Strengthening connections to drive future growth

The experience of treasurers and CFOs in France

France has rich historic, cultural and trading links with Africa, and the strength of these ties show no sign of weakening. According to research we conducted recently amongst treasurers and CFOs from across Europe and the Americas, 40% of French companies prioritize Africa as a growth destination, almost double the 21% from respondents from other parts of Europe. Similarly, over half, 54%, anticipate further expansion into Asia Pacific for sales or sourcing. Uniquely, French companies are far more motivated to seek growth in emerging markets than more developed regions. For example, while 87% of companies overall were inclined to seek growth in North America, this was only 57% amongst French respondents.

Managing complexity

Seeking growth in emerging markets brings more complex challenges than expansion in more familiar regions of Europe and North America. French companies’ biggest single concern when seeking international growth, is to understand regional regulation, highlighted by 29% of respondents. This can seem particularly challenging in regions such as Africa, where there is significant diversity across countries, and differing levels of market and regulatory maturity. For example, French respondents ranked managing FX volatility as a higher supply chain priority than those from other countries sampled.

However, companies increasingly recognize the value of their partner bank’s local presence and expertise, and tailored solutions, to help meet their local, regional and global objectives. In addition, French CFOs and treasurers were particularly concerned about ‘on the ground’ issues that could impact their international growth strategies, and ranked the importance of building supply chain relationships (26%) and managing the ongoing impact of COVID-19 (23%) more highly than those from other regions.

The value of long-term relationships

A story that resonates strongly for French respondents in this study is one of loyalty and long-term relationships. From a liquidity perspective, French companies were far more likely to fund their international growth through bank facilities than respondents from other countries, with 89% emphasizing the importance of bank funding compared with 69% overall. The recognition of the value of long-term, trusted relationships was also apparent in the way that French respondents seek to build resilience into their supply chains. In particular, they were less inclined to diversify their suppliers outside their home market and also less likely to renegotiate payment terms with existing suppliers (49% vs 61%) than those from other countries.

This commitment to maintaining good, long-term relationships is very positive for stable, resilient supply chains. However, companies also need to consider working capital requirements. Working capital techniques such as supply chain financing (reverse factoring) can be a valuable way of protecting the company’s own working capital position, therefore stabilizing the supply chain as a whole, whilst also protecting the interests and working capital of their supply chain partners.

For more information please visit our Europe and Americas page.