“Build your dreams” (“build your dreams”), promises the Chinese manufacturer BYD. Those from France, who hoped to see BYD build its first European factory for the production of electric cars on its territory, took off on December 22, 2023: it was in Hungary that BYD announced it would set up said factory. Like Germany or Spain, France had spared no effort to attract the Chinese juggernaut, which is now competing with Tesla for its place as world leader in this sector. The Minister of the Economy, Bruno Le Maire, went to China in the summer of 2023 to convince the boss of the company. Achieving this would have been a triumph for a government which aims to build 2 million electric cars in 2030, and which has made reindustrialization the compass of its economic policy.
The episode illustrates the difficulty of the exercise. To restore the country’s attractiveness, Emmanuel Macron has focused everything on supply-side policy since 2017: nearly 30 billion euros in tax cuts for businesses, reductions in charges and speeches. business friendly. SSubsidies and standards have come to complete the range, since Covid-19, to confront China and the United States, which are now adopting an openly protectionist policy. The issue is not only economic, Emmanuel Macron and Bruno Le Maire know this well: deindustrialization produces populism on a large scale.
But the policy of supply reaches its limits here. France’s first rivals are not at the end of the world, but within the European Union (EU). What really sets Hungary apart is its labor costs. The minimum wage is the lowest in the EU, after Bulgaria. At 579 euros gross per month, it is three times lower than in France (1,709 euros) and half as much as in Spain (1,167 euros). A competitive advantage of such magnitude that the French public authorities can hardly combat it with tax credits and reductions in charges.
Few options
Despite all its efforts to reduce labor costs over the past ten years, France will never be able to compete with the low-wage countries of the Old Continent – yesterday Portugal, the Czech Republic or Slovakia, today Hungary, tomorrow perhaps being Serbia, Albania, Ukraine… Certainly, with a lot of subsidies, it has attracted a few battery factories in the north of the country, but these, very automated, in reality employ little labor artwork.
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