- The coronavirus epidemic is causing "supply difficulties" for certain French companies, recognized this Friday the Minister of the Economy, Bruno Le Maire, announcing in passing cash measures for the affected companies.
- Subcontractors and SMEs are on the front line, as are certain sectors such as fashion, luxury, the pharmaceutical industry, viticulture or the automobile, on different scales.
- A situation considered problematic for the Minister of the Economy, who wants to remedy the dependence of France on the most strategic sectors. But the challenge is far from simple.
Faced with the coronavirus epidemic, the toll of which amounted to more than 2,100 deaths and 74,000 people infected on Thursday, tension is mounting in Bercy. After bringing together more than thirty representatives from different economic sectors on Friday, the Minister of the Economy, Bruno Le Maire, announced measures to help French companies affected by the paralysis of the Chinese economy. And this, while the epidemic could already cost 0.1 point of economic growth in France.
For the time being, French SMEs and subcontractors are "the most affected by the coronavirus epidemic", specifies Bruno Le Maire. As during demonstrations of "yellow vests" or strikes against the pension reform, the government is therefore ready to relieve their treasuries by granting exemptions from overtime or by spreading out the payment of social and fiscal charges. He also invites the subcontractors' clients to be "understanding" about the delays in deliveries which could expose them to penalties.
Luxury, hotels, tourism, viticulture… they have a drink
This Friday, Bercy took stock of the sectors most concerned, revealing the French dependence on the Chinese locomotive. Immediately cited are luxury, very popular with consumers in China - and where French brands are already established -, but also tourism and hotels and restaurants in France. In early February, the national group of hotel chains already warned the world of "massive cancellations" of stays planned in France until March and April. Wine exporters are suffering the “double pain”: in addition to the drop in Chinese orders, they are also suffering from the increase in American taxes decided by the President of the United States, Donald Trump.
Some industries could also be disrupted by the fact that the epidemic "challenges a number of value chains that are too dependent on their supply abroad," says Bruno Le Maire. This is the case, for example, in the automobile industry or in electronics, even if for the moment, “there are no visible ruptures […]”, specifies the Secretary of State to the Minister , Agnès Pannier-Runacher. “It all depends in fact on the evolution of the coronavirus in China and the rate of restart of the channels in China. They have restarted, but the difficulty is that they do not restart at full capacity, since the operators working in these factories are, for some of them, prevented from coming, ”she continues.
French “sovereignty” in question
Be that as it may, "you have to know how to draw good from evil", underlines Bruno Le Maire. Who does not want to stop there. "This epidemic shows that in certain sectors, supply difficulties can pose a strategic problem," said the minister. "We cannot depend on 95% of the supply of electric batteries from China or Asia, or it is because you are dispossessed of your sovereignty over a strategic and critical component," he warns.
He also cites the health industry, where 80% of the raw materials for the active components of a drug come from China or Asia. A real concern for “health independence in the medium or long term”, underlines Bruno Le Maire. Beyond these two cases, Bercy therefore intends to screen all sectors to detect "strategic vulnerabilities in the supply of French industrial sectors" in order to "draw the consequences in terms of the organization of our sectors" , said the Minister.
Difficult to relocate to France
Only, will he be able to? Economist at Clermont Auvergne University and author of the Economy of China (La Découverte, 2018), Mary-Françoise Renard believes that this approach "can only be limited" given the current functioning of the economy, which is very globalized, especially in the industry.
According to her, firms are hardly tempted to repatriate their production chains which they have installed in China for cost reasons. A reality facing which a State is powerless since it is a question of private companies, especially anxious to get closer to a country whose population exceeds 1.3 billion people. This is the case of the pharmaceutical industry, for which China "is a very important consumer market", and where France has consequently set up research and development centers, illustrates the specialist.
Another obstacle is that of certain raw materials or products where Chinese production dominates. This is the case for example of rare earths, whose Chinese control 90% of the supply, according to AFP, even though they are necessary for smartphones, solar panels and military technologies.
Sign of the issue, Beijing did not hesitate last year to imply that it would block exports to weigh against Donald Trump, on the offensive since 2018 against Chinese trade practices "unfair According to him, reported AFP recently. Without, however, that the argument weighs in this conflict between the two powers, which results for two years by an increase in customs duties, on one side as on the other, on hundreds of thousands of dollars of merchandise. Together with Canada, the United States announced in September 2019 that it would join forces to exploit Canadian rare earths and thus reduce its dependence on China on this point.
"Airbus" electric batteries in France
Faced with its own dependency on China, the French government plans for the moment, for its part, to help companies diversify their supplies where possible. And highlights steps already underway. Regarding the pharmaceutical industry, Bruno Le Maire is counting on a report devoted to solutions to shortages of drugs which should be delivered "within a few days".
The Minister of Economy also took advantage of another positive step already launched, the example of the “Airbus” of electric batteries, a Franco-German initiative to reduce dependence on China. For this mega-project, the European Union has released 2.3 billion euros. And the first pilot site was inaugurated at the end of January in Nersac (Charente).
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- China
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- Bruno Le Maire
- SMEs