TURKEY MARKET OVERVIEW • Turkey Market Overview
Agenda 1 Methodology of Research 2 Overview of Turkey 3 Survey Main Findings
Methodology • Phase 1: Preliminary Desk Research • Match supply capabilities with Import behaviour of Turkey • Shortlist potential products • Appoint Consultant • Phase 2: Fieldwork • Collection of Samples (20 products used) • Face to Face Interviews 3 – 12 December 2012 • Importers • Chamber of Commerce and Associations of Food importers, Shoe Manufacturers, Ship Models • Regulatory body: Halal Certification Body • Mystery shopping • Phase 3: Reporting and Disseminating Main Findings • Workshop • Report on Website, in EM’s Knowledge Centre
Fieldwork - Mystery Shopping for Agro Products • Objectives: • collect retail prices of potential competitors for Jam, Noodles, Honey, Tuna, Canned Fruits and Liquor. • Retail Stores Surveyed: • Carrefour • Macro Centre, • MMM Migros
Turkey Facts • Full name: Republic of Turkey • Population: 73.6million • Capital: Ankara • Largest city: Istanbul • Area: 779,452 sq km (300,948 sq miles) • Major language: Turkish • Major religion: Islam • Life expectancy: 72 years (men), 77 years (women) • Monetary unit: Turkish lira • Internet domain: .tr • International dialling code: +90
Economic Overview • Turkey is World’s 17th largest economy • GDP per capita: $14,400 • GDP real growth rate: 8.5% in 2011, but 2,2% (2012) • Inflation: 6.5% • Major industries: textiles, food processing, autos, electronics, mining (coal, chromate, copper, boron), steel, petroleum, construction, lumber, paper. • Unemployment rate: 9.8%
Political Overview • Turkey is in EU Accession Negotiotations, since 2005 • Parlamentary System • Politically stable country • Strong one party rule for the last decade – Justice and Development Part (center-right, conservative) • Next Elections 2015
Population Structure • Youngest population in Europe; Average ageis 29 • 1.8m Students graduate each year • The young population is image conscious and brand aware • 67m GSM Users
Foreign Trade Exports $143.4 billion Exports - commodities:apparel, foodstuffs, textiles, metal manufactures, transport equipment Exports - partners: Germany 10.3%, Iraq 6.2%, UK 6%, Italy 5.8%, France 5%, Russia 4.4% Imports $232.9 billion Imports - commodities: machinery, chemicals, semi-finished goods, fuels, transport equipment Imports - partners: Russia 9.9%, Germany 9.5%, China 9%, US 6.7%, Italy 5.6%, Iran 5.2%
Economic Benchmarks • Corporate Tax 20 % • VAT 18 % ( two reduced rates 8% & 1%) • Basic Monthly Salary – 978 TL ( approx. 515 USD) • Law: derived from various European systems, mainly French, Italian, and Swiss. The Turkish court system does not include the concept of jury. Verdicts are reached by a panel of judges
Business Climate I • Bridging Europe and Asia, Turkey is located in the heart of the Eurasia region catering to a profitable market. • Turkey is a springboard to enter alternative markets such as the Balkan markets including Bulgaria, Macedonia, Romania; former Soviet Union markets like Azerbaijan, Kazakhstan, Turkmenistan as well as neighbouring countries like Iraq, Iran and Georgia. It means tapping a total market estimated at 220 million inhabitants. • It is traditional, but also modern; multicultural and techologically advanced market.
Business Climate II • Business people are open minded and definetely open for international contacts • It is a vibrant economy and an emerging market • Bureaucracy can be an issue in certain cases, specifically when dealing with the Government for various permits and licences • Good infrastructure exists, but Traffic is an issue. Moving from one meeting to another in Istanbul, can easily take an hour if not more.
Why do business in Turkey? • Steady growth over the last eight years. • According to Goldman Sachs, the country will become the ninth largest economy in the world and the third largest in Europe by 2050 • Large and yet unsaturated market • Half of the Population is under the age of 29 • Developed infrastructure and logistics • Centrally located • Energy Corridor and Terminal of Europe • Large and strong domestic market • Mature and Dynamic Private Sector • Liberal and reformist investment Climate • Customs Union with the EU since 1996
Opportunities For Mauritian Businessmen • Agriculture • Textile, specifically denim fabrics • Food and Beverage • Tourism • Consumer Goods
Key Projects & Trade Shows Key Projects: • Istanbul Finance Project • 3rd Bridge on the Bosphorus • 3rd Airport in Istanbul, planned to be the biggest in Europe • Privatization of power plants • Bioistanbul Key Trade Shows: • Foodİst • World Food • Istanbul Fashion Week • Texbridge
Business Culture I • Shakinghands, both male and female is normal in Turkey. • A personal relationship is an important basis for a successful business affiliation in Turkey. • Proceedings begin slowly with the exchange of pleasantries and the drinking of Turkish tea served in small glasses • Pricing and finance are tackled slowly and never at the beginning of negotiations • Entertaining in the evenings can greatly assist the development of a close relationship.
Business Culture II • Turkish people are highly hospitable and business is relationship-based, so it is good to take time to get to know the counterpart. • When entering a room, it is common to greet the most elderly or most senior first with a handshake. • In general, Turkish people will identify themselves as Muslim but will not necessarily practice. Some will drink alcohol but eating pork is extremely unusual. • Status is important – family background, profession and appearance • Gadgets like a state-of-the-art mobile phone are popular. • Bargaining is part of everyday life and will occur at all levels
Travel to Turkey • Currently, no direct flight with Turkish Airlines, but it is under discussion and expected that a direct link Istanbul – Mauritius will start in the near future. • Internal flights to main cities like Ankara, Izmir, Antalya are very common • Trafic is a problem. It is not advised to drive for people visiting Istanbul for the first time. • Moving by taxi or hiring a driver/ rent-a-car is a better option • Maximum 3-4 meetings per day. A typical first meeting takes 1 – 1,5 hours.
Main Business Sectors & Trade Figures Main Matching Business Sectors between the two countries are: Agriculture, Textile, F&B, Tourism, Logistics. Mutual trade volume between Turkey and Mauritius Tradevolume between Turkey and Mauritius was 41.7 million US$ in 2012. Exportsto Mauritius were equal to 35.5 million US$, whereas imports from Mauritius were valued at 6.2 million US$. The principal exports of Turkeyto Mauritius:iron and steel bars, leather articles, machinery products as well as rubber tyre The principal exports of Mauritius to Turkey: denim fabrics, T-shirt and plain weave cotton, bakers wares.
Consular Information Ordinary passport holders from Mauritius are required to have visa to enter Turkey. They can obtain one month multiple entry visas at the Turkish border gates. Threemonth period multi entry visa can be obtained from Turkish diplomatic representations abroad. The Turkish Embassy Physical Address : 1067 Church Street, Hatfield,Pretoria, South Africa Postal Address : PO Box 56014, Arcadia, 0007,Pretoria, South Africa Tel : +2712 342 6055/6 Fax : +2712 342 6052 E-mail : email@example.com Web : www.turkishembassy.co.za
Food & Beverages I Highlights: • F&B industry grew by 18.1% in 2012 • Share of F&B industry within GDP is 20,1% • The total value of F&B exports was announced as $6,708 million in 2012. • The value of F&B imports was reported $3,429 million in USD. • Top 5import countries for the F&B industry in Turkey are Malaysia, United States, Germany, Ukraine, Netherlands. • «Vegetable and Animal Oils & Fats Sector»has the highest share of imports equal to 32,5 %, while «Pasta, Noodles, Couscous and Bakery Products» has the lowest share of imports.
Food & Beverages I Banana chips • Turkish is a big consumer of Banana • Only one supplier of Banana chips from Ecuador: • Plantain Chips available in packets of 75g. • Flavoursavailable are:JungleChilli. Garlic and Pacific Sea Salt. • Retail prices in supermarkets is around Rs 54 for the 75g packet • Quality and price of Mauritian Banana Chips found to be very good. • Mauritians can compete with “Plantain” by adapting its production to suit the local tastes. • The Banana chips will need to be marketed as a healthy snack so as to gain market acceptance (less monosodium level).
Food & BeveragesII Tuna • 9 tons of tuna fish imported in Turkey p.a • Kerevitas and Dardanel are the two main players • Albacore, Bigeye, Northern Bluefin, Skipjack and Yellowfin Tuna are the main types. • Imports from Philippines, Thailand, China • Good potential for Mauritian exporters if there is good price/quality value
Food & BeveragesIII Pineapple, Litchis and Breadfruit • Bananas, pineapples, coconuts, avocado, kiwi are the main imported tropical fruits • Logistics and Customs issues • 100,000 tons p.a bananas are imported from Ecuador, Costa Rica, USA. • High potential for fresh Victoria Pineapple during off-season. • High Potential to enter the market for fresh Litchis and Breadfruit • High Potential for canned pineapple and canned litchis. • Breadfruit not well-known but importers willing to test the market.
Food & BeveragesIV Alchoholic Beverages • The top four alcoholic beverages produced and consumed are beer, raki, wine and vodka. • Local players continued to dominate alcoholic drinks sales in Turkey during 2011. • Rumis not much preferred alcoholic drink by local consumers, but there is certain niche market in the hotel industry, specifically at 5 * all inclusive hotels. • Fruits in the rum bottle are not allowed to be imported according to Turkish standards.
Food & BeveragesV Cut Flowers • rose, pink, orchidare the main imported cut flowers • Turkey is also cut flower producing and exporting center • Turkey imports cut flowers mainly from Netherlands, Kenya. Spices • black pepper, chili pepper, mint, thyme, cumin and cinnamon are mostly consumed • Exotic spices are not much of demand • Distributionchannel obstacle, due to high shelf costs at supermarkets • The value of spice import in Turkey is relatively insiginificant (250.000 TL)
Food & BeveragesVI Noodles • Turkey is one of the top pasta producers in the world • Joint venture with Japanese Nissin Food & Yildiz Holding for noodle production in Turkey • 1,000 tons noodles imported • Growing young population, economic prosperity and increasing urbanization, it is expected that the consumption of noodle will increase in the future. • Mauritian noodles can compete with “Indomie” price-wise.
Food & BeveragesVIII Halal Certification • Association for the Inspection and Certification of Food and Supplies (GIMDES) • 20% of consumers pay attention to Halal certification • GIMDES has a representative in South Africa • Mauritian exporters are recommended to initially target the 80% consumers who do not look for Halal certification.
Textile & Apparel I • Textile and clothing are among the most important sectors of the Turkish economy and foreign trade. • These sectors had a 18,5% share in total export volume • There are more than 40,000 textile and clothing companies in Turkey with an estimated workforce of 750,000 employees • Turkey ranks 8th in world cotton production and 4th in world cotton consumption. • The Turkish clothing industry is the 6th largest supplier in the world.
Textile & Apparel II • Significant Increase of textile imports since 2003 • Top 10 import countries are China, Bangladesh, India, Italy, Vietnam, Sri Lanka, Egypt, Pakistan, Spain, Indonesia • The local apparel industry is very competitive in both price and quality. Turkey is a manufacturer of T-shirts, coats, jackets, swimwear, kidswear and lingerie for world famous brands. • Turkey is importing ready-to-wear, but mainly premium brands from Italy and USA or average quality offers with very attractive pricing from the Far East.
Denim Garments & Textile • There are couple of well-known local denim fabric manufacturers like Isko, Deba, Bossa but still Turkey imports quite a big volume of denim fabrics and denim garments. • The value of denim fabric imports was around to 431 million USD, while the value of denim garment imports was around to 184,4 million USD in 2011. • The top 5 countries that Turkey imports denim fabric are Pakistan, India, Italy, China and Bahrain. • In recent years, the highest increase of denim fabric import to the Turkish market was from Romania and Morocco. • Mauritius on the other hand is number 14 in the list of denim fabric importers to Turkey in 2011.
Denim Garments & Textile • Value of denim fabric imported from Mauritius was: • 3.151.808 USD in 2009 • 3.243.443 USD in 2010 • 3.462.090 USD in 2011 • The share of Mauritian imports in the total value of Turkish denim fabric imports is only 0.8 % • There is definitely potential for further penetrating the Turkish market. • For example, the share of denim fabric imports from Pakistan in the Turkish denim industry is 45 %; from India it is 10,2 % and from Italy it is 9,5 %.
Textile and Garments • Opportunities for Mauritius • Customs duties will be phased down over 4 years • Customs duties still imposed on India, China, Pakistan • Since there is cut-throat competition for cotton denim, Mauritians should focus on soft denim garments (mixed with viscose and polyester). • Turkish importers not happy with the Quality and Standards from Asian Exporters – opportunities for Mauritian exporters • Even if Asian operators are competitive, there are many hidden costs since the Turkish clients have to travel regularly to check quality • Key Success Factors: Reliability, Quality, Trust and Long-term relationship
Ship Models • It is relatively small and niche market, but still with potential for growth • To be able to work with shipyards, the Mauritian exporter should be ready to work on order basis • Price and quality level of Mauritian models very good • The Ship Model Association in Istanbul ready to support Mauritian entrepreneurs.
Sunglasses • The annual consumption of frames is 9-10 million pieces • The annual consumption of glasses is 20-25 million pieces • The main import markets for spectacles and sunglasses are China, Italy, France, Germany, Japan and South Korea • It is an import driven market, but imports which are mainly from China are supplied at very competitive prices • Mauritian operators need to compete on quality and price aggressively from China.
Footwear & leather • The footwear market is quite price sensitive in Turkey • High Quality local production available • The footwear offer should be of high leather quality and offered at a competitive price.
Key Success Factors • Advanced Research and Planning • Adjustment of Business Model to Suit local conditions • Establishing efficient logistics • Long – term commitment • Relationship development with distributors, local government and partners • Understanding competition and market dynamics • Prior international experience would be an advantage • Patience when dealing with government and empathy for a different culture • Be adjusted for realistic time frames and budgets
Realities of the Turkish Market • Languageis a vehicle for better business relationship • Relations with buyers are very important; thus the importance of customer loyalty • Although it depends on sectors and industries, it is a fact that Turkish buyers prefer to deal with local agents. (specifically in Textile business) • The presence of the Mauritian company in the local market should be continuous and long-term. Interrupted and unstable presence is a reason for disappointment and failure