Positive elementGreen chemistryproves attractiveformula for growthand jobsPage 2

Inside »

Banking on arich heritageFinance turns itsattention tosmaller companiesPage 2

High idealsUrban regenerationprogrammeprovides draw forforeign groupsPage 3

GastronomicpolicyA passionate mixof business andpleasurePage 4

FT SPECIAL REPORT

Doing Business in LyonMonday March 11 2013 www.ft.com/reports | twitter.com/ftreports

The French economy hastaken a battering but Lyon,the southeastern city wherethe Saône and Rhône riversmeet, has been spared much

of the worst of the fallout from threeyears of the eurozone crisis. Unem-ployment in France’s second biggesteconomic region, at 8.4 per cent, isbelow the national level, which is ris-ing above one in 10 after a spate ofindustrial redundancies.

The high-speed TGV trains thatdash back and forth every 30 minutesto Paris remain full of busy businesspeople, typically tapping away thetwo-hour journey on their laptops.

Aderly, Lyon’s inward investmentagency, posted a record year in 2012,reporting the arrival of 71 companiesin the area, promising 1,800 jobs overthe next three years, a shade more

even than in 2007, when the previousrecord was set before the financialcrisis hit in 2008 and a sharp recessionfollowed in 2009. The effects of a yearof zero growth have been felt: Lyon’scommercial property sector saw a bigfall in new rentals in 2012. But foururban development projects aroundthe city are pressing ahead as Lyonlooks to raise its standing in the rank-ings of European economic centres.

“If Europe was to collapse tomorrowof course it would be difficult for eve-ryone but today we are managing tomaintain our course,” says GérardCollomb, the city’s socialist mayor inan interview with the FinancialTimes. “Our big urban projects arerising from the ground and they areallowing us to sustain the current ofbusiness in Lyon during this difficultperiod.” Franck Viart, who covers the

local economy for the regional dailynewspaper Le Progres, adds: “Ofcourse Lyon has felt the effects of thecrisis. Unemployment has risen andthere is a lack of visibility about thisyear. But there have not been the biglayoffs like elsewhere, such as in theauto industry. Those traditionalindustries are not so present in Lyonany more.” Lyon has a history as acommercial and industrial base, posi-tioned not only at a natural cross-

roads between the north of the coun-try and the Mediterranean coast, butalso close to Switzerland and Italy,with Germany not far to the northeast. With St Etienne just to its southwest, Grenoble to the south east andGeneva to the north east, Lyon is atthe centre of a busy commercial hub.

Its traditional industries were basedon textiles, water, chemicals andpharmaceuticals – and a hinterlandrich in food and wine, with the vine-yards of Beaujolais to the north andthe Cotes du Rhône to the south. Thecity prides itself on being the gastro-nomic capital of France, no meanclaim in a country so proud of its foodand drink. “Lyon has always beenhelped by its geographic position andthat continues to be a factor in itsdevelopment,” says Jacques de Chilly,head of Aderly. The city’s ambition is

to consolidate its position as the coun-try’s second economic power afterParis and establish itself as a Euro-pean centre to rival the continent’sother big regional cities.

“When I look at cities like Barce-lona, Milan and Munich, we are stillthe little one at the back of the class,”says Mr Collomb. “But we’ve enteredthe class and that is not bad.”

The city, which counts a populationin the greater Lyon area of 1.2m, hassought to construct a future empha-sising new technology and in areas inwhich it can build on its industrialheritage and its higher educationbase, which has an tradition in medi-cine. These include the environmentand energy, life sciences and chemi-cals, transport and communicationsand the movie and gaming industry.

Continued on Page 2

Second cityputs focuson finding astar roleUrban renewal is at the heart of ambitions torise up the rankings in the economic premierleague of European cities, writes Hugh Carnegy Bright lights, big ambitions: Lyon, seen here during its light festival, aims to establish itself on the international stage Alamy

‘When I look at Barcelona,Milan and Munich, we arestill the little one at theback of the class’

Middle groundHow Lyon’s politicsrun counter tonational trends

On FT.com »

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2 ★ FINANCIAL TIMES MONDAY MARCH 11 2013

Doing Business in Lyon

Mr Collomb emphasisesinnovation and the use ofLyon’s regional strength toconsolidate its attraction tobusiness during a period ofeconomic stringency. “To acertain extent Lyon hasbenefited from restructur-ing,” he says, pointing toSanofi, the pharmaceuticalgroup, which is modifyingits research operations inFrance, increasing its tradi-tional presence in Lyonwhile reducing it elsewhere,notably in Toulouse.

“We’re trying to makesure that Lyon stays in thegame. Our challenge in thecrisis is to be the mostattractive,” adds the mayor.

A particular struggle is tocompete with the magneticattraction of Paris, by farthe biggest business centrein France. As one officialwith a development agencyput it, Lyon and the sur-rounding Rhône-Alpesregion have to battle con-stantly against the “Jacobinhegemony of Paris”.

One way to counter thecharacteristic centralisationof France is to give Lyongreater critical mass. Thecity is due within the nexttwo years to become thefirst city in the countrywith the status of EuropeanMetropolis, merging withthe surrounding Rhonedépartement in a bid toincrease its financial fire-power and streamline thelayers of local administra-tion and bureaucracy forwhich France is notorious.

The city is pressing aheadwith its urban renewalprojects, based around therevival of the large Conflu-ence area, where the city’s

two rivers join, Part-Dieu, acity-centre business district– already second in size inFrance to La Défense inParis.

Officials place emphasisin these projects on build-ing an “intelligent city”,with environmentally-friendly buildings and infra-structure, integrated publictransport and the applica-tion of the latest informa-tion and communicationtechnologies.

Lyon is known for trans-port innovation. It was thefirst city to be connected toParis by TGV in 1981 andthe first in France to deployan extensive network ofpublic hire bicycles, beforeParis won internationalacclaim for its Vélib. Thecity benefits from a four-line metro but still has areputation for patience-sap-ping traffic jams on itsroads.

Perhaps its biggest prob-lem as a business centre isthe perceived inadequacy ofits airport, ranked 47th inEurope. Local businessleaders complain at the lackof international links,despite a tie-up with Emir-ates, the Gulf airline. “Itremains a big handicap,”admits Mr de Chilly. “Welose projects to Frankfurtand Paris because of thelack of international con-nections.”

The other handicap thatall cities and regions inFrance suffer from in bid-ding to attract foreigninvestment is France’s rep-utation for high taxes, rein-forced by PresidentFrançois Hollande’s electionpledge, yet to be imple-mented, of a 75 per centmarginal rate on incomesabove €1m.

Mr Collomb says hewarned the governmentagainst the adverse effects.“It is not so much the com-panies [that worry], it is theindividual people. It is thesenior managers who say‘oh la la’. With such levelsof tax a senior manager of abig international companymay look to go somewhereelse for his next posting.”

The mayor insists thenational government isturning away from newtaxes. It has embarked on a“Say ‘Oui’ to France” inter-national campaign to securemore foreign investment.Lyon is anxious to win afair share of the spoils.

Continued from Page 1

Focusturns tofindingstar role

‘We lose projects toFrankfurt and Parisbecause of the lackof internationalconnections’

With debate raging aboutFrance’s attractiveness toforeign investors, Lyon hasat least one recent successstory to talk about: its so-called “cleantech” sector.

The name might be some-what euphemistic for a sec-tor made up in part by theregion’s historic chemicalsindustry. But during a diffi-cult time for French indus-try, cleantech companies –made up of chemicals,green energy and autosgroups – are proving to be acrucial source of job crea-tion for the city and the

Rhône-Alpes region. Lastyear, 29 cleantech compa-nies set up in Lyon and thesurrounding region, doublethe 2011 number. Theyaccounted for 41 per cent ofall groups that moved tothe area or started up therein 2012. Of the 29, 14 werefrom Germany, Austria,Spain and Italy, five werefrom the US and Canada,two from China and onefrom India.

“Green chemistry, greenbuildings, technology forrenewable energy and envi-ronmentally friendly auto-motives are some of themain areas of growth forLyon,” says Marie-LaureAlonso, cleantech projectadviser at Aderly, the city’sdevelopment agency.

The 800-hectare “Chemi-cal Valley”, along theRhône south of Lyon, was

the birthplace of the Frenchchemicals industry morethan 150 years ago and isstill its heartland. About500 companies, includingArkema, Rhodia and AirLiquide, operate in Rhône-Alpes, bringing in sales ofabout €12bn for the regionand €4bn for Lyon alone.

Despite recent problemsin areas such as PVC manu-facturing, chemicalsemploys 22,000 in theregion, about half in Lyon.

Local officials insist thatthe cleantech tag is morethan just green marketingand a reflection of genuineambitions towards environ-mentally sound processesby the traditionally dirtychemicals and plasticsindustries. As well asChemical Valley, the regionplays host to Plastipolis, theonly plastics industry clus-

ter in France. Lyon’s chiefclaim for “green chemistry”resides in Axelera, set up in2005 by Arkema, Rhodiaand GDF Suez as France’sonly chemicals and environ-ment industrial cluster.

Some €559m of researchand development fundshave been pumped intoChemical Valley as a resultof Axelera, which says ithas put itself at the “serviceof the major societal chal-lenges” such as “the preser-vation of natural spaces;

total recyclability of materi-als; plant-based chemicalsand the factory of thefuture”.

This desire to address the“societal challenges” of cre-ating a less polluted envi-ronment is the thread thatlinks the rest of Lyon’sdeveloping cleantech sector.

Frédéric Miribel, directorof Aderly’s cleantech unit,says: “Driven by environ-mental issues, one can see anumber of activities nowmerging which were previ-ously from quite distinctsectors. Buildings, forinstance, are becomingincreasingly environmental-ly-friendly in design, andthe smart community con-cept encompasses technolo-gies related to energy, theenvironment, transport, etc.The connection betweencleantech and industry is

becoming increasingly visi-ble and should contribute toour economic develop-ment.”

By way of example, thecity has recently teamed upwith Toshiba and NEDO – aJapanese governmentenergy and environmentalagency – for a €50m projectto test “smart community”projects in Lyon Conflu-ence, one of the largesturban developments inEurope.

Toshiba has been joinedby Bouygues, the construc-tion group, VeoliaTransdev, a transport pro-vider, and carmaker Peuge-ot-Citroën to examine“smart grids” in the Conflu-ence dockland developmentto better manage energyconsumption.

The Confluence projectsinclude: the construction of

a 12,000 sq m “positive-en-ergy” building of residentialunits, offices and retailspace; an electric vehiclesharing system with a net-work of charging stations;and the renovation of exist-ing flats to install anenergy management sys-tem.

Other investments inLyon include a move byBosch, the German manu-facturer, to spend €50m ona production unit for photo-voltaic panels. Boschemploys about 1,200 staff atits Vénissieux site south ofLyon. The company saysthe investment “safeguardsproduction and jobs on thissite”.

The cleantech companiesthat set up last year areexpected to create about 800jobs over three years, upfrom 650 in 2011.

Green chemistry proves itself an attractive formulaCleantech

New investors arearriving in numbers,writes James Boxell

‘The connectionbetween cleantechand industry isbecomingincreasingly visible’

Lyon can trace its richbanking and commercialhistory back to the 15thcentury and an epoch whenthe city was wealthier andmore densely-populatedthan Paris.

The Medicis installed abranch of their Italianbanking empire in Lyonand it was the city in whichHenri IV married Marie deMédicis in 1600 – the subject

of a series of paintings byRubens. This was whereFrance’s first stockexchange opened in the16th century, in a buildingwhose name, the Temple duChange, close to the bank ofthe Saône river, indicatesthe reverence accorded tothe activity. The city gaveits name to Crédit Lyonnais– reputedly the world’s big-gest bank in 1900 – andLyonnaise de Banque, sinceengulfed by, respectively,Crédit Agricole and CIC,the French mutual banks.

Jean-Paul Trichet, theformer governor of theBank of France and of theEuropean Central Bank,was one of a large numberof leading financiers born

in Lyon. However, thedevelopment of electronictrading and growing cen-tralisation led to the migra-tion of listings from theprovinces to Paris. Despitea fight, the stock exchange,which moved across theriver to the ornate Palais dela Bourse, finally closed itsdoors in the late 1980s.

Loathe to give up its her-itage, the city has chan-neled its expertise intofinancing and services forsmall and mid-cap compa-nies. “There is no longer afinancial marketplace inLyon but there is a co-oper-ative structure that bringstogether all the actorsinvolved in financing smalland medium-size compa-

nies,” says Marcel Deruy,chairman of the Lyon PlaceFinancière et Tertiare, themain financing associationfor companies based in theRhônes-Alpes region andwhich is headquartered inthe Palais de la Bourse, nowrenamed the Palais du Com-merce.

Mr Deruy says after theclosure of the stockexchange, the priority forLyon was to ensure that itdid not lose its financingexpertise and ancillaryservices to the capital aswell: “The real questiontoday is whether companiesare able to find financingsolutions for their needs.And it’s certainly the casethat the lawyers, bankers,

accountants and others nec-essary to the growth ofcompanies, have a big andactive enough regional mar-ket to keep them here.”

An indicator of thatdemand is the EMLyonbusiness school, third in FTrankings to the Parisregion’s Insead and HECbusiness schools. Last year,the Bank of China opened aregional branch in Lyon,testifying to the growingimportance of China toFrench regional companies.

The association, alongwith other regional part-ners and the Caisse desDepôts, the sovereignwealth fund, has morerecently been developing afinancing mechanism for

smaller companies, which isto be launched in June.Philippe Valentin, deputychairman of the LyonChamber of Commerce,says: “For the past sevenyears we have been work-ing on a tool to help smalland medium-size companiesobtain financing. It willsoon be in place and it’s afirst of its kind in France.”

Under the scheme –named Lyon, Placed’échanges, a nod to theformer stock exchange – thelocal authorities will intro-duce regional investors tocompanies seeking finance.

The minimum investmentis around €200,000 forgroups with sales on aver-age of €2.5m. Mr Valentin

says the financial crisis hastaken its toll on privately-owned small and medium-size enterprises. Theirnumber has fallen from 79per cent of the total in 2007to 47 per cent.

“Private companies aremore willing to open uptheir capital – before thefinancial crisis they did notwant to do this,” he says.“We wanted something sim-ple that allowed companyowners to keep control. Thesystem is based on proxim-ity – the big advantage ofbeing a regional centre isthat everyone knows every-one, which is reassuring forboth investors and the com-panies opening up theircapital.”

Historic centre capitalises on talent for reinventionFinancial services

Future lies in aid forsmaller groups,writes ScheherazadeDaneshkhu

In the six years since Jean-Michel Aulas, owner andpresident of Lyon’s top-flight soccer clubOlympique Lyonnais,launched a plan to build astadium in the east of thecity, the €400m projectturned into a politicalfootball dividing localofficials, environmentalists,fans and residents.

Mr Aulas never gave upand he has finally clinchedthe contract with Vinciconstruction group to buildthe 58,000-seat stadium intime to host the Europeanchampionships in 2016.

The Olympique Lyonnaisowner does not have thereputation of being apushover. He is an atypicalfigure in corporate Franceand more akin to a SiliconValley entrepreneur. MrAulas, 64, started his firstbusiness when only 19rather than climbing thetraditional Frencheducational ladder. Hefounded Cegid, a softwarecompany specialising inaccounting and fiscalservices in 1983 andeventually acquiredcompetitors, developed thebusiness and listed thecompany on the stockexchange.

Football was his otherbig passion. In 1987, hewas asked to help restorethe fortunes of OlympiqueLyonnais which was

languishing in the seconddivision. From thebeginning he adopted abusiness approach and setabout returning the club tothe French first division(achieved in barely fouryears).

He rid the club of itsdebts, reorganised itsmanagement and, over twodecades, transformed itinto one of the richest inEurope. Lyon won its firstever Ligue 1 title in 2002 –the start of a record-breaking streak of sevensuccessive titles.

In spite of his successeson the pitch and inbusiness, the outspoken MrAulas has not escapedcriticism and remains acontroversial, if dominant,figure in Lyon and Frenchfootball. His opponentsdislike his overtlycommercial and financialapproach to the game.Lyon is the first and onlyFrench club to be listed onthe stock exchange. He hasturned the club into astrong business brand. ForOlympique Lyonnais, orOL as it is known, is notjust a football team. It hasa number of subsidiariesoperating in the mediasector (OL Image), inservices (OL Organisation),in catering (OL Brasserie),in distribution (OLMerchandising) and it isalso involved in a travelgroup.

These days, Mr Aulasdevotes most of his time tohis football interests,having sold a large stakein his software company tothe Groupama mutualinsurer.

In an interview in LeMonde, he said he did notsee himself so much as atraditional football clubboss but as anentrepreneur havingdeveloped a new businessmodel for the sport. He isfocusing on his newstadium, which willinvolve the construction oftwo hotels, a leisure centreand office buildings.

He says the project willgive Lyon a huge economicboost as well as become ashowcase for the city andregion. Yet he still has topersuade the banks to lendhim €200m to help financethe grand venture. “InFrance there is a culturalproblem,” he once said.“Winners are not popular.”

Football manwho scores inbig businessProfileJean­Michel Aulas

Olympique Lyonnaisowner has achieved along­awaited goal,writes Paul Betts

Jean­Michel Aulas: atypicalfigure in corporate France

Lyon is famous for two kinds of“bouchons”, and while thefirst – restaurants serving tra-ditional food – is the city’spride and joy, the second – a

French slang word for traffic jams – isless celebrated.

The city may have been a pioneer ofthe high-speed train (the Paris-LyonTGV connection has operated for over30 years) but its road network is farfrom satisfactory for a metropolis atthe crossroads of southern and north-ern Europe and a key route betweenItaly, Switzerland and France.

Difficult terrain to the west andpoor planning in the 1970s and 80shave led to today’s problems.

The city’s western half of the “ringroad” remains a project rather than areality. Lyon is one of the few leadingEuropean cities that has a motorwaygoing through it, with about 115,000vehicles a day crossing the city cen-tre. Efforts have been made over thepast decades to divert and reduce thetraffic and alleviate economic andpublic health consequences for urbandwellers but problems remain.

“We cannot accept this situationany more,” says Gérard Claisse, vice-president at Greater Lyon, a munici-pal federation. After many years ofhesitation, city officials are pushingfor the construction of the westernsegment of the motorway.

A public consultation is under wayand several options are being consid-ered though the Greater Lyon admin-istration clearly has a favourite one.This scheme would mean the con-struction of a 15km road through thewestern suburbs of Lyon, of whichabout 80 per cent would be under-ground.

Its supporters say the proposal,named anneau des sciences (or the“sciences’ ring”, as it would link sev-eral scientific sites around Lyon)would free up space above ground tobuild tram and light-rail lines, thusimproving public transport.

The project requires investmentfrom the central government, eitherto finish the wider bypass road on theeastern side of the city or to build oneon the west side, so the new ring roadis not jammed tight with traffic fromits first day. A decision on this issueis due next summer. Current esti-mates point to €2.5bn investmentneeded for just the construction of thenew section of the road, which is notexpected to be completed before 2028in any case.

The anneau des sciences is not thecity’s only long-term project. TheLyon-Turin railway tunnel, anotherkey element in infrastructure plansfor the city’s development, has beenaround for some time. In spite of soar-ing cost estimates, uncertain traffic

expectations and a degree of politicaluncertainty on the Italian side of theAlps, its promoters remain confidentthat France, Italy and the EU willtake the 57km tunnel project further.But, as for the ring road, no comple-tion before 2030 is expected.

Developing air connections atLyon’s Saint Exupéry airport is achallenge that remains to be takenup. With only 8.5m passengers lastyear (up 0.2 per cent year on year),Lyon ranks third among French cities(behind Paris and Nice) but is farbehind similar size European citiessuch as Dusseldorf (20.8m) or Man-chester (22m). Part of Saint Exupéry’slack of dynamism can be attributed tothe fact that use by low-cost airlinesremains relatively marginal. Low-costpassengers, the fastest growing seg-ment (up 4.5 per cent last year inLyon) represented only 22 per cent ofthe airport’s total number of passen-gers. The scarcity of direct connec-tions beyond Europe, Africa and theMiddle East has not helped either.From Lyon, planes fly to 115 destina-tions, which is significantly fewerthan, for example, Dusseldorf, whichflies to about 200. Direct long-haulregular flights from Saint Exupéryonly take travellers to Punta Cana inthe Dominican Republic (once a week)and, only since last December, toDubai (five times).

Transport shortcomings keepthe brakes on developmentInfrastructure Improving road and air links is problematic, says Yann Morell y Alcover

Growing frustration: the lack of a ring road and slow progress towards a solution mean Lyon suffers from acute road­traffic problems Getty

‘We cannot acceptthis [traffic]situation any more’

Gérard Claisse,Greater Lyon

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FINANCIAL TIMES MONDAY MARCH 11 2013 ★ 3

Doing Business in Lyon

Lyon is France’s secondcity after Paris in the movieand videogame industry, aposition the Rhône-Alpesregion and the greater Lyonarea want to improve byinvesting heavily in thesector. Regional authoritiesinvest almost €8 million peryear in the imaging indus-try.

“There’s a will from theregion and greater Lyon todevelop these sectors,” saysGrégory Faes, director ofRhône AlpesCinéma, a co-production fund supportedby the region and the stateto attract filmmaking to theRhône-Alpes region. Sinceits creation in 1991 the fundhas co-produced 200 mostlyFrench movies, includingOscar-nominated animationfeature Une vie de Chat.

Rhône Alpes Cinéma hascreated the Pôle Pixel, oneof the four “territorial polesof excellence” set up in theregion’s territory, whichgathers all the componentsof the image industry (vide-ogame, cinema, animationand multimedia) in a singlephysical area.

Pixel, located in the cityof Villeurbanne, a 15-minute tram-ride from thecentre of Lyon, was inaugu-rated in 2002 with the con-struction of a 900 sq m stu-dio.

Today, Lyon’s little Holly-

wood comprises 16,000 sq mof shooting space, equip-ment, offices, a school and450 workers.

“The starting point wascinema and we graduallydrifted towards a larger ter-ritory,” said Mr Faes, whoacknowledges that bridgesbetween different sectors ofthe image industry havemultiplied over the years.Pixel’s objective is to facili-tate the synergy betweenthese sectors.

“These actors will have towork together in thefuture,” said Tangui Selo,director of Imaginov’, acluster of 200 image compa-nies based at the Pixel com-plex.

Labelled as a “pole of

competitiveness”, Imaginov’is funded by the state andthe region to assist thedevelopment of companieswith R&D, commercial sup-port and training. These aremissions complementary toPixel Entreprises, a “com-pany hotel”, which rentsready-to-use offices on thePixel complex.

Upper Byte Studio, a vide-ogame start-up, thinksthere are many advantagesto being part of both thosestructures. “There’s adynamic created by thepresence of other compa-nies,” said Camille Masson,co-director and technicaldirector of Upper Byte.“Because we all are smallstructures, when a project

Little Hollywood lies at heartof area’s fertile imaginationMovies and games

Image industry’svaried parts combineto prosper, saysElvire Camus

Straight shooting: city and region invest heavily

Frequently listed among the mostattractive cities in Europe, Lyon, with1.2m residents in the greater city area,claims it has few reasons to envy itsbig sister, Paris, writes Elvire Camus.

It “has all the advantages of a bigcity, without the drawbacks of Paris”,says Pauline Renard, a 27­year­oldsocial worker. Mrs Renard, who haslived in Lyon for five years, appreciatesthe quality of life of the city.

The Lyon property market remainslow compared with London or Paris,because the city still retains a ville deprovince status. For an unfurnishedtwo­bedroom apartment, rent variessignificantly from Lyon (€1,160 amonth), to Paris (€3,300) and London(€4,480), according to a 2011 MercerHuman Resource Consulting study. Butthe prices are rising steadily, despite adecline in the number of transactions –by 24 per cent in 2012 according toFrench real estate agent Laforêt. Themost expensive arrondissements remainthe 6th and 2nd, traditionally Catholicneighbourhoods similar to the beauxquartiers of Paris.

Lyon is listed 39th in the 2012 worldquality of living ranking by Mercer, justafter London (38th) and Paris (29th).

Like any big city, it is equipped witha public transport network of buses,trams and metro lines.

Environmentally­friendly transport hasbeen a goal under socialist mayorGérard Collomb: the Vélo’v network ofpublic hire bicycles, forerunner of theParisian Velib, was introduced in 2005.Two years later, a 5km strip of urbanexpressway on the Rhône river­bankwas returned to pedestrian and bicycletraffic. Playgrounds, footpaths and bikepaths skim the river’s edge, for theLyonnais’ pleasure.

With its well­renovated historicalcentre listed as a Unesco worldheritage site, its Gallo­Romanruins to the east and its117 hectare Parc de laTête d’Or to thenorth, Lyon offersa varied land­scape. Thehistoricallybourgeoiscity,straddlingthe con­fluence ofthe Saôneand Rhônerivers, is par­ticularly attrac­tive and each ofits nine arrondis­sements have their

own identities: from the former anar­chist Croix Rousse neighbourhood tothe Part­Dieu business district.

Owing to its central geographicalposition (two hours from Paris by TGVand less than two hours from Marseille)the city is well connected to continentalEurope and its climate is notably agree­able.

Lyon is a young city; 28.9 per centof its population was under 30 in 2009,according to a study by Insee, thenational statistics agency. It is France’ssecond student city, home to theEMLyon, ranked as Europe’s 15th bestbusiness school by the Financial Times.Out of the 170,000 students enrolled in2012, 12 per cent were from abroad.The chemicals, digital and biotech sec­tors are particularly well represented inthe region.

In an over­centralised nation and withParis historically so dominant, Lyon isworking hard to throw off its provincialtradition.

The city is gradually managing toimpose itself on a national and Euro­pean level.

Culturally, Lyon welcomes manyinternational events and festivals amongwhich the Biennale d’Artcontemporainand the Fête des Lumières. Lyoncounts 17 museums and boasts anopera house partly designed by theFrench architect Jean Nouvel.

“There is a considerable amount ofculture on offer in Lyon but it is still alittle too institutional if you ask me,”says Vincent Carry, head of Arty Farty,a non­profit organisation that promotesemerging artists and innovative trendsin Lyon. Arty Farty created les NuitsSo­nores, a one­week electronic festivalscattered in dozens of venues all over

the city.Mr Carry argues thatsuch a project could

never have existedin Paris because it

was ”custom­made” for Lyon.Today, Lyon hasits own identityaccording to MrCarry.

“We’re overthe competi­tion withParis,” hesays.

City living Paris match is over

From the “Skyroom”, atop the115m Oxygen Tower in thePart-Dieu business district,visitors get a panoramic viewof the lie of the Lyon land,

including its Unesco-protected herit-age centre 2km away to the west, theConfluence peninsula between theSaône and the Rhône towards thesouth and the cars parked on the roofof the commercial centre 28 floorsdown.

There are not many cars on the roof– one reason why is that it is ear-marked to be redeveloped into a greenarea, helping to breath some beautyinto the decidedly 1970s office-blockarchitecture around the Part-Dieurailway station.

Part-Dieu is one of four main areasin Lyon being regenerated to fulfil thecity’s ambition of consolidating itsposition as France’s second-largesteconomic region outside Ile-de-France.

On average, €650m is being spenteach year on commercial develop-ment, mainly by private investors –developers and the corporate sector –while the public authorities’ contribu-tion is mainly confined to planningthe regeneration development andfunding public spaces.

“We are on the phone all the timeasking people to come,” said one cityofficial. So far the calls have paid off.

Last year, 71 companies made Lyontheir regional or national hub, upfrom 60 in 2011, including two Chinesecompanies – Haier, the consumer elec-tronics group, and Bank of China.

Price, quality of life and good trans-port links are important pitches. A

business employing 100 people in 2,000sq m of office space would save €1.3ma year compared with the equivalentspace in Paris, according to city offi-cials.

The countryside and small villagesare just a short drive away, saysGérard Collomb, Lyon’s mayor. Hehighlights the start in December ofdirect flights to Dubai with Emiratesairline: “This is very importantbecause many of our companies aredeveloping business in Asia and it’seasy to get there via Dubai.”

The amount of Lyon office spacehas grown by 21 per cent over thepast 10 years to 5.2m sq m in 2012 butthe rate of growth has slowed sharplyduring the economic crisis of the pastthree years. In fact, commercial rentaldemand fell by more than a quarterlast year compared with 2011, thoughcity officials say this was partlybecause some key projects weredelayed by a few months, pushing thesigning of rental take-up of thosebuildings into this year.

Mr Collomb says the city is carefulto control the pace of development toprevent an oversupply. By way ofproof, officials say that only3 per cent of commercial property isempty, from a peak of 6.5 per cent.

Each of the four regions is beingregenerated with specific businesssectors in mind to prevent them fromcompeting with each other. Part-Dieuis the biggest, with 230,000 sq m so farredeveloped out of 1m sq m planned.It is resolutely a business district,anchored by insurance and financialcompanies. Carré de Soie in the north-

west, targets technology, environmen-tal and energy companies, while themore recent Gerland southern districtis home to a cluster of biotechnologygroups, including Sanofi Pasteur,Merial and Genzyme.

Perhaps the most exciting area isthe smallest. Confluence was anindustrial peninsula with gasworksand a powder factory, cut off from thecity by the railway into Perrache sta-tion, around which thrived a red lightdistrict. Now it is taking advantage ofits double riverfronts to build offices,which will account for 60 per cent ofthe buildings, and trendy residentialapartments for the rest. The London-based Academy of Urbanism think-tank calls it “an outstanding exampleof how to create a new sustainablemixed-use neighbourhood on a citycentre brownfield site”.

More than half the peninsula hasbeen regenerated – its landmarkbuilding being a large orange cube,designed by architects Jakob and Mac-Farlane, which is the headquarters of

Cardinal Group, the property develop-ers. There are media and culturalorganisations as well as the Banquede France which has moved its baseinto Confluence from the historic cen-tre.

Challenges to the commercial devel-opment of Lyon include a traffic prob-lem, pollution and for some, a contro-versial commitment to a number ofskyscrapers in the Part-Dieu area. TheOxygen Tower was inaugurated onlythree years ago and a new 160m toweris planned nearby for 2017, one of “anew generation of towers”, accordingto Mr Collomb. Francois Decoster, oneof the architects working on theregeneration project says: “There’snot much room, so the developmenthas to be vertical. We want a newskyline but it won’t be brutal, not likeShanghai.”

“The city has completely changed inthe past 10 years,” says Mr Collomb. Itsounds like the view from the Sky-room will be very different again inthe next 10.

Emphasis onregenerationattracts interestfrom abroadUrban development Four areas stand outfrom a commercial and environmental pointof view, writes Scheherazade Daneshkhu

Perfectpitch: Lyon’sopera house

High ideals: the Oxygen Tower in Lyon’s Part­Dieu business district Dreamstime

is too big for our shoulders,rather than hire someone,which is risky for us, weask next door if they can orneed to work temporarily,”he went on. Cédric Cadier-gues, the other co-directorof Upper Byte, is artisticdirector for a videogamecompany with offices in thesame building.

Being one of the 22 vide-ogame start-ups to haveblossomed in Lyon since2008, Upper Byte is repre-sentative of the recoveringvideogame industry here.When the financial crisishit and forced six big stu-dios (including EdenGames, an Atari studio) outof business, Lyon lost itsposition as national leaderof the industry. Today,structures like Imaginov’work with the new faces ofthe industry – start-ups – topick up the torch of the bigstudios.

Lyon is looking to imposeitself on the internationalside of the image industry,still largely dominated bythe United States, Japanand Canada. Julie Berliet,in charge of the imageindustry at Aderly, Lyon’sinward investment agency,says the French have agood reputation overseas:“French savoir faire is stillvery much appreciatedinternationally.”

Asked if Lyon has anupper hand over Paris, MrsBerliet says that, ever sincethe invention of the cine-matograph by the Lumièrebrothers in Lyon in 1895,the industry has alwaysfound fertile in the region.“The difference is that here,it’s historic,” she says.

Hugh CarnegyParis Bureau Chief

James BoxellParis Correspondent

Scheherazade DaneshkhuParis Correspondent

Yann Morell y AlcoverFT Contributor

Paul BettsFT Contributor

Elvire CamusFT Contributor

Andy MearsPicture Editor

Steven BirdDesign

Ian MossCommissioning Editor

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MARCH 11 2013 Section:Reports Time: 7/3/2013 - 15:28 User: mossi Page Name: LYO3, Part,Page,Edition: LYO, 3, 1

4 ★ FINANCIAL TIMES MONDAY MARCH 11 2013

Doing Business in Lyon

About 15km west of Lyon’scentre, in the small town ofMarcy l’Étoile, is one of themost emblematic sites forthe region’s pharmaceuticalindustry. The atmosphere ispeaceful and the views ofthe Saône valley and theFourvière hill, with its 85miron tower, are amazing.

But visitors are soonreminded that they are atthe heart of the biggest vac-cine production plants inthe world. The Sanofi Pas-teur Marcy l’Étoile facilitycomprises no less than 90buildings and exports about97 per cent of the hundredsof millions of vaccine doses

produced every year. Thestory of Sanofi Pasteur, partof Sanofi group, in Lyon isillustrative of the city’slong history in the life sci-ences industry. It datesback to the foundation ofthe Mérieux Institute in1897 by Marcel Mérieux, aformer assistant to LouisPasteur, creator of the firstvaccine for rabies. TheMérieux Institute was even-tually taken over in the1970s by chemical groupRhône-Poulenc, which inturn, after a series of merg-ers and acquisitions,became Sanofi.

The group employs morethan 6,700 in the Rhône-Al-pes region, almost a quarterof the firm’s workforce inFrance (28,000) and this fig-ure is expected to remainstable over the next threeyears, despite plans to cut900 jobs elsewhere inFrance.

Sanofi is Greater Lyon’s

biggest private-sectoremployer, thanks to twoother divisions of the group,Genzyme and Merial.“Being here, in a regionwith a strong heritage inbiology, is very important,”says Olivier Charmeil,Sanofi Pasteur’s CEO.

Many other pharmaceuti-cal and life sciences compa-nies have come to the sameconclusion.

Some, such as Boiron, theworld’s leading homeo-pathic drugs maker, in-vitrodiagnostics specialistBioMérieux and laboratorymice-breeder Genoway wereestablished in Lyon. Others,such as Bayer and Merck,have been in Lyon for manyyears.

While the region’s indus-trial production has beenhard hit over the past 20years, the pharmaceuticalsector has been one the fewthat has escaped.

Job cuts have not been

avoided, especially in biggergroups but job creation,especially in the biologyand the biotechnology sub-sectors, seem to have out-weighed them.

According to figuresreleased in December bythe French statistics insti-tute (Insee), the pharmaceu-tical industry added 3,700jobs (35 per cent) in theRhone-Alpes region,between 1990 and 2010. Theoverall number of industrialjobs in the region shrank by24.3 per cent.

According to figures fromthe Greater Lyon council,the city concentrates about9 per cent of total jobs inthe pharmaceutical indus-try in France.

Most of these are locatedwithin the Lyon’s so-calledChemical Valley and theGerland business district,home to many national andinternational groups suchas Sanofi Pasteur, BASF

Beauty Care Solutions orL’Oréal’s Episkin centre, aunique facility that pro-duces reconstructed epider-mis used for cosmetic test-ing.

Despite tough competi-tion from other leadingFrench cities such as Paris,Toulouse and Strasbourg,Lyon has an edge in severalareas of the life sciencesindustry.

“Lyon really is a globalleader in the infectious dis-eases area and in medicaldevices,” commentsPhilippe Grand of Ernst &Young.

City officials seem tohave realised the industry’spotential as a driver for eco-nomic growth and employ-ment.

They have been pushinghard to foster furtherinvestment. Part of thiswork has resulted in the“competitiveness cluster”styled Lyon Biopôle, a body

in charge of promoting col-laboration between localcompanies and scientificresearch and training insti-tutions, both public and pri-vate, working in the field ofinfectious diseases.

“Two things make ourproject different from mostclusters – our strong indus-trial leadership and the factwe manage our own infra-structure,” says IsabelleScarabine, economic andinternational affairs direc-tor at Lyon Biopôle.

From six founding mem-bers (among them fourindustrial partners: BectonDickinson, BioMérieux,Merial, Sanofi Pasteur) in2005, the cluster has grownto 130, mostly small andmedium businesses.

It has enabled the crea-tion of at least 11 start-upsand has led to almost 200scientific publications andthe registration of dozens ofpatents.

Pharmaceutical hub builds on groundbreaking heritageHealth and biotech

Life sciences are seenas a contributor togrowth, writes YannMorell y Alcover

‘Lyon really is aglobal leader inthe infectiousdiseases area andin medical devices’

It is noon on a Thursdayin February and all is calmin the emergency callcentre at the headquartersof Homeserve’s Frenchoperations in the centre ofLyon. A screen mountedon the wall shows that 295calls have come in sincemidnight from the UK-based company’s Frenchclients seeking assistancefor a household emergency.

But apparently that isnothing compared withwhen customers havereturned from a weekendaway to the horror of burstpipes, blown electrics oranother calamity. “It’s aquiet day today,” says oneof the call-centremanagers. “We take morethan 1,000 calls onMondays.”

Operating under thelocal brand name ofDomeo, Homeserve hasbeen working in Francesince 2001 when it becamethe first company to bringto the country its round-the-clock service. It isunusual in being a foreigncompany operating inconsumer services in a citybetter known for itsindustrial and scientificemphasis.

Rachael Hughes, theBritish business womanwho launched the Frenchoperation – originally ajoint venture with Veolia,the French utility – says ittook nine months to cracka market unused to theservice Homeserve wasoffering. But then businesstook off. “Customerreaction is similar in mostplaces if you get home late

and the pipes are leaking,”she says.

It was harder to buildthe network of contractorswilling to sign up to beavailable at all hours in asociety where workinghours tend to be strictlyobserved. “The typicalreaction of the localplumber was to say, I’meating my lunch between1pm and 2pm so how can Ianswer a call,” laughsPierre Loustric, Domeo’sgeneral manager.

Domeo employs 500 in itstwo sites in Lyon includingboth emergency and salescall centres. The companynow has 900,000 householdsholding 2.3m policies and1,000 contractorsnationwide to serve them.Revenues in the first halfof the current financialyear reached £26.6m, withan operating profit of£5.6m.

Mr Loustric, who willtake the French reins fromMs Hughes as she leadsHomeserve’s move intomore European markets, istargeting 1.5m householdsover the coming years.This campaign willcontinue to be based inLyon. Ms Hughes says heroriginal intention was toset up in Paris. But Veolia,which Homeserve has sincebought out, had ready-made offices available inLyon. “I thought verymuch that we shouldlaunch in Paris,” sherecalls. “But I looked atLyon and realised it wasideal. If I was to do itagain, I wouldn’t go toParis or anywhere else.”

Both she and MrLoustric cite a readyavailability of goodmanagerial and white-collar talent in the area.

But Ms Hughes still hasher gripes – notably aboutthe limitation of links fromLyon’s airport. A directflight to Birmingham,where Homeserve is based,was recently stopped, toher consternation. “The airlinks are a real issue forinternational businesses.”

Call­outservicefeels athome

ProfileHomeserve

A UK­basedbusiness is thrivingafter overcoming acultural hurdle, saysHugh Carnegy

‘Customer reactionis similar in mostplaces if you gethome late and thepipes are leaking’

Back in 1935, MauriceEdmond Sailland, theFrench food writer dubbedthe “prince of gastronomes”and better known by his

pen-name Curnosky, declared Lyonthe “world capital of gastronomy”.The city and its region with its longand distinguished culinary traditionticked all the boxes in his book ongastronomic excellence. “Good cook-ing is when things taste of what theyare and above all when it is kept sim-ple,” he said.

For Lyon, food – and all its relatedindustries – is much more than goodand pleasurable eating. It has a signif-icant impact on the city’s economyaccounting for around €1bn of localGDP. It is a big employer, and thepresence of chefs who have accumu-lated a total of 64 Michelin stars makethe region all the more attractive forvisiting businessmen and women aswell as tourists. The region accountsfor 11 per cent of all French appella-tion d’origine contrôlée designatedproducts such as cheeses, butter, sau-sages and wines.

So it was not surprising that thecity, its mayor Gerard Collomb, itschefs and restaurateurs were all dis-mayed and angered when Lyon wasnot chosen in January by the Frenchheritage food mission as the country’s“city of gastronomy”. Instead, themission – set up in 2008 as part of theFrench government’s campaign topersuade Unesco to declare the Gallicmeal an intangible heritage of human-ity – opted to award the title to a trioof cities: Dijon, Tours and the Pariswholesale market suburb of Rungis.Adding insult to injury, it said Lyoncould eventually join this network ofgastronomic cities.

Lyon is already part of a network of

likeminded international citiesengaged in promoting culinary excel-lence and good food.

With its own culinary heritage – itstypical small bistros known as bou-chons, its abundance of markets, itsarray of regional produce, its schoolsand culinary research institutes, itsMichelin- starred restaurants clus-tered around one of the world’s mostfamous chefs Paul Bocuse (see articleon this page) – the mayor could notunderstand why Lyon had not beenchosen.

Others underline the point: “It is allpolitics once again,” said the chef of apopular Lyon watering hole near thetown hall. “They probably wanted tospread the goodies around rather thangive it to Lyon.”

The city does not intend to let thesetback undermine its gastronomicindustry and culture that are soimportant to its social and economiclife.

In January, people flocked to Sirha,Lyon’s biennial international food res-taurant and hotel exhibition. Theweek-long event attracted 185,000 visi-tors and 18,715 chefs from 86 coun-tries. Of the 2,980 exhibitors, 21 percent came from abroad.

Several international competitionswere held, including the world pastrycup and the Bocuse d’Or, a publiccontest for one of the most covetedprizes between selected chefs fromaround the world that is more akin toa sporting match than a traditionalcooking competition.

Jerome Bocuse, son of Paul Bocuseand president of Sirha, said after-wards the exhibition had “reallybecome the world rendezvous for thefood, catering and hotel industries”.

As for Mr Collomb, he is pressingahead with the project to turn the

Hotel Dieu, the grand old hospital nolonger in use on the west bank of theRhône, into a centre of gastronomy.The €18m scheme was a central partof the city’s bid to be declaredFrance's city of gastronomy.

“It is a great project,” says PaulBocuse. “We will be opening a bistrothere.”

“We are going ahead with thisproject with our construction partnerEiffage and the international publicwill judge which is the true capital ofgastronomy,” says Mr Collomb.

The plan is for the old hospital,which dates back to 1454 and is a

historic city landmark, to be to be asite for gastronomic exhibitions, con-ferences, a museum, educationalcourses and tasting experiences in abuilding where Francois Rabelaisonce practised medicine.

In 1532, the former Franciscan-Bene-dictine monk turned doctor and greathumanist wrote his most celebratedwork Gargantua and Pantagruel dur-ing his tenure at the hospital. Themessage of the book is “eat, drink andbe merry”.

It seems totally appropriate forthere are few better places than Lyonto do just that.

Enduring centreof gastronomyhas little to fearfrom rivalsFood Despite a snub by an awards judgingpanel, the city’s biennial exhibition had a stronganswer for the critics, writes Paul Betts

Lyon is sometimes describedas the city near PaulBocuse’s restaurant, writesPaul Betts. This is notentirely an exaggeration. The87­year­old chef is a livinglegend. He has probablydone more than anybody topromote the culinary tradi­tions of his region and hiscountry. He has been named“chef of the century” and the“pope of French gastron­omy”. When he turned up inNew York in February for theopening of the Bocuse res­taurant at the Culinary Insti­tute of America he wastreated like a pop star. He isprobably the best knownFrenchman in Japan.

He is larger than life, andhas always remained close tohis family roots in the villageof Collonges on the banks ofthe river Saône outside Lyon,he likes doing things inthrees. He has had threebypasses, he still has threewomen in his life and he hashad three Michelin starssince 1965. In a couple ofyear’s time, God willing, hewill become the first chef tohave held the top gastro­nomic accolade for half acentury.

Standing in his splendidwhite toque and white apronin his eccentric, stylish yetsomewhat kitsch red andgreen auberge, he acknowl­edges he is getting “a littletired”. Since his last heartoperation, he has developedParkinson’s disease. That hasnot stopped him running hissmall empire, watching overhis kitchen, travelling aroundthe world, albeit less thanbefore, and defending whathe calls “real food”. After all,he was the first famous chefto emerge out of his kitchen

to meet his customers andthe wider public, although hesuggests this trend may havegone a little too far andchefs should start going backto their kitchens.

“You cannot have goodfood without good products,That is lesson number one,”he says. Lesson number twois that it is not the chef whodecides but it is the cus­tomer for “no customer, norestaurant”. Lesson numberthree: “You need good seats,round tables and smiles allaround because our job is togive pleasure.” At the bottomof his menu he has a quotefrom Van Gogh as his motto:“How difficult it is to be sim­ple”.

His food is certainly notsimple and is executed withmilitary precision in his spot­less kitchen and served byan elegant brigade with theharmonious professionalismof a symphony orchestra.Although at one time cred­ited as the founder of “nouv­

elle cuisine”, the dishes hehas been serving for decadesare the antithesis of this con­cept, which he has describedas “an approach to cookingfor those who have lost theirappetites and leads to ano­rexia”. In his traditional styleof cooking, cream and butterare omnipresent. In any case,he adds, “what is new todaywill be old tomorrow.” Forhim, the greatest change ofall is not to change anything.

“Here in Lyon and itsregion we are blessed. Wehave one of the world’sgreatest larders for produce.Chickens from Bresse, won­derful meats, vegetables andfruits, we have fantasticcheeses and incrediblecream, the great Beaujolaisvineyards north of the cityand great Rhône wines tothe south, we have rivers andlakes full of fish. Lyon andFrance are a paradise forfood,” he says, as a waiterserves his famous trufflesoup he invented for former

President Valery Giscardd’Estaing. If Paul Bocuse hasbeen good for Lyon and itsinternational resonance, hereadily admits that Lyon hasalso been good for him.

Like other celebrity chefs,Bocuse has restaurants inJapan and the US as well asbrasseries in Lyon. The city’scovered market has beennamed after him and theInstitut Paul Bocuse trains450 students a year from 47countries. At the same time,he has not expanded aroundthe globe as much as othersand says, in his cryptic way,“we don’t really like goingout to the suburbs.” He stillsleeps in the same room hedid as a child on top of therestaurant. He talks fondly ofhis kitchen gardens where histeam pick fresh salads andvegetables for the restaurantthat never closes except ontwo nights a year – Christ­mas and New Year. He haskept a straightforward pro­fessional approach.

Above all he clearly loveswhat he does. His life startedin the kitchen of his father.He apprenticed with La MèreBrazier, the late Eugénie Bra­zier, the first woman toreceive three Michelin stars.With her, he cooked, fed thepigs, washed the linen andlooked after the kitchen gar­den. After subsequently train­ing under the genial FernandPoint at La Pyramide inVienne, south of Lyon, he setabout putting his own markon the Lyon tradition ofgreat, simple cuisine trans­forming his auberge at Col­longes into a welcoming tem­ple of gastronomy. He willundoubtedly end in thekitchen just like Molière didon the stage.

Living legend Veteran chef is biggest champion of region’s culinary traditions

Lighttouch: achef inthe finalof Lyon’sworldpastrycupGetty

Simple ideas: Paul Bocuse says Lyon is ‘blessed’ Getty

‘[Lyon has] really becomethe world rendezvousfor the food, cateringand hotel industries’

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