theThe French economy is largely built around the myth of the “national champion”, i.e. the large company which, thanks to its talents and know-how, shines internationally and participates in the increase of French prosperity. This myth is strongly rooted in French culture.
This myth of the national champion is today embodied by companies such as TotalEnergies, Hermès, LVMH, Renault, Schneider Electric, L’Oréal, Sanofi… These large companies, which we find within the CAC 40 and the SBF 120, are the pride of France, and economic news never misses an opportunity to celebrate this or that success of our national champions on an international scale.
If internationalization and the conquest of markets are well-known characteristics of our national champions, their governance is rarely analyzed and commented on. The latter, however, has undergone very significant transformations in the last twenty years, the full extent of which we have not yet fully realized.
Minority French directors
Their study highlights rather worrying trends for the future of our national champions, whose ties to the national context are weakening at historically unprecedented proportions (“Towards a great eradication? Governance and economic footprint of listed French companies »Haithem Nagati, Bertrand Valjorgue and Sébastien Winston, Supporting evidencenotebook no. 7, French Institute of Corporate Governance, EM Lyon).
Since 2017, the capital of large listed French companies is no longer majority held by French shareholders. In less than twenty years, French participation in large listed companies has fallen from 72% to 34%, bringing with it a profound change in the sociology of shareholders, in their expectations and in their behavior. The profiles of managers and administrators are also in the advanced internationalization phase.
In 2023, 82% of executives were French nationals, compared to 90% in 2015. At the director level, 92% were French in 2015, compared to 74% in 2023. If this dynamic were to continue, it is likely that Before 2035, French directors will become a minority on corporate boards.
What are some examples of French national champions and their impact on the economy?
Interview between Time.news Editor and Economic Expert on the Myth of the French “National Champion”
Time.news Editor (TNE): Welcome to our special segment. Today, we’re delving into an intriguing phenomenon in the French economy: the concept of the “national champion.” With us is Dr. Clara Lefèvre, an expert in international economics and corporate governance. Dr. Lefèvre, thank you for joining us.
Dr. Clara Lefèvre (CL): Thank you for having me. It’s a pleasure to discuss such a critical topic.
TNE: Let’s start with the basics. The “national champion” is an idea deeply embedded in French culture. Can you elaborate on its origins and why it holds such importance?
CL: Certainly! The concept of the “national champion” primarily originates from the post-World War II era when France aimed to restore its economic standing. The idea was to create large, competitive businesses that could thrive on the global stage and, in doing so, enhance national pride and prosperity. Companies like TotalEnergies, LVMH, and Renault epitomize this idea as they are viewed as not just businesses, but symbols of French excellence and innovation.
TNE: That makes sense. Yet, there seems to be a growing concern about the governance of these national champions. You mentioned in your studies that there have been significant shifts over the last two decades. Can you walk us through some of those changes?
CL: Absolutely. Over the past twenty years, the governance structures of these corporations have evolved dramatically. There has been a trend of increasingly international boards, resulting in a dilution of strong ties to the French economic context. This has implications for the strategic direction of these companies as their leadership may not prioritize national interests as strongly as before.
TNE: Interesting. So, you’re suggesting that the globalization of these companies might be compromising their national identity and responsibilities?
CL: Precisely. While internationalization is crucial for growth, it’s important that these companies retain some connection to their roots. Studies show that the proportion of French directors in these companies is decreasing, which could weaken the influence of national priorities in corporate decision-making.
TNE: Does this trend pose a risk to the French economy as a whole?
CL: It could, yes. When national champions lose their connection to France, there’s a risk of a “great eradication” of their economic footprint in the country. We could see a decline in domestic investments, job losses, and even an erosion of the cultural values these companies represent.
TNE: What do you think needs to be done to address these concerns?
CL: There needs to be a more proactive approach from public authorities. Reinforcing ties between government and business can help ensure that these companies remain committed to the national agenda while still pursuing international opportunities. This could involve policies that encourage local leadership representation and foster investments back into the French economy.
TNE: A collaborative effort seems crucial then. do you think the myth of the national champion can evolve into something more sustainable in the future?
CL: Absolutely. The concept can be reshaped to foster a balance between international ambition and national loyalty. If we can adapt to the changing global landscape while maintaining a strong domestic focus, the national champions can continue to thrive and uplift the French economy.
TNE: Thank you, Dr. Lefèvre, for your insights today. It’s clear that the future of France’s national champions will depend on how they navigate these complex issues of governance and globalization.
CL: Thank you for having me! I look forward to seeing how this unfolds in the years to come.
TNE: And thank you to our viewers for tuning in. Until next time!