Turkey

Turkey is rapidly emerging as a high-growth market for many businesses. Indeed, the country is already Europe's sixth and the world's seventeenth largest economy. Its recent economic growth record, its talented, young workforce and its geographical location as a prime hub for regional market access make Turkey a hugely attractive destination for UK and European trade and investment.

The political, economic and legal reform processes underway as part of Turkey's drive towards membership of the European Union are key factors in encouraging new businesses to grow and prosper. Although current worldwide economic problems are having an effect on Turkey and growth has slowed over the past year or so, the medium- and long term importance of this market cannot be overlooked.

Now is the right time to explore the prospects for your business in Turkey. With its many and varied opportunities, doing business in Turkey can be highly rewarding for those who are well prepared.

The business environment is little different from anywhere else. In Turkey you will find the same keen competitiveness, the same thirst for high quality and the same insatiable appetite for trade. Like any new market, if you want to be successful and fully realise your potential, it is crucial to understand the culture and how business operates locally. 

Doing Business

Once you have decided that entering the Turkey market is right for your company, you will need to identify which part of Turkey you will start in - unless, of course, you are doing business in Turkey as a result of an initial enquiry from a Turkey company.                                                                                                                                       

Choosing the right place to start will depend on a whole range of factors, many of which will be specific to your company. The 'Questions to ask yourself' may help to focus your thoughts on identifying the best place to start.

There is a range of investment zones in Turkey - all of which encourage foreign companies to do business in their particular zone. Are there any such zones in the areas of Turkey you are looking at and, if so, what incentives are on offer? Further details regarding the various investment zones can be found here: http://www.invest.gov.tr/en-US/investmentguide/investorsguide/Pages/SpecialInvestmentZones.aspx

Questions to ask yourself:

  • Where is the greatest demand for my product?
  • Where is there greatest growth potential?
  • How easy will it be to market, distribute and sell
    my product in the provinces I am looking at?
  • What is the local/provincial authorities' attitude
    to international trade?
  • Do they welcome it or do they have a reputationfor bureaucracy and obstructiveness?

Once you have decided that entering the Turkey market is right for your company, you will need to identify which part of Turkey you will start in - unless, of course, you are doing business in Turkey as a result of an initial enquiry from a Turkey company.                                                                                                                                                                                                                                                                                                           

Choosing the right place to start will depend on a whole range of factors, many of which will be specific to your company. The 'Questions to ask yourself' may help to focus your thoughts on identifying the best place to start.

There is a range of investment zones in Turkey - all of which encourage foreign companies to do business in their particular zone. Are there any such zones in the areas of Turkey you are looking at and, if so, what incentives are on offer? Further details regarding the various investment zones can be found here: http://www.invest.gov.tr/en-US/investmentguide/investorsguide/Pages/SpecialInvestmentZones.aspx

Principal Commercial Centres and Towns

Ankara

Ankara is the capital of Turkey and seat of the Government. Although traditionally a town of civil servants and politicians it is increasingly becoming an industrial centre. There are three organised industrial zones. The industries are mainly in the secondary and tertiary sectors.

A number of Turkey's largest private construction companies are based in Ankara, as are several trade and industrial associations including the Union of International Contractors and the Union of Chambers of Commerce of Turkey.

Istanbul

The commercial centre of the Turkish Republic and former capital of three successive empires, Istanbul honours and preserves the legacy of its past while looking forward to its future. Istanbul owes its commercial importance to its favourable geographic location, acting as an intersection for sea and land trade routes. It is the financial centre of the country, and is also responsible for approximately 20 per cent of Turkey's industrial workforce.

Izmir

Izmir, which is the major city of the Aegean region, plays an important role in the Turkish economy. A considerable amount of Turkish exports are shipped from the Port of Izmir, which is the second most highly utilised port in Turkey. The volume of trade activities in Izmir has improved with the establishment of the Aegean Free Zone several years ago, and the city promises to be one of the most progressive trade centres in the Middle East.

Konya

Konya is the largest city in south-central Anatolia and Turkey's agricultural capital. It is home to a large agroindustry. It is also known for its conservatism and as the home of the whirling dervishes.

Kayseri

Kayseri is an industrial town in the east of central Anatolia. It is one of the traditional centres of the weaving industry in Turkey. It has one of the largest organised industrial zones, with over 300 companies established on it. Kayseri is dominated by Mount Erciyes, a dormant volcano, on which the snow never melts. Mount Erciyes is home to a ski resort.

Gaziantep

Gaziantep is at the centre of the GAP (South-East Anatolian Project). The GAP is Turkey's most ambitious development project, comprising 22 dams and the irrigation of over 1.5 million hectares of land. Gaziantep has a strong industrial base.

There are three organised industrial zones and plans to establish a fourth, which would be a free trade zone.

Gaziantep is famous for its kebabs and baklava, reputedly the best in Turkey.

Eskisehir

Situated midway between Istanbul and Ankara, Eskisehir is a developing industrial town. There is a factory manufacturing aircraft engines. There are also two dynamic universities. Eskisehir is traditionally famous as the home of Meerschaum pipes.

Agents & Distributors

Finding the right Agent or Distributor

The checklist below details things you should
bear in mind when looking for a suitable agent
or distributor.

Background

  • Size of agency.
  • History of agency.
  • Number of salespeople, their length
    of service and qualifications.
  • Other agencies held and success record.
  • Banking and trade references.

Distribution

  • Geographical coverage.
  • Types of outlets covered and frequency
    of calling.
  • Transportation
  • Warehousing

Are they right for your product?

  • Knowledge of local market conditions.
  • Marketing competence.
  • Degree of English language skills
    throughout the organisation.
  • Agent's interest in and enthusiasm for
    new products - and yours in particular.
  • After-sales service levels.
  • Required skills of salespeople.

Two of the most common market entry methods into overseas markets are via agents or distributors. They know the market in their territory and can potentially give a very fast way of building market share. The two are often confused, but the differences are very straightforward.

Agents: work for a commission, never buy or own the products, and can be controlled by you.

Distributors: buy and sell to make a profit, own the products, and cannot be controlled by you.

One of the most frequent queries is, "Which should I choose, agent or distributor?" There are no hard-and-fast rules, and the answer may well be different for different territories.

Once you have chosen an agent or distributor you will want to ensure that your products receive a fair share (or more than a fair share) of the agent's attention.

This can be achieved as follows:

  • Visiting as regularly as is practicable at senior management level - this shows interest in, and commitment to, the agent and the market. This will also provide you with an opportunity to learn about conditions in the market and see how your products are faring.
  • Working closely with the agents to show them how they can profit from your products.
  • Helping to prepare marketing and sales plans for the agent.
  • Providing regular training for the sales staff and after-sales training for the technical staff in the UK.
  • Linking performance to incentives and agreeing milestone targets.

Agents

The best agents are those who know the market, and it's a fair bet that if a potential agent is not already active in the market they will not succeed for you. There are several types of agent but they can be put into three broad categories:

1. A sole agent will be the only agent you appoint in the territory, but it still leaves the way clear for you to sell direct. The sole agent will only get commission for those orders that they have brought in.

2. An exclusive agent will want exclusivity. This way they have no competition and receive commission for all sales made in the territory, whether or not they have assisted in bringing in the order.

3. A non-exclusive agent will normally be appointed where you are not too concerned about splitting the world into territories or having agents compete with each other.

Whenever you appoint an agent make sure you have a contract:

  • Verbal contracts are as binding as formal written contracts.
  • Operation as an agent is sufficient to assume a contract exists.
  • Failure to limit territory or products will lead to unlimited territory for all products.

Within the contract make sure you define:

  • Type of agency,
  • Products,
  • Market area,
  • Territory,
  • Targets,
  • Commission levels,
  • Reporting requirements,
  • Negotiating limits,
  • House accounts,
  • Termination conditions,
  • Disputes (arbitration or courts), and
  • Control of IPR.

Distributors

There are really only two types of distributors:

1. Exclusive, where a distributor is given a territory where no other distributor will be appointed.

2. Non-exclusive, where any number of distributors may be appointed in any territory.

Some care needs to be taken in contracts where exclusivity is offered, otherwise the parties can find themselves unwittingly breaching competition policy, an expensive error that can lead to penalties of up to 10 per cent of turnover going back up to three years. This is particularly so if you have a large market share, something easily achieved with a specialist or unique product.

In any contract you should define:

  • Products,
  • Territory,
  • Targets,
  • Promotion strategy and responsibilities,
  • Stockholding requirements,
  • Forecasting requirements,
  • Block exemptions (if exclusivity is granted),
  • Payment terms,
  • Use of IPR (intellectual property such as trademarks and copyright), and
  • Termination reasons and conditions.

Do not include:

  • Customer prices,
  • Restrictions on markets,
  • Restrictions on who else he buys from, and
  • Anything that might distort the operation of a free market.

Distributor termination is not bound by the same regulations as agency termination, but it is often a very fractious and litigious process. Be aware that any notice period must be "reasonable" (three months may be considered reasonable for most products), and damages for breach of contract are unlimited, but must be real.

Economy

Since coming to power in 2002, the incumbent Justice and Development Party (Adalet ve Kalkinma Partisi, AKP) led by Prime Minister Recep Tayyip Erdogan has presided over a period of unprecedented economic growth. According to the OECD, Average Real Economic Growth between 2002 and 2012 has been 5%.  Between 2010 and 2011, growth averaged 9% although 2013 is predicted to see a more modest growth rate after the Turkish economy grew by 2.2% in 2012.

Following the Banking Crisis of 2001, the Turkish government has enacted major structural reforms and pursued a prudent fiscal policy thereby making the country increasingly attractive to investors. In May 2013 the credit rating agency Moody’s Investor Services increased Turkey’s government bond-ratings to Baa3 ‘investment grade’ from Ba1 and assigned the country a ‘stable outlook’. In its explanatory note for the rating increase, Moody’s wrote that ‘Turkey's economic strengths -- its size, wealth, economic diversification and growth prospects -- and its public finances are stronger than many other countries in its rating category’. Data published by the International Investors Association of Turkey (YASED) predicts that Turkey is expected to receive US$ 15-20bn of FDI in 2013, a figure that may well be exceeded on the back of the recent rating boost.

Basic Turkish

Turkish is a Turkic Language spoken by over 80 million people. It is the official language of Turkey, spoken by around 90 per cent of the population as a first language. It is also an official language of Cyprus and is spoken by minority groups in Azerbaijan, Bulgaria, Greece, Macedonia and Romania as well as expatriate groups around the world, most notably in Germany.

Turkish uses a 29-letter variant of the Latin alphabet. It was introduced as part of Mustafa Kemal Ataturk's cultural reforms in 1928, replacing the Arabic variant used during the Ottoman Empire and early years of the Turkish nation.

English

Turkish with English Characters

Turkish with Turkish Characters

Phonetic

Hello

Merhaba

Merhaba

mehr-hah-bah

Goodbye

Gule gule

Güle Güle

gew-leh gew-leh

Yes

Evet

Evet

eh-veht

No

Hayir

Hayır

hah-yuhr

How are you?

Nasilsiniz?

Nasılsınız?

nahs-suhl-suh-nuhz

Please

Lutfen

Lütfen

lewt-fehn

Thank you

Tesekkur ederim

Teşekkür ederim

tesh-ek-kewr eh-dehr-eem

Sorry

Ozur dilerim

Özür dilerim

uz-urr di-ler-rim

Mr

Bey

Bey

(as in "bay", an area of a sea)

Mrs/Miss/Ms

Hanim

Hanım

Hah-num

Excuse me

Pardon

Pardon

pahr-dohn

Cheers

Serefe

Şerefe

she-re-fe

No problem (it's OK)

Birsey degil

Bir şey değil

beer shehy deh-yeel

I don't understand

Anlamadim

Anlamadim

ahn-lah-mah-dhim

 

Contacts

UKTI

Georgina Hamilton

Tel: +44 (0)20 7215 8518

Email: georgina.hamilton@ukti.gsi.gov.uk

UK Trade & Investment

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