With total sales of USD 119,630 million in 2005 the French chemical industry remains number two in Europe after Germany.  France continued to be a major exporter of chemicals, with USD 73,000 million worth of exports, exceeding imports by USD 12,630 million.  French chemical companies consistently export more than they sell domestically.

The French chemical industry ranks fifth in the world, after the United States, Japan, Germany and China.  In France, the industrial chemicals industry is comprised of 1,190 companies employing over 240,700 persons.  With 10 percent of France’s manufacturing employment, industrial chemicals represent the fourth largest employment sector in France.

Most of these 1,190 French companies are SMEs.  In fact, only 138 of the 1,190 are considered “major.”  These 138 major companies, however, account for three quarters of France’s total chemical output.  The 138 major companies, which include international groups (Bayer, BASF, Exxon Chemical, Rohm and Haas, etc.), are divided as follows: 88 of the 138 produce organic chemicals (total workforce of over 34,000); the other 50 produce inorganic chemicals (total workforce of just under 7,000).

In 2005, French chemical production grew by 3 percent, a welcome change after three years of decline and one year of modest 0.6 percent growth in 2004.  In addition to this 3 percent growth in production, the French chemical industry also experienced a 3 percent increase in its profit margin.  Last but not least, in 2005, the industrial investments of the French chemical industry enjoyed an 8.7 percent increase from 2004 to reach USD 4 billion.

Packaging, transportation, warehousing and safety regulations for the distribution of chemical products are very strict.  Today, most regulations are issued and managed at the European level.

REACH legislation

After 7 years of negotiating with the European chemical industry, the European Parliament adopted the REACH (Registration, Evaluation and Authorization of Chemicals) legislation in December 2006.  The REACH regulations are designed to mitigate the toxic impact of chemicals on the environment and on human health.  The initial objective of REACH is to replace dangerous molecules with safer ones wherever possible.  REACH places the burden on chemical producers and importers to prove that their chemicals are safe. 

The first phase of REACH requires that 3000 molecules already identified as potentially the most dangerous will have to be registered with an agency being created in Helsinki, Finland.  Manufacturers of these 3000 substances will then be required to conduct various tests on them.   REACH’s second phase, spread until 2018, requires that 27,000 additional less dangerous substances be registered with the same agency, then tested by their manufacturers.

All sales and import contracts must be modified to meet the information requirements of REACH.  Foreign suppliers must have a ‘presence’ in the European Union (EU) in order to register their products.  U.S. manufacturers can appoint an EU-based representative for the purpose of registration.  Any relevant sanctions will be imposed by individual EU member countries at the national level, not by the EU as a whole.  The Chemical Producers Associations of the member countries of the European Union lobbied in Brussels to ensure that these costly regulations will not paralyze the industry.  There is little doubt, however, that they will have a negative impact on the current annual sales of more than USD 20 billion in chemicals exported by the United States to the European Union.

The U.S. Commercial Mission to the European Union (see address at the end for details and information) is monitoring REACH developments.

Best Products/Services 

In 2005, U.S. chemical exports to France totaled USD 6,590 million, a 0.5 percent decrease from 2004.  In 2005, U.S. chemical sales to France exceeded French chemical sales to the U.S. by USD 0.83 billion.  As a supplier to France, the U.S. ranks number two after Germany and before the United Kingdom.

Organic and inorganic chemicals constitute approximately 20 percent of U.S. exports of basic chemical products to France.  The balance of U.S. chemical exports to France is spread between small amounts of a wide variety of products ranging from coatings to detergents and miscellaneous non-basic chemicals.

Opportunities     

Successful market entry of U.S. chemical companies into France depends on innovation, pricing and compliance with French and EU standards and regulations.  Given the strong European competition, U.S. companies should adopt a moderate pricing policy, taking into account the current competitive edge offered by the strong euro.

There are over 130 members of the French Association of Chemical Distributors (FACD).  These include independent distributors as well as the distribution networks established by the major industrial chemicals producers.  They generate annual sales in excess of USD 75 billion.  In addition, a number of German and Dutch companies have subsidiaries in France.

The French chemical industry is always seeking more productive equipment, innovative technologies, product improvements and new products to maintain its profit margins and remain competitive.  The FACD reports that expenditures associated with such activities amounted to USD 3,840 million in 2005, an 8.7 percent increase from 2004.  Continued spending by the French chemical industry on these activities offers a number of niche markets in France for U.S. companies with state-of-the-art products, machineries and technologies made all the more attractive by the current strength of the euro.

Resources      

French duties on industrial chemicals:
Import duties for all industrial chemicals range from total exemption to 5.5 percent. Specific product duties can be found through the French Customs website:
http://douane.gouv.fr/page.asp?id=203

Major French Trade Association:
UNION DES INDUSTRIES CHIMIQUES
www.uic.fr

Major Trade Show:
No major chemical industry trade shows take place in France.  The major European chemical industry trade show is Kunststoff (“K”) in Germany (see details below).  Many dynamic French distributors visit Kunststoff to seek additional innovative products and equipments to complement their line or improve their production.  Kunststoff offers U.S. companies an ideal opportunity to meet with these potential French partners.

Kunststoff - Dusseldorf, Germany
www.messe-dusseldorf.de
Held every three years – Next edition: Fall 2007

United States Delegation to the European Union
Rue Zinnerstraat 13
B - 1000 - Brussels, Belgium
Ph:   32.2.508.2222
Fax: 32.2.513.1228
REACH: www.buyusa.gov/europeanunion/reach.html
e-mail: useu@N0SPAM.state.gov
e-mail: brussels.ec.office.box@N0SPAM.mail.doc.gov

U.S. Commercial Service Trade Specialist : Stephanie.Pencole.Montet@N0SPAM.mail.doc.gov
Phone: (33-4) 78 38 39 42
www.buyusa.gov/france/en

Links to web sites outside the U.S. Government or the use of trade, firm, or corporation names within U.S. Commercial Service web sites are for the convenience of the user. Such links and use do not constitute an express or implied official endorsement or approval by the United States Department of Commerce of any private sector web site, or of the products or services of specifically identified companies or of any of the private entities that may have contributed to a U.S. Commercial Service web site.