FRANCE Telecom, PSA Peugeot Citroën, Gefco, EDF, Faurecia. These are just a few of the major French companies that have established large holdings in Slovakia, building new production facilities involving investments of millions of euros and employing tens of thousands of Slovaks. The first French investors may have arrived in Slovakia seeking lower wage costs but this has not been the primary reason for some time. French investors now cite the importance of Slovakia in the heart of Europe, its qualified labour force and the adoption of the euro in 2009 as the more significant reasons for conducting business here.
“France is a significant partner of Slovakia in trade and business,” Lenka Korchanová, executive director of the French-Slovak Chamber of Commerce (FSOK), told The Slovak Spectator. “It holds third position for Slovakia’s exports and unofficially it tops the investment ranking [in Slovakia] since most investment transfers by French companies came via financial houses outside France.”
Richard Dírer, spokesperson for the Slovak Investment and Trade Development Agency (SARIO), confirmed the strong position of French investors in Slovakia.
“French investors first arrived in Slovakia in 1990,” Dírer told The Slovak Spectator, adding that at the beginning these were small investments in the machinery and food industries. ”Bigger investments started after 1991.”
These included the acquisition of Chemlon Humenné by Rhône-Poulenc and investments by Dalkia, France Telecom Globtel, Carrefour and Dexia, a bank. Other significant investments from that period included Plastic Omnium, Bacou-Dalloz and the investment by Natixis Banques Populaires in Ľudová Banka.
Beginning in 2000, French companies have invested more than €5 billion in Slovakia according to Dírer, who specified that these investments included those of Gaz de France, France Telecom, PSA Peugeot Citroën, EDF and another 300 companies. During the past few years, additional French investors arrived, such as Valeo and Faurecia, direct subcontractors of PSA Peugeot Citroën, Arcelor, Areva-Framatome, Marionnaud, Gefco, Air Liquide, Total, Hutchinson and Vinci.
“Direct foreign investments from France into Slovakia are proof of permanently sustainable relations in that investments in the case of giants such as PSA, Gaz de France and Faurecia are estimated to extend at least 25 to 30 years,” Dírer said.
According to Korchanová, the kinds of investments made by French companies have changed significantly over the last five years.
“In 1990 investors who arrived in Slovakia were driven particularly by reduction of costs by moving production to Slovakia,” said Korchanová. “Some of these companies have already left Slovakia. But during the last few years investors who came to Slovakia wanted to open new markets and acknowledge the advantageous geographical position of the country and the educational level of Slovaks.”
Korchanová estimated the number of French companies operating in Slovakia at up to 400, adding that it is difficult to count them clearly as many French firms were established here via Dutch intermediaries. Nevertheless, she added that between 2002 and 2007 France was the second biggest investor in Slovakia. During the economic downturn the flow of new investments slowed, she said, but added that this was not a problem that only Slovakia faced.
“The crisis did not completely halt the inflow of new investors; it only curbed it,” Korchanová said. “Companies that can better establish themselves in Slovakia than at home are still arriving.”
Korchanová said French investors acclaim the high qualifications of their Slovak employees but added that they would also welcome better enforceability of laws and more reform of the education system.
The French-Slovak Chamber of Commerce does not believe any of its member companies are currently planning to relocate their investments outside Slovakia.
“This is because Slovakia’s [economic] position during the crisis was good when compared with neighbouring countries,” Korchanová said. “The euro, which puts Slovakia at an advantage in comparison with other countries, is a significant stabilising factor.”
New investment opportunities
SARIO assisted 19 French companies to establish themselves in Slovakia between 2002 and 2010 and these investments amounted to €833 million and created almost 7,000 jobs. SARIO is currently collaborating on three French investment projects that may bring investments of €25 million from companies involved with the automotive industry, logistics and recycling of batteries and could create 380 new jobs.
“The automotive industry will remain the dominant sector but we expect that also other sectors of industry and services will be interesting for French investors,” Dírer said. “France is also ready to cooperate with Slovakia in building roads and we also have regular interest in commercial-investment cooperation in the area of environmental protection. Within inter-regional cooperation, Slovakia offers French investors space in industrial parks and various commercial activities in the fields of drinking water treatment, waste water purification, municipal waste disposal and geothermal resources for industrial and healing purposes. Opportunities within tourism are unlimited.”
Korchanová added that French companies are particularly interested in heating plants and other aspects of the energy industry as well as cooperation within the Allegro project, a part of the European Sustainable Nuclear Industrial Initiative established within the Strategic Energy Technology plan (SET).
She said the implementation plan for 2010-2012 includes the launch of a consortium of central European countries in which Slovakia will be represented by VÚJE, followed by a wider European consortium. VÚJE is a privately-owned engineering company based in Trnava that is active in the fields of nuclear and conventional power generation. It evolved from a formerly state-owned nuclear research institute.
SARIO has continued presenting Slovakia in France as a country hungry for new investments.
“SARIO attended a seminar in France about the automotive industry in central Europe at the beginning of 2011,” Dírer said. “The aim of the seminar was to introduce the automotive sectors in Slovakia, the Czech Republic and Hungary and particularly to discuss opportunities for further cooperation in the fields of subcontractors and investments. French companies are being pushed to reduce costs and Slovakia shows up as a natural choice. Even though Slovakia is gradually losing its comparative advantage in terms of wage costs, it enjoys a great advantage in its excellent location in terms of distribution, services and infrastructure, lower tax rates and still slightly lower comparable costs.”
“If a French company wants to maintain competitiveness in the globalised economy, Slovakia in central Europe is one of the solutions,” Dírer stated.
Slovakia has enjoyed a positive trade balance with France in recent years
“France is seventh in imports [to Slovakia] and is the third biggest export partner of Slovakia,” Korchanová said. “Slovakia’s most important export commodities to France are motor vehicles, their components and accessories, electrical goods and apparatus, nuclear technology, boilers, and various kinds of machinery.”
Slovakia imported goods worth €482 million from France in the first three months of 2011 while exports from Slovakia to France were €962 million. For all of 2010, imports from France were half the level of Slovakia’s exports – with imports from France reaching €1.7 billion and exports to France reaching €3.4 billion, according to the Statistics Office.
Chamber expects more exchange
The French-Slovak Chamber of Commerce continually seeks to improve its services to member companies established in Slovakia as well as to those companies deciding whether to invest here. Korchanová said the chamber’s expert forums and social events are good opportunities for Slovak and French businesspeople to develop mutual relations. An upcoming opportunity will be on July 14, Bastille Day, a state holiday in France. The French embassy, in cooperation with the chamber and the French Institute in Bratislava, is preparing a celebration at the Main Square in Bratislava that will be open as well to the general public.
“On July 14 the entire Main Square will belong to France,” Korchanová said. “In addition to music, France will have various stands where people will be able to get to know about this beautiful country and its economy, tourism, education and gastronomy.”
20. Jun 2011 at 0:00 | Jana Liptáková