagnation in most areas
since the adoption of the SBA in 2008. Most progress
has been achieved in the transposition of EU law,
while access to affordable financing has become more
difficult in the context of the financial and economic
crisis. For the other principles of the SBA, the status
quo of 2008 is generally maintained.
In 2012, France continued to implement the SBA
agenda, but at a somewhat slower pace than
previously. This is due to the change of government
following the spring elections, and the new
governments intention to chart a new course involving
significant departures from previous public policies.
The most important initiative in 2012 was the adoption
of the research tax credit (Crdit impt recherche),
which has been expanded to cover costs relating to
design, prototype and pilot products.
Following the Rapport Gallois on measures to
increase economic competitiveness, the National Pact
for Growth, Competitiveness and Employment (Pacte
national pour la croissance, la comptitivit et
lemploi) was adopted by the government on
6 November 2012. This involves a roadmap to greater
competitiveness in French industry along eight
strategic axes, with 35 operational measures, some of
which are aimed at administrative simplification
(rationalisation of taxes levied by the end of the year,
introduction of a one-stop shop, etc.).
France does not currently have a dedicated strategy
for the implementation of the SBA, nor a dedicated
SBA monitoring process. Implementation is followed
by the European Affairs Office in the Ministry of
Industrys Directorate-General for Competitiveness,
Industry and Services (DGCIS), which coordinates all
action taken under the SBA and has set up a network
of institutional partners.
Stakeholder consultations take place regularly on
various topics. A network has been created at regional
level of SME representatives (Commissaires au
redressement productif) charged with identifying and
articulating the needs of SMEs and keeping them
informed about national policies and measures
affecting them. At national level, entrepreneurs are
regularly consulted about the programme for a more
friendly business environment, launched under the
National Pact for Growth.
The new governments key future policy
3
priorities for
SMEs are improving access to finance and reducing
administrative burdens. The Public Investment Bank
(Banque Publique dInvestissement), which should
become operational in May 2013, is expected to
provide a local financing service supported by an
extended portfolio of financial instruments covering all
stages of business development, from start-up to
growth.

2013 SBA Fact Sheet France 6

Frances SBA performance: Status quo and development (2008-13)
4




I. Entrepreneurship


2013 SBA Fact Sheet France 7

Despite recent improvements according to a majority
of indicators measuring entrepreneurship, France
continues to trail the EU average in this respect
because other Member States have made faster
progress. In recent years, entrepreneurial activity in
France has intensified, spurred by the introduction of
auto-entrepreneur status in 2009, which was followed
in subsequent years by a peak in business
registrations. The quality of entrepreneurial activity
also improved, with the proportion of opportunity-
driven entrepreneurs rising from 47 % in 2009 to 50 %
in 2012.
Frances entrepreneurship culture scores well on the
desirability of becoming self-employed,
entrepreneurial intention and motivation all
important factors in the countrys entrepreneurial
potential.
Entrepreneurial education seems to be losing ground,
however, as only 50 % of adults (as against 60 % in
2009) currently believe that school education is
successful in providing students with the knowledge,
skills and motivation to encourage them to become
entrepreneurs.
Finally, societys perception of entrepreneurship, as
expressed by the degree of media attention received
by entrepreneurs and the social status accorded to
them, seems on average less favourable in France
than in the EU as a whole.
On the policy side, a wide consultation of
stakeholders (Assises de lentrepreneuriat) was
launched in January 2013, with nine working groups
being set up to seek ways of doubling the number of
growth businesses in the next five years. The
conclusions of the work were presented in April 2013
and were fed into a five-year entrepreneurship action
plan.


II. Second chance


The indicators measuring second chance give a
positive picture, but show almost no change from the
previous year. In essence, France continues to offer
comparatively favourable conditions for honest
entrepreneurs who have failed and want to start over
again. However, one significant barrier which remains
is the fear of failure and high level of risk aversion
among the French population. This seems to have
risen further as a result of the global economic crisis,
with the proportion of adults who believe honest
entrepreneurs deserve a second chance falling from
86 % in 2009 to 80 % in 2012.
No major policy initiatives were reported in 2012.


2013 SBA Fact Sheet France 8

III. Think small first

French SMEs continue to benefit from a well-
developed institutional and legislative framework, but
still face significant legal and administrative
constraints on a daily basis in their dealings with the
administration. Entrepreneurs perceive government
regulation as imposing a heavier-than-average
burden, with employment legislation (strict and
complicated rules for hiring and firing workers) the
most problematic area.
Following the Rapport Gallois on measures to
increase economic competitiveness, the National Pact
for Growth, Competitiveness and Employment (Pacte
national pour la croissance, la comptitivit et
lemploi) was adopted by the government at the
beginning of 2013. This involves a roadmap aiming to
greater competitiveness in French industry along
eight strategic axes, with 35 operational measures,
some of which are aimed at administrative
simplification (rationalisation of taxes levied at the end
of the year, introduction of a one-stop shop, SME test,
etc.).

IV. Responsive administration

Frances modern and responsive public administration
scores far above the EU average, but the pace of

2013 SBA Fact Sheet France 9

administrative reform has slowed down significantly,
as shown by only marginal changes in its performance
against the relevant indicators.
It is currently possible to start a business in France in
four days, at a cost of 83, with no capital
requirements. Since 2012, entrepreneurs have been
able to start their business online. Nevertheless, while
it is very easy and cheap to start a business, running it
on a daily basis typically brings additional obstacles.
Other important indicators relating to day-to-day
business operations (number and duration of tax
payments, cost of enforcing contracts) and milestones
in the life-cycle of a business give a generally positive
picture. However, there is room for improvement on
certain aspects not captured by statistics, such as the
provision of (legal, tax, social or bankruptcy-related)
public advisory services for SMEs. Finally, frequent
changes in administrative rules and procedures make
daily administrative tasks difficult and time-consuming
for SMEs.
No major policy initiatives were reported in 2012.
Still, under the National Pact for Growth,
Competitiveness and Employment, a programme of
business-friendly measures will be implemented in
2013, some aimed at administrative simplification
(e.g. introduction of a one-stop shop, rationalisation of
taxes levied at the end of the year).

V. State aid & Public procurement

France continues to offer comparatively favourable
conditions for SME access to state aid and public
procurement. The proportion of state aid earmarked
specifically for small and medium-sized enterprises
rose from 5 % in 2010 to 7 % in 2011, one percentage
point above the EU average. However, a number of
SME stakeholders argue that state aid is used mainly
to maintain employment in average SMEs rather than
finance innovative small companies with high growth
potential.
Small and medium-sized enterprises account for a
higher-than-average proportion of the value of public
procurement contracts (45 % as against 38 % in the
EU as a whole in 2008), but this is not yet matched by
their contribution to the economy (59 % of gross value
added).
No significant policy initiatives were reported in
2012. Nevertheless, some positive changes were
made to the public procurement system so as to allow
direct payments to subcontractors, the submitting of
proposals online and simplified access to information
on public tenders.



2013 SBA Fact Sheet France 10

VI. Access to finance

France offers SMEs average conditions for access to
various sources of finance, but progress on this front
has stalled and the return of the financial and
economic crisis has created a difficult climate for
businesses.
As result of tightened credit standards, SMEs access
to finance was more difficult in 2012 than in 2011. The
proportion of rejected loans increased from 11 % to
14 % and a greater number of business owners
noticed reported that banks were less willing to
provide loans. At the same time, the conditions for
accessing public financial support, including
guarantees, were also more restrictive.
As compared with the EU average, French
businesses have fewer cash-flow problems due to the
loss of payments from bankrupt customers (2 % of
total turnover as against 3 % in the EU as a whole).
However, the total time it takes for customers in
France to pay for delivered goods or services is close
to the EU average: 55 days as compared with 53. The
institutions and systems that can facilitate access to
finance, such as credit registry bureaux and the legal
rights system, are as solid as in most other EU
countries. The same can be said of the availability of
early-stage venture capital, which amounted to
0.019 % of the countrys GDP in 2009.
On the policy side, the Conseil des ministres put
forward a proposal for a public investment bank
(Banque Publique dInvestissement BPI) in the last
quarter of 2012 and this became operational in May
2013. The BPI was formed by a merger of three
existing funding structures: OSEO, the Strategic
Investment Fund (FSI) and CDC Enterprises. The
BPIs overall objective is to offer businesses with
priority given to very small enterprises, SMEs and
small and medium businesses a local financing
service supported by an extended portfolio of financial
instruments and consultation options that can be
called upon at any point in the business development
process. The BPI five-year budget of 42 billion is
used to provide loans and buy shares.
Finally, amendments to the Research Tax Credit to
include an Innovation Tax Credit were announced.

2013 SBA Fact Sheet France 11

The aim of the Research Tax Credit, established in
1983 and updated several times since 2000, is to
reduce businesses RTD-related costs. The
government decided to extend this measure
downstream to (design, prototype and pilot) costs
relating to innovation. The changes will enter into
force at the beginning of 2014.
VII. Single market

Due to the size of the domestic market, French SMEs
generally have only a local vision for their businesses.
The lack of a strong export culture among SMEs is
reflected in below-average results in intra-EU export
and import performance. In terms of internal market
legislation and transposing EU into national law,
France seems to be performing significantly better
than its EU peers, with fewer directives awaiting
transposition and shorter accumulated delays.
No major policy initiatives were reported in 2012.
VIII. Skills and innovation


2013 SBA Fact Sheet France 12

France is on a par with the EU as a whole in skills and
innovation, but progress has stalled recently. It has
average scores for all indicators measuring innovation
among SMEs and its performance is slightly below
average in terms of firms ability to sell and make
purchases online.
The two indicators measuring training and skills
development show somewhat divergent results. While
the proportion of firms providing vocational training to
their employees is very close to the EU average,
French micro-enterprises are less likely than their
peers to ensure that their employees take part in
lifelong learning activities.
No major policy initiatives were reported in 2012.

IX. Environment

France scores below the EU average in this field, but
its performance varies somewhat between the
individual indicators.
On the one hand, despite slightly worse-than average
access to public support measures, French SMEs are
more likely to take steps to increase their resource
efficiency.
On the other hand, as compared with the EU average,
few companies in France have gained a foothold in
green markets, and even fewer have generated more
than 50 % of their turnover by selling green products
and services.
No major policy initiatives were reported in 2012.


2013 SBA Fact Sheet France 13

X. Internationalisation

Thanks to the generally good framework conditions for
trading, France scores well in this area. However, the
indicators measuring the performance of French
companies outside the EU remain rather low. This
reflects the loss of competitiveness that has led to
almost a decade of decline in Frances foreign trade.
No major policy initiatives were reported in 2012.
However, the National Pact for Competitiveness,
Growth and Employment (Pacte national pour la
comptitivit, la croissance et lemploi) and the Public
Investment Banks roadmap involve a specific
measure to support the internationalisation of 1 000
SMEs.
Export funding arrangements should undergo reform
this year. Finally, reforms are also planned to bolster
and simplify the Volunteer for International
Businesses programme.

2013 SBA Fact Sheet France 14

3. Good practice
Below is an example of good practice from France to show what governments can do to support SMEs:
The research tax credit (Crdit impt recherche CIR)
This measure involves a tax reduction to support companies in-house research. Since its inception in 1983,
it has produced very positive results. The new government has confirmed that it will be maintained and
consolidated over the next five years. As from 2013, a flat rate of 30 % applies in all cases (higher rates for
the first two years have been removed).
In addition, the scope of the measure will be extended to downstream research phases, i.e. the first (design
and prototype) stages of innovation.

References
http://cache.media.enseignementsup-recherche.gouv.fr/file/CIR/58/6/CIR-03-12_vweb_212586.pdf

Important remarks
The Small Business Act (SBA) Fact Sheets are produced by DG Enterprise as part of the SME Performance
Review (SPR), which is its main vehicle for economic analysis of SME issues. They combine the latest
available statistical and policy information for the 28 EU Member States and nine non-EU countries which
also contribute to the EUs Competitiveness and Innovation Framework Programme (CIP). Produced
annually, the Fact Sheets help to organise the available information to facilitate SME policy assessments and
monitor SBA implementation. They take stock and record progress. They are not an assessment of Member
States policies but should be regarded as an additional source of information designed to improve evidence-
based policy-making. For example, the Fact Sheets cite only those policy measures deemed relevant by
local SME policy experts. They do not, and cannot, reflect all measures taken by the government over the
reference period. More policy information can be found on a database accessible from the SPR website.
Please also see the end notes overleaf.

For more information
SME Performance Review:
http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/index_en.htm
Small Business Act:
http://ec.europa.eu/enterprise/policies/sme/small-business-act/index_en.htm
The European Small Business Portal:
http://ec.europa.eu/small-business/index_en.htm
Entr-SPR@ec.europa.eu