Sino-French trade relations: Looking beyond based on the present

by | May 31, 2020

Sino-French trade relations: Looking beyond based on the present

May 31, 2020

In 2018 the bilateral trade between France and China reached an all-time high, with a year-on-year growth rate of 15.5%. In 2019 China was France’s seventh largest export market and sixth largest source of imports. France’s exports to China reached $23.38 billion, accounting for 4.1% of France’s total exports. Furthermore, France’s imports from China reached $35.17 billion, accounting for 5.4% of its total imports.

Compared to other European nations, France currently is China’s fourth largest trading partner. It is behind Germany, the Netherlands and the UK. According to statistics of Chinese Customs, the trade between China and France in 2018 was about 34.2% of that between China and Germany. Furthermore, it was 73.8% of that between China and the Netherlands and 78.2% of that between China and the UK. However, it is worth noting that the growth momentum of Sino-French trade remains the fastest among China’s major trading partners in the EU in recent 2-3 years.


French sectors in China

Traditional Industrial Sectors

Of the seven Western industrial nations (G7), France seems to be the furthest from industrial significance. The term “made in France” is often associated with luxury and high-end consumer goods. Often these products are produced by hand and on a relatively small scale. Something which is not really associated with the word “industrial”. However, this is far from the truth. When looking at the diversity of French sectors, it is apparent that France can offer much more than luxury goods or consumer goods such as wine, perfume, and cosmetics.

According to European Patents Office, France has the second highest number of patent applications in Europe. This makes France the second most innovative European country behind Germany. With its 10,163 patent applications in 2019, and France even sits in the fifth place on the world ranking.

The leading industries in France are nuclear energy, aerospace, aviation, and pharmaceuticals. These industries also align with the French export and French investments in China. Based on the latest complete Sino-French trade data available from 2018, the aerospace industry accounts for around 34% of French exports, machinery, nuclear reactors & boilers account for around 15% of the exports, electronic equipment products account for around 5% of the exports, and pharmaceuticals products account for 4.7% of the exports.


Consumer products sector

From consumers’ perspective, these leading sectors might seem miles away from the sectors we know more about. However, this does not mean other well-known sectors are negligible. The more well-known sectors, such as luxury products, (alcoholic) beverages, beauty products also play an significant role in French exports to China. Among these consumer products, beverage, spirits & vinegar accounted for 5.2% of France’s export value to China and essential oils, perfumes, cosmetics, toiletries accounted for around 4% of the exports.

Furthermore, the total value of French beauty products global exports reached 15.7 billion Euros in 2019, with an increase of 9% year on year, it also marks over 10 years’ continuous growth. When it comes to the export to China, the export value in 2019 rose 48% year on year, and this enables China to become France’s 4th export destination country compared to the 7th place in 2018.

With the rise of e-commerce market and increase in consumption power in China, more French brands are entering the Chinese market through cross-border e-commerce. Cross Border E-commerce is often regarded as an express way for foreign brands to enter the Chinese market. Companies can save a large amount of money by not having to set-up a company in China, and it also saves companies the headache of product registration and licensing.

For more information regarding Cross Border E-commerce in China, please refer to our previous article.


Agriculture sector

France is the largest agricultural country in Europe and the world’s leading exporter of agricultural products and processed agricultural products. Although in 2018 France occupied around 28.49% of China’s imported wine market share, lacking behind Australia’s 35.54%, the total French agricultural and agri-food exports to China were 2.3 billion Euros, accounting for only around 11% of its total export to China, with 8 percent decline compared to that of 2017.

However, the opportunities that come with China’s huge consumption scale cannot be neglected, especially fusing French government’s promotion to further expand agricultural exports to China: Following Macron’s visit to China earlier 2018, China finally allowed French beef to enter into the Chinese market after a ban of 17 years following the outbreak of mad cow disease in Europe. The French government also conveyed the message hoping that China and France can continue to expand agricultural trade and further export French pork, poultry and processed pork to China along the path carved out by beef. With the huge consumption scale and business-focused diplomacy approach, it is expected that more French specialties will appear on the table of the Chinese people.


When thinking about France you think about wine. Interested in what the wine market in China looks like? Read our article here!


France’s reinforcement in China in 2019

There exists a significant trade imbalance between China and France. According to the Sino-French trade numbers in 2019, the trade deficit with China reached up to $11.78 billion. How to balance out the large gap of French export & investment in China and vice-versa seems to be one of the major priorities for the French government in recent years.

On November of year 2019, Macron paid his second visit to China on the China International Import Expo (CIIE). Taking a closer look at portfolios of his delegation team, the delegation consisted mainly of the heads of 70 French companies, including industry giants such as Gdf Suez, L’Oréal, Schneider Electric, EDF and Airbus. According to statistics from China’s Ministry of Commerce, a total of 77 French enterprises participated in 2019 CIIE and the intended transaction amount reached more than 2.4 billion us dollars, an increase of 56% compared with the first CIIE in 2018.

Moreover, according to the action plan on China-France relations released during Macron’s visit, 24 undisclosed contracts were signed between Chinese and French companies in fields including certification, aviation, industry, finance and agri-food.


Closing remark

Starting from the discussion on traditional sectors then diving into consumer goods and agri-food sectors, the breadth of French business sectors is undeniable. As for Sino- French business cooperation, we can foresee that it will be still centralized around the traditional leading sectors such as nuclear energy and aerospace. Meanwhile, with China’s consumption upgrading and e-commerce business model, coupled with the optimism of business-focused diplomacy approach, other sectors are also likely to be strengthen and further developed in the Chinese market.

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