What the French Know About Globalization (A Lot More Than They're Letting On...)
	In the country that loves the Tobin Tax and claims to hate McDonald's, globalization is a fighting word. But PAT REGNIER finds this hasn't kept French businesses from taking advantage of free trade

Posted Sunday, April 14, 2002; 15.05GMT

	PASCAL SITTLER/REA Suez CEO Gérard Mestrallet

A tale of two companies — appropriately enough, one in London and the other in Paris. Orange, the wireless telephone operator, looks very much like a British firm. Launched in the U.K. in 1994 by subjects of the Queen (a Canadian backed with Hong Kong money), it has become one of the country's best-known brands and its most popular mobile network, with more than 12 million active subscribers in Britain. Its current CEO lives in Kensington and goes to work in W1. But Jean-François Pontal is also a Frenchman who was sent to Orange by France Télécom, the partly state-owned utility that bought the firm in 2000 and still holds 85% of its shares. Orange, in turn, now runs its parent's old mobile network in France from London. "The language of Orange is English, everywhere," says Pontal, who avoids West End theater because his own English isn't quite sharp enough. "So Orange is not really a typical French company."

Or maybe it's a lot more typical than most French would like to admit. To see what we mean, just hop the Eurostar to Paris, and look up the head office of Suez, in a refurbished hôtel particulier a short walk from the Elysée Palace. Here is a deeply French enterprise, whose complicated history is intertwined with the nation's. In the 19th century, when France was still a world superpower, one of its corporate ancestors built and operated the Suez Canal. After World War II, another branch of the family, Lyonnaise des Eaux, lost its gas and electricity businesses to the state. And in 1982, Socialist President François Mitterrand, as part of a massive public takeover of the French economy, nationalized Suez (which by then was mostly a bank) outright. But that company is barely recognizable in today's Suez. After CEO Gérard Mestrallet took over the reprivatized company in 1995, he began unraveling Suez's vast collection of businesses, and got out of banking. "I realized it wouldn't be possible in the international financial market for us to be a diversified holding company any more," he says, explaining that investors on Wall Street and in London pay more for so-called pure plays. Mestrallet has focused Suez on its global water, energy and waste management businesses. Result: the majority of Suez's revenues come from outside France, and about half its shares are foreign-held. Suez and Orange are just two examples of what Philip Gordon, senior fellow at the Brookings Institution, calls France's "globalization by stealth." Look at how the rest of the cac 40, France's leading share index, does business these days. Half of automaker Renault's profits in 2001 came from its partnership with Japan's once-ailing Nissan Motor, which Renault is helping to revamp. Cement maker Lafarge, even though it's in a naturally local business (cement being costly to ship), gets over 85% of its sales from outside France. Meanwhile, oil producer TotalFinaElf, Jean-Marie Messier's Vivendi Universal and financial services giant Axa are all mostly owned by non-French investors. In all about 40% of French shares are in the hands of foreigners. That's more than in Germany or even in that free-trade bastion Britain. "You are starting to get to the point where these are not even French companies," says Gordon. "If foreigners own them, and they sell their stuff to foreigners, they're global companies with headquarters in France."

So much for l'exception Française. The French as much as foreigners cherish the stereotype of a proud but often insular nation that still plays by its own economic rules. Yet on the home turf of José Bové — where a Marks & Spencer going-out-of-business sale is regarded as a crime scene, and politicians of all stripes must be seen defending the monopoly of the state-owned Electricité de France — France's corporations have proved to be not the victims of globalization but among its most effective agents. And French managers say, with little regret, that they are more exposed to the rigors of Anglo-Saxon shareholder capitalism than their counterparts in the rest of Continental Europe. Perhaps instead of vandalizing McDonald's, the kids in balaclavas would do as well to smash up a few Renaults.

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