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Cape Town - Although France is a very competitive market, French consumers appreciate quality, Claus Lippert, CEO of Hans Merensky Holdings (HMH) said at an Invest in France seminar at ENSafrica on Wednesday.
HMH is a South African renewable bio-resource company with vertically integrated value chains. Merensky Timber and Westfalia Fruit are wholly owned subsidiaries. About ten years ago HMH decided to expand operations and invest in France. Currently about 20% of its turnover is generated in France.
"Our rationale to invest in France was its culture of eating fruit. France is, for instance, the biggest consumer of avocado's in Europe. There is a large middle income market and cuisine is a key part of the French culture," said Lippert.
"Customer sophistication is at a very high level with huge differentiation opportunities. The wholesale market still represents about 40% of the retail market and there are still lots of small shops, especially in rural areas."
Lippert offers a few principles of success for investment in France:
- Respect cultural differences. The French population is tolerant of its sub-cultures, yet at the heart the country is conservative;
- Understanding the supply chain was initially difficult as the market was foreign to everything known in SA;
- Selecting the right partner is critical. HMH realised it was necessary to have the best French team in France rather than a super-imposed expat. This was a vital recognition to achieve success;
- Building relationships based on respect and trust takes time. For this, consistent integrity is required. Then any challenge can be overcome together;
- Getting the right advisers (legal, finance, tax, labour) is essential;
- Autonomy, mastery and purpose are universally essential to achieving success in business. This concept has been proven true in France;
- Due diligence is easy to do in France;
- The labour situation was first daunting, but that is deceptive. HMH found very committed employees and had no strikes the last 10 years.
Lippert said HMH also learnt some lessons in France:
- Cultural differences are significant between European countries. Lessons learnt in South Africa about inclusivity - the opposite of discrimination - are helpful references of engagement in France;
- The cost of labour and the complexity of legislation might seem prohibitive;
- Engaging with staff is very important;
- Preconceived solutions are not always the ideal in different circumstances. Leave room for unique solutions arrived at from different perspectives;
- "No" is not the ultimate answer – it is the beginning of the negotiation position in France;
- Going the extra mile together builds respect;
- France is a good stepping stone into the rest of Europe – especially Latin based countries;
- Europe and France have very competitive markets. Don’t underestimate competition.
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