Israeli tech companies can help expedite the French (digital) revolution
After Covid-19 shattered French conservatism, its giant companies need a boost of innovation, says Israeli trade attache
The coronavirus (Covid-19) pandemic hastened the need for digitalization in France, and Israeli companies are facing a unique opportunity if they play their cards right, according to Yaron Schrotter, director of the Economic and Commercial Mission of Israel to France, one of 44 economic missions operated globally by the Ministry of Economy and Industry.
"Even prior to the Covid-19 crisis, France was undergoing a digital transformation," Schrotter told CTech. "They were also inspired by us and President Macron's visit to Israel. He imported the term 'startup nation' and has since been using it to describe his vision for France."
Macron used the term on various occasions including at the Vivatech in June 2017, in an address to the French Parliament in July 2018, and at the international show of agriculture in February 2019.
“It is now often used in France without even knowing that it originated in Israel. It is very important for France to create an ecosystem of innovation. France has massive state-of-the-art corporations, but they are relatively conservative and over recent years we are seeing increased interest and necessity for innovation,” Schrotter said. “They are desperately seeking innovation and Israeli companies have a built-in advantage when it comes to this. Israeli companies have innovative solutions for many industries that are relevant to France. Anything from the automotive industry, cybersecurity and retailtech to agtech and foodtech."
Schrotter said that doing business in France presents some special challenges, but that the potential profits make it well worthwhile. "It isn't simple for Israeli companies to work in France due to the size of the companies here. In many ways that is the story of the Israeli tech industry and Israel's economy in general. The Israeli economy is made up of many small companies and in many ways, it is our job as attaches to connect them with big corporations across the globe. This is always a challenge, and in particular in France where the companies are really big and the business culture here is so different to what we have in Israel. The French business culture is relatively slow and conservative and it isn't easy for an Israeli startup to bridge this gap. An Israeli company that wants to operate in France needs to make a real investment. It needs to invest in bridging the language barrier, but also often invest in having a presence here and making the right adjustments for the French market. But this effort is ultimately worthwhile, and especially now when there is this window of opportunity. These French corporations really need innovation and Israel has an excellent reputation."
According to the latest estimates, France's GDP is expected to shrink between 10%-12% in 2020. France managed to flatten the Covid-19 curve and is so far dealing well with the end of the lockdown, but only after registering more than 160,000 cases and 29,778 deaths related to coronavirus. Cafes, bars, and restaurants have reopened, and schools are also back, with France desperate to kick-start its economy, a third of which was essentially shut down during the lockdown. At least 8 million employees, almost a third of France's entire workforce, received money from the government via their employers, a program the country implemented in order to be able to get the economy back on track as quickly as possible.
"Many big events were canceled and it is unclear what will go-ahead for the rest of the year. Events like shows and festivals are a huge industry in France, as is tourism. Tourism only makes up 4%-5% of France's GDP, but as this is the sixth-largest economy in the world that is still a huge amount. Around 90 million tourists visit France every year, the most of any country in the world. Millions of people are dependent on these industries, whether we are talking about hotels, restaurants, transport or entertainment," detailed Schrotter.
Schrotter noted that it takes a certain type of Israeli company to be successful in France. "An Israeli startup without references will have a tough time connecting with the big French companies. This is something we deal with quite a bit. We often advise Israeli startups on what they need to do to reach these companies and sometimes also have to tell them that it might not be possible as they are unable to invest what is necessary to do so. One of our strategies is using local contractors and system integrators to help Israeli startups," he explained.
In addition to Israel's traditional expertise, the economic mission in Paris has also identified the construction industry as an area for growth. "There are particular opportunities that Israeli companies can make the most of right now. Israeli startups are very flexible, very active and quick to react and this gives them a window of opportunity we are helping them to utilize," he said. "You still have to be very cautious and smart when doing business in France, but if you are a startup with references this could be your opportunity. We are really encouraging Israeli companies to come to France. It may not be the first destination for most Israeli startups and there are also big gaps to be bridged in the business culture and in thinking between the massive corporations and small startups. But what is happening in France over the past few years, and is now being accelerated by the Covid-19 crisis, is something that is ideal for Israeli companies. This is one of world's biggest economies and as soon as you start working with the big corporations you will benefit from a very healthy relationship. These are corporations every company would want to work with. There is a huge opportunity here. There is also growing interest in Israeli innovation in the French construction industry. This industry suffered a blow due to coronavirus, but it is quickly getting back on track and France has some of the biggest construction companies in the world that are building towers in the Gulf and stadiums across the globe."
Schrotter noted that on the one hand, everyone in France is extra cautious and in many ways are focused on survival. On the other hand, there is a lot of pressure, which has only increased due to the pandemic, to use digital tools, especially with anything related to remote work, remote medicine and e-commerce, which also results in an increase in demand for cybersecurity solutions.
"Everything is changing and Covid-19 has accelerated the process," he said. "It helps break the French conservatism. They are more open to hearing about new technologies and are moving faster because they need this innovation. This acceleration is ultimately good for Israeli companies."