FMConsulting CEO Peter Heidinger gives a presentation on "Market Entry in Turkey" in Investing in Romania, Poland, Turkey and China Conference, Italy.

Size: px

Start display at page:

Download "FMConsulting CEO Peter Heidinger gives a presentation on "Market Entry in Turkey" in Investing in Romania, Poland, Turkey and China Conference, Italy."

Kelly Beasley
5 years ago
Views:

FMConsulting CEO Peter Heidinger gives a presentation on "Market Entry in Turkey" in Investing in Romania, Poland, Turkey and China Conference, Italy.

1 FMConsulting CEO Peter Heidinger gives a presentation on "Market Entry in Turkey" in Investing in Romania, Poland, Turkey and China Conference, Italy. December 13, 2013 Padova, Italy Eurointerim International organized a conference on Investing in Romania, Poland, Turkey and China in December,2013 which introduced by Luigi Sposato, President of Eurointerim Spa. Following this introduction, consultants from different countries gave presentations on the current economic situation and investing in Romania, Poland, Turkey and China. You can find Mr. Heidinger s presentation about "Market Entry in Turkey " in the following pages.

2 Presentation Market Entry in Turkey Peter J. Heidinger December 13, 2013 Padova, Italy

3 3

4 What makes Turkey that interesting? 76 million people Youngest population in Europe Average age: % younger than 35 Highly motivated labor force Near to Europe Strategic location Neighbor countries 4

5 Turkey is the Gate between the Eastern and Western World Turkey... ddd 5

6 World s Largest Economies (GDP-PPP, USD trillion, 2012) Source: IMF, World Economic Outlook, Undersecretariat of Treasury, October

7 Europe s Largest Economies (GDP-PPP, USD trillion, 2012) Source: IMF, World Economic Outlook, Undersecretariat of Treasury, October

8 Comparison of Europe and Turkey: Real GDP Growth (2001=100) Source: OECD, Undersecretariat of Treasury,

9 GDP Growth Rate Projections (%) Source: Ministry of Development, Medium Term Economic Program , Undersecretariat of Treasury,

10 Per Capita GDP (USD) Source: Turkstat, Undersecretariat of Treasury,

11 FDI Inflows (USD billion) (*) Annualized as of September 2013 Source: CBRT, Undersecretariat of Treasury,

FDI Inflows (USD billion) FDI by Sectors (2008-2012) Wood and Wood Products; 4% Transport Equipment; 4% Other; 11% Food Products, Beverages and Tobacco; 31% Pulp, Paper and Paper Products and

12 FDI Inflows (USD billion) FDI by Sectors ( ) Wood and Wood Products; 4% Transport Equipment; 4% Other; 11% Food Products, Beverages and Tobacco; 31% Pulp, Paper and Paper Products and Publishing and Printing; 4% Machinery and Equipment; 6% Basic Metals and Fabricated Metal Products; 6% Rubber and Plastic Products; 11% Textiles and Textile Products; 11% Other Non-Metallic Mineral Products; 13% Source: CBRT,

FDI Inflows (USD billion) FDI by Countries (2008-2012) Other; 25% Austria; 13% Luxembourg; 11% Saudi Arabia;

13 FDI Inflows (USD billion) FDI by Countries ( ) Other; 25% Austria; 13% Luxembourg; 11% Saudi Arabia; 3% Belgium; 4% Netherlands; 10% France; 6% USA; 6% Germany; 6% Spain; 7% United Kingdom; 9% Source: CBRT,

14 Privatization Implementations (Billion USD) Source: Privatization Administration, Saving Deposit Insurance Fund, Undersecretariat of Treasury,

15 Exports (USD billion) (*) Annualized as of October 2013 Source: Turkstat, Undersecretariat of Treasury,

16 Imports (USD billion) (*) Annualized as of October 2013 Source: Turkstat, Undersecretariat of Treasury,

17 Top 10 Countries in Foreign Trade Exports (2012) Imports (2012) Country USD 000 Country USD 000 Germany Russia Iraq Germany Iran China UK USA UAE Italy Russia Iran Italy France France Spain USA India Spain S.Korea Source: Turkstat,

18 Main Product Groups in Foreign Trade Exports (2012) Imports (2012) Product Group USD '000 Product Group USD ' Precious stones, precious metals, pearls and articles thereof 2- Vehicles other than railway or tramway rolling-stock, parts thereof Mineral fuels, minerals oils and product of their distillation 2- Boilers, machinery and mechanical appliances, parts thereof Boilers, machinery and mechanical appliances, parts thereof Iron and steel Iron and steel Electrical machinery and equipment, parts thereof Electrical machinery and equipment, parts thereof Vehicles other than railway or tramway rolling-stock, parts thereof Source: Turkstat,

19 Trade between TR and EU (*) Jan.-Sep. Source: Ministry of Economy,

20 Distribution of Employment by Economic Activity (%) Source: Turkstat, Undersecretariat of Treasury,

21 Unemployment Rate (%) Source: Turkstat, Undersecretariat of Treasury,

22 Average Inflation in Periods (%) Source: Turkstat, Undersecretariat of Treasury,

23 R&D Expenditure per Capita (PPP, USD) Source: TUBITAK, Undersecretariat of Treasury,

24 Electricity Demand and Supply in Turkey (Billion kwh) Source: TEIAS, Undersecretariat of Treasury,

25 Turkey s Energy Perspective Targets for 2023 Complete use of the potential of indigenous coal and hydro resources Maximum use of renewable resources Incorporate nuclear energy into electricity generation Rapid and continuous improvement in energy efficiency Turkey s Energy Corridor Concept: Strategy is to act as a transit country for secure & commercially viable projects and to be an energy terminal. e.g. TANAP (Trans-Anatolian Natural Gas Pipeline) Project Some ongoing important energy projects that will help Turkey s Energy Security: Mersin Akkuyu Nuclear Power Plant-Russia Sinop Nuclear Power Plant-Japan Source: Ministry of Economy,

26 Growing Dynamism in Turkey's Domestic Market Cell phone penetration rate in households: 93.2% (2012) Internet access rate in households: 47.2% (2012) Internet access rate in enterprises: 92.5% (2012) PC penetration rate in households: 31.8% (2012) Laptop penetration rate in households: 27.1% (2012) Digital camera penetration rate in households: 27.1% (2012) Printer penetration rate in households: 14.0% (2011) 1 of each 5 people owns a vehicle. (2011) Source: Ministry of Economy,

27 Logistics 2012 Europe s biggest truck fleet 53,000 hauler trucks 1,800-2,000 logistics and transportation companies Almost 1.4 million flights in million tonnes freight and 131 million passengers in airways 25. biggest ship fleet in the world 68 airports and 253 ports Total length of divided highways reached 18,000 kilometers High-speed railway projects are carried out rapidly Source: Ministry of Economy,

28 Market entry in Turkey Market entry without direct investment Direct sales Co-operation with an agency or importer Distribution via a sales representative Establishment of a liaison office Market entry involving direct investment Establishment of a branch office Establishment of a new company Participation in a company Acquisition of a company Joint venture 28

29 Essentials of strategy development Market opportunities? 29

30 Essentials of strategy development Market opportunities? Competition? 30

31 Clarification of the following issues: How large is the market potential and how is it developing? What is the regional distribution of the customers like? Do they import directly or do they buy locally? Which local and international competitors are currently operating? How are they positioned and which strategies are being implemented successfully? How satisfied are the customers with the products and services that have been offered so far? Which deficits are there? What are the distribution structures in the sector like (chain from the producer down to the final customer)? How is the price situation and which products are mainly being sold? What is the image of the own brand like in Turkey? 31

32 Testing the market Definition of the target group Mailing to the companies that are interested Research for companies Re-contacting Identifying of contact persons Phone interview to find out if they are interested Short-listing of companies that are interested In-situ talks with the companies 32

33 Direct sales There is not a large number of customers. Customers are bigger companies that are used to buy and import directly from foreign countries. Pricing pressure is very high, and the products need little explaining. The products need a lot of explaining and are very customer-specific. A representative will hardly be able to provide the required know-how, but the market is not large enough to be able to have an employee. 33

34 Direct sales Advantages Direct contact with customers No price increase due to commissions to be paid to representatives Disadvantages Time-consuming when there is a large number of customers Smaller companies prefer to buy locally in Turkey 34

35 Agent or importer Market potential < 1 million Customers are municipalities or the state 35

36 Agent or importer Advantages Advantageous cost situation Fast access to the market Utilization of existing resources Disadvantages Partners often think short-term Difficult to steer Strategy cannot be decided directly Market information is filtered Less customer confidence compared to own representation 36

37 Experiences of our customers with importers and agents In practice usually considerably less successful than company s own representation Problems due to diverging mentalities By first having a representative and then own company you train a future competitor Short-term thinking is not compatible with the building up of the market that will be rather slow at first 37

38 Possible mistakes when choosing partners You choose an exclusive partner who only has good leads to one of several target sectors Your sales partner represents too many companies already 38

39 More possible mistakes You choose a representative with a traditional mentality You choose a representative that is not active enough 39

40 Problem areas Your partner plans on a rather short term Market information is being filtered 40

41 Search for a sales partner Definition of profile of desired partner Systematic search for candidates (should be ) together with contact persons Personal interviews of the candidates on the basis of a detailed questionnaire, collection of market information Analysis and reporting Long list Mailing to the candidates Interviews with the candidates Verification of references Phone interviews for short-listing Consultation of potential customers: What are their recommendations? Selection of one or several partners Possibly local follow-up in the initial period 41

42 Sales representative In practice of little significance, mostly there is a real employee, or an agent or importer Individual personnel who will work strictly on a commission basis is extremely hard to find 42

43 Liaison Office Easy market entry Comparatively few expenses Not a full legal entity No personal income tax for employees 43

44 Liaison Office Advantages Steering of strategy with own employees No personal income tax for employees Representation with an address and phone number in Turkey Simple expense accounting Disadvantages No way to issue local invoices No possibility of importing or stock-keeping Input tax not deductible Customer confidence 44

45 Limited liability company Advantages Easier access to the market Full governance Customer intimacy and confidence Control of know-how Competitive advantages Qualified employees Disadvantages Running expenses Administrative burden 45

46 Joint Venture We only recommend a joint venture if the strategic benefits are very high There are many examples of joint ventures that have failed miserably 46

47 Employee Leasing Customized recruitment for example by our recruitment company Employment in a Turkish company (we offer to employ the persons in our company Professional employee administration, payroll by us Optional active employee management by us Functional management by our client 47

48 Employee Leasing - Advantages Fast and and uncomplicated market entry Full control of activities Highly flexible, formation of a subsidiary in Turkey later on possible and even possibility to quit the market easily 48

49 A little bit of advice Be careful how you conduct negotiations Try to gain people s trust Take emotional aspects into account Build and cultivate personal relationships Develop intercultural know-how on Turkey 49

50 Turkey Newsletter Foreign Market Consulting publishes a complimentary monthly newsletter via , which informs about current economic and political issues in Turkey in a concise and condensed manner. Subscribe 50

Turkey: Recent Developments and Future Prospects. ISBANK Economic Research Division October 2018

Turkey: Recent Developments and Future Prospects ISBANK Economic Research Division October 2018 Macroeconomic Outlook Strong Economic Growth Cycle GDP of 851 bn USD (2017), 10.6k USD (2017) per capita