JEDDAH, 20 February 2006 — A French diplomat has put forward an investment formula calling for capital-technology cooperation between Saudi Arabia and France. The formula would result in a win-win situation for both countries.
Clara Gaymard, France’s ambassador for international investment, spoke at a press conference at the recent Seventh Jeddah Economic Forum. She introduced the formula for globalizing Saudi capital and French small and medium enterprises (SMEs) through investing in enterprises that are technologically advanced. According to Gaymard, numerous French small and medium enterprises possess competitive-edge technologies that would enhance their position in global competition; however, capital shortage is hindering internationalization of these enterprises. Saudi capital could eliminate this and Saudi investors would gain directly once French SMEs were capable of competing internationally.
“The problem is that when French small and medium enterprises decide to go international, they seek European capital followed by American, and then Indian and Chinese. Middle Eastern capital comes last,” Gaymard explained. She mentioned, for example, that once there were only eight Chinese companies in France but that today, that number has been multiplied by eight.
French SMEs rarely form partnerships with the Middle East and “increasing cooperation between the region and French enterprises is what we are trying to achieve; hence we want to reverse that pattern and take Middle Eastern capital to the front.” She went on to say, “Saudi investors are mostly interested in investments in French financial and real estate sectors, and there are not enough investments in industry and services.” According to her, implementing the new investment scheme would result in the importation of new French technologies to the Kingdom and the diversification of Saudi international investment portfolios.
“We are looking forward to the creation of new investment channels for Saudi capital other than investments in international financial funds,” said Gaymard. Large international funds will invest mostly in large French corporations, she pointed out, and the new strategy is the only way to channel Saudi capital into small and medium enterprises. According to her, the new scheme would allow Saudi investors to share in the administration of French enterprises and the management of their own capital instead of delegating all the tasks to international funds managers. “Saudi companies would benefit as well since they would internationalize their level of management,” said Gaymard.
She said that the investment environment in France is among the best in Europe, thanks to the introduction of new tax reform laws and the relatively low cost of labor. According to her, the cost of French labor is less than in Germany and the United Kingdom. Not only does French labor costs less, but its productivity is higher than that of the United Kingdom, Germany, United States, Japan and the European Union 15. The statistics of the Invest in France Agency show that between 2000 and 2004 the average labor productivity per hour worked in France was 120 percent. This means that the French produce 20 percent more than the maximum of 100 percent for every hour of labor. This is higher than the 100 percent level of the EU 15 and the 110 percent of the United States. The statistics also show that the cost of doing business (work force, infrastructure, transport, public utility, taxes, etc.) in France is actually cheaper than in the US.
