Exporting to France
By Paula Murphy, Director
Historically, Massachusetts exports have almost instinctually gravitated towards Western Europe. Given our geographic proximity, cultural ties and complementary industrial strengths, Europe has always been a natural fit for Massachusetts exports.
Within Europe, France continues to be one of the most important markets for Massachusetts goods and services – in 2006, we exported over $700 Million in manufactured articles to France. Although there has been a slight decline in recent years, Massachusetts exports to France have rebounded in 2007, increasing over twenty percent in the first half of the year. The life sciences sector dominates the state’s exports to France. In fact, the top 5 Massachusetts exports to France are all healthcare-related (laboratory equipment, medicaments, reagents and medical devices among others). Other sectors showing strong export performance to France include Information & Communications Technology as well as Seafood. In fact, France is one of the largest global markets for Massachusetts seafood exports, second only to Canada.
Despite the importance of the French market, however, France has been losing ground to other faster-growing economies that have caught the attention of Massachusetts exporters. Countries such as China, Mexico and Taiwan have overtaken France in recent years as destinations for Massachusetts exports. While this trend will likely continue, France will always remain a key market for the types of high-value, niche technologies and goods in which Massachusetts specializes.
Companies considering France as a potential export destination may have several options for market entry. Most new-to-market firms align themselves with a partner within the country who already has existing relationships with target customers. There are several benefits to this approach. A local partner in France means that the exporter can reach far more customers in the market than by targeting end customers from the U.S. Also, the exporter can leverage their French partner’s existing relationships with potential customers to establish sales quickly. A strong partner will serve as a local presence for the exporter, and can even assume such functions as installation, repairs and technical support if necessary. Most importantly, a strong partner will represent the exporter well in the market, growing sales and managing end customer relationships.
The types of partners that typically serve this function are sales agents or distributors. Both agents and distributors represent a range of related, complementary suppliers. For example, a Massachusetts manufacturer of orthopedic surgical equipment will likely seek a distributor of related products, such as orthopedic implants, that will be sold to orthopedic surgeons in France. In this case, a good distributor would have offices or sales representatives located in close proximity to the major healthcare centers of France and existing relationships with orthopedic surgeons. Ideally, the distributor should also be able to help the exporter to obtain the necessary certifications and approvals in order to sell in France. Exporters need to remember that a relationship with a French agent or distributor will only be successful if the exporter provides sufficient training and ongoing support.
While exporting through an agent or distributor is a great way to gain quick access to the market, there can be drawbacks. Some distributors represent several suppliers, and it can be difficult for a small or midsized exporter to compete for a distributor’s attention and support. Moreover, under French law, sales agents and some distributors may be eligible for compensation if their contract is terminated or not renewed. Ultimately, some exporters may find that they will need to establish a subsidiary sales office with their own direct employees. Obviously, the costs and risks for this option are much higher than exporting through agents and distributors, but some exporters may find that a direct sales presence offers maximum sales and market share over the long term.
Once an exporter establishes a relationship with a French distributor or end customer, there are a host of technical issues that come in to play before, during and after the export transaction. Exporters need to familiarize themselves with U.S. export regulations, which can require that exports to certain parties in France or exports of certain products to France may require an export license. Exporters also need to familiarize themselves with export clearance requirements, shipping terms, logistics and documentation to ensure that their shipment arrives safely and without hassle from U.S. or French customs authorities. In today’s heightened global supply chain security environment, mistakes or vague language on export documentation can easily lead to customs seizures. Finally, exporters need to be well-versed in different international payment terms. While many companies are extremely risk-averse when it comes to international sales, relaxed payment terms, such as open account, are very common in France. Exporters need to think creatively in order to offer competitive terms while mitigating credit risk.
Massachusetts businesses have access to a wealth of resources that can help them export to France. Private sector resources, such as banks, law firms and freight forwarders, can help exporters with some of the technical issues related to exporting. Public sector resources, such as the Massachusetts Export Center, U.S. Department of Commerce, U.S. Small Business Administration, MassDevelopment and MOITI offer a range of specific services to counsel exporters and help them to research the French market, identify potential partners, and even finance export sales to France.
— Paula Murphy is director of the Massachusetts Export Center, part of the Massachusetts Small Business Development Center Network. The Export Center provides a full range of support to the state’s exporting community, including counseling, technical assistance, international business development services and training programs. For further information, visit www.mass.gov/export.