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ANALYSIS-France tells investors: just learn to play game our way

* GE-Alstom comes weeks after Dongfeng stake in PSA

* France a venue for foreign M&A, but FDI remains weak

* For many, sluggish economy more of a concern

PARIS, June 25 (Reuters) - For the boss of General Electric, the trials and tribulations of doing business in France are summed up in the lyric of an old Rolling Stones' song: "You can't always get what you want, but if you try sometimes you just might find you get what you need."

This pragmatic approach to one of the Western world's most complex business environments, spelt out in a blog by Jeff Immelt to staff after GE secured parts of Alstom's energy business, highlights France's uneasy investment image.

For some, government involvement in the Alstom saga - which included pushing through a decree expanding its powers to block takeover deals in strategic sectors, and the state taking 20 percent stake in Alstom - has added to their concerns.

"The GE-Alstom deal is another negative example of the protectionist French attitude," the German country head of a large investment bank said.

"In France, bosses are sometimes taken hostage and tyres are burned, but on top of that the state interferes even if companies don't ask for it," said the banker, who declined to be named to avoid harming prospects of doing business in France.

He was referring to frequent worker protests over layoffs and so-called "boss-nappings" in which employees lock managers in their business premises overnight to demand concessions.

Other observers are more phlegmatic. GE's experience shows that for all its reputation, France isn't necessarily hostile to foreign takeovers if the acquirers know which buttons to push.

Ultimately, Paris agreed to the sale of Alstom's lucrative gas turbine assets and a joint venture in the sensitive nuclear arm, acknowledging the struggling firm could not go on alone.

Indeed, the GE-Alstom deal was the second time in months that the Socialist government has allowed an iconic company to bring in foreign capital.

China's Dongfeng became a shareholder in car-maker PSA-Peugeot-Citroen alongside the French state as part of a capital injection. Shareholders backed the deal in April.

"It's not like it's a forbidden land for M&A. Deals happen all the time," said Daniel Holland, senior equity analyst at Morningstar, who covers GE and other conglomerates.

"It's just a reminder that the government still has a role regardless of how much you think the market should decide."

CHARM

In the Alstom battle, patience, presentation and job creation were key. Immelt led a charm offensive which included meetings with President Francois Hollande and pro-intervention Economy Minister Arnaud Montebourg, wooing lawmakers and trade unions as well as advertising in leading newspapers and radio.

Faced with a rival offer by Germany's Siemens and Japan's Mitsubishi Heavy Industries, GE totally revamped its offer to turn it from a straight purchase into one including joint ventures, a state stake-holding and veto on nuclear strategy.

It sought advice from asset manager Lazard - some of whose managers have ties with Hollande going back years - and vowed to create 1,000 new jobs within three years or accept a fine of 50,000 euros ($68,000) for every job short of that target.

A strong asset for GE was having establishment insider Clara Gaymard - ex-head of the Invest in France agency and wife of a former minister - at the head of its French business and a very public advocate for the bid. GE also made widely known that it has had a permanent industrial presence in France for some 40 years, making it anything but a hostile American predator.

Put together, GE's approach allowed Hollande's government - enduring rock bottom popularity ratings due to the poor state of the euro zone's second largest economy - to claim a victory.

"We live in a complicated world where multiple voices must be heard and understood," Immelt reflected in his blog.

The government may have intervened in Alstom's case, but it did not step in on a much bigger takeover this year by Switzerland's Holcim of French group Lafarge, the world's largest cement maker.

It also stayed out of a now defunct plan by France's Publicis to merge with the U.S-based Omnicom to create the world's largest ad agency.

To many analysts interviewed about Alstom, the clear message is that France will intervene only when it sees the business as strategic, or when many domestic jobs at stake.

"France has given itself veto power but that's normal given the strategic nature of the matter and I'm sure other countries would have done likewise," one Italian investment banker said.

The 2-trillion-euro economy is struggling more than other large industrialised countries to attract foreign investment but it is still a major target for M&A activity.

Thomson Reuters data on M&A deals going back to 2000 show France as the sixth biggest target of cross-border deals with a total value of nearly half a trillion U.S. dollars.

This puts it slightly behind neighbouring Germany and the Netherlands and far behind Britain both in terms of value and share of M&A deals coming from abroad. But still, over a third of M&A deals targeting French companies come from abroad.

Its regulations on foreign direct investment are slightly less open than those of 16 fellow EU countries but are still less restrictive than average among the main industrialised nations, according to rankings by the OECD think-tank.

That said, foreign direct investment in terms of GDP lies far behind all other G7 countries except Japan, representing 0.2 percent of France's economic output last year, seven times less than the OECD average, data show.

ECONOMY MORE A CONCERN

France's reference daily Le Monde backed state intervention to get a better offer for Alstom but voiced concern that the state had taken a stake in Alstom for what it called political reasons to prevent the leftist Montebourg resigning.

"This could further put off foreign investors who will choose to avoid France and its interventionist state," the daily said in an editorial.

"If foreign direct investment in France, apart from real estate, is far below OECD average, there is a reason for that."

Officials note that France is not the only country keeping an eye on bids targeting flagship companies. Washington barred Dubai Ports World from buying port operator P&O in 2006 and stopped China's CNOOC buying oil firm Unocal in 2005.

In Europe, British Prime Minister David Cameron said he wanted further commitments from Pfizer before giving his blessing to a takeover bid for Britain's second largest drugs group AstraZeneca, which eventually fell through.

Some argue the interventionist risk in France is manageable and that the real problem is a sluggish economy - which the statistics office sees undershooting the government's 1 percent growth target this year - and the failure of successive governments to bring about deep structural reform reform.

"Investors have always known that (intervention) is the case," said Andrea Williams, European equity fund manager at Royal London Asset Management.

"They would be more worried about the fact that the economy does not seem to be doing that well and the reforms are not being introduced by Hollande."

GRAPHICS LINKS: FDI inflows in G7 countries: http://link.reuters.com/fej32w Cross-border M&A deals: http://link.reuters.com/gac49v Holdings in public companies: http://link.reuters.com/sed47t ($1 = 0.7355 Euros)

(Graphics by Vincent Flasseur; Additional reporting by Arno Schuetze in Frankfurt, Stephen Brown in Berlin, Alberto Sisto, Stephen Jewkes and Danilo Masoni in Rome, Jeffrey Dastin in New York, Sophie Sassard in London; editing by Mark John and Paul Taylor)