By Linda Kozlowski, Director, Global Marketing and Customer Experience, Alibaba.com
The Economic Outlook
Over the last ten years the Turkish economy has seen a dramatic turnaround, with structural reform and government investment all contributing to rapid growth. Between 2002 and 2010 GDP levels more than tripled from $231 billion to $736 billion, and exports reached USD 114 billion - up from USD 36 billion.
As a result of this growth, Turkey is now the 16th largest economy in the world (according to GDP figures in 2010). Furthermore, before the recession hit, the Turkish economy managed to sustain strong economic growth for 27 consecutive quarters, making it one of the fastest growing economies in Europe.
Unsurprisingly, the global economic crisis did have a negative impact on the Turkish economy, but it has rebounded more quickly than many other countries, with signs of recovery as early as the last quarter of 2009. According to the Organisation for Economic Co-operation and Development (OECD), Turkey is expected to be the fastest growing economy of the OECD members between 2011 and 2017, with an annual prospective average growth rate of 6.7 percent.
What are the opportunities for Small to Medium Sized Enterprises?
The continual rise in imports and exports not only indicates that Turkish SMEs are becoming more adventurous and confident about trading with the rest of the world, but also that consumer tastes are becoming more discerning and they are looking to source a wider variety of goods from international markets.
The internet’s continuing expansion has also opened up a host of opportunities for Turkish businesses to trade more easily on an international level, with e-commerce sites such as Alibaba.com providing a quick and simple platform for sourcing suppliers. As of June 2011, Alibaba.com had almost 337,000 registered users in Turkey - a 35 per cent increase on the same time the previous year.
For UK SMEs looking to source from Turkey, the country offers a seemingly continuous supply of raw materials and intermediary goods, which are usually of a high standard and competitively priced. The spearheads of Turkish foreign trade are the automobile and textile industries, with the latter employing 18% of the country’s total workforce. These are followed by the food industry, machinery, electronic equipment, steel and chemical sectors.
The most popular Turkish products on Alibaba.com relate to the food and beverage, machinery and construction/real estate sectors. Turkey is a popular market amongst UK businesses, with five per cent of all Alibaba.com buyer enquiries to the country currently coming from the UK.
In the case of imports, the most popular products amongst Alibaba.com’s Turkish buyers are machinery, agriculture and construction/real estate products. The majority of enquiries currently go to China (60 per cent), followed by India (four per cent) and three percent remain within Turkey itself.
Business infrastructure has also improved immensely over recent years, particularly as investment in the country has increased. For example, in order to start a business in Turkey you previously had to be a resident of the country, meaning that all foreign companies had to buy a house or land before establishing a base there. However, the regulatory environment has now become a lot more business friendly and any nationality can now start a company in Turkey.
What you need to know about Turkey:
The currency is Turkish Lira and there is no specific exchange rate agreed for dealing with foreign companies. Internal and home companies tend to use rates from the ‘Central Bank of the Republic of Turkey’ when dealing with foreign transactions.
Language and Culture:
Turkish is the main language but English is widely spoken across the country. It is unlikely that you will need a translator when dealing with young businessmen, but you may need this with the older generation.
It is also worth remembering that 99 percent of the Turkish population is Muslim so the majority of people will celebrate the spiritual fasting month of Ramadan every year followed by Eid. The second Eid follows one month after the first one and every year this calendar moves backwards by a month.
An increasing number of people from all over the world are moving to Turkey for work, to start a new business or even to retire - it is seen very much as a land of opportunity due to the growing economy and booming tourism industry. Turkey’s new residents come from a variety of countries, including the UK, Germany, Ireland, Denmark, the Netherlands, Norway, Austria, Belgium, France and the USA.
Turkey has one of the most competitive corporate tax rates of OECD members and since new tax law was passed in 2006 the legislation has also become a lot clearer and in line with international standards.
Incentives from the Turkish Government
The Turkish Government has put a number of measures in place that are designed to stimulate activity and trade by SMEs. These include:
Exemption from customs duties
VAT exemption for imported and domestically purchased machinery and equipment
Credit allocation from the budget
Credit guarantee support
These incentives are continuously being amended to encourage investments, particularly in manufacturing and services, the energy sector and exports. Both local and foreign investors have equal access to support whether it is financial or more practical guidance. Additional support from the Government includes training for employees and finance for R&D.
Trading with any international market can be daunting at first but with the trade links, incentives and online tools available today, there really is no reason to be put off. Turkey could present a wealth of opportunities for UK businesses at a time when many are struggling to find those opportunities at home.
Companies considering trading with or establishing a business in Turkey, should contact UKTI and Invest in Turkey, who can provide invaluable help and support.