Turkish Companies Expand Globally

Istanbul, Turkey | January 31, 2008 by D-8 Secretariat

After years of expansion within the domestic market, Turkey’s companies are learning step by step how to become global actors since they have faced tough challenges from the forces of globalization, especially at the start of the new millennium, reported the Turkish’s TodaysZaman daily.

Turkish food giant Ülker Group realized the biggest acquisition by a Turkish company in history in 2007, buying luxury chocolatier Godiva for $850 million. Not only are Turkish firms becoming more active in foreign markets, but their brands are also gaining more recognition with non-Turkish customers.

State-owned news agency Anatolia summarized the most outstanding examples of these companies in a study yesterday. Including numerous sectors, from food to home appliances, these examples indicate the increasing tendency of mergers and acquisitions by Turkish companies.

Vestel, a leading home appliance and electronics manufacturer, exports 90 percent of its production to 106 countries, while 80 percent of its export revenue comes from the European Union.

The company sells roughly 20 million units abroad every year. Earning $12.5 billion from exports in the last 12 years, Vestel has been the number-one exporter in the electronics market for seven years.

Turan Erdoğan, the deputy CEO and president of Vestel’s Foreign Trade Department, says they started focusing on new markets this year, especially in India and Far Eastern countries. “We see great opportunities in these regions. We are expecting big increases in Australia, the Middle East and Eastern Europe as well,” he adds. He notes that their company accounts for 6 percent of the world’s electronic equipment production and also produces 28 percent of European electronic equipment. In addition, Vestel has an 11 percent market share in the European refrigerator market. In the realm of digital products, Vestel has a 50 percent share in Britain and 20 percent in Europe overall. Twenty-eight percent of the European television market is also under Vestel’s control.

Erdoğan notes that his company is also vying to take the leadership of the LCD and plasma markets across Europe, planning to leave China and Taiwan far behind. In 2006 the company bought Finlux and Luxor to enter the Scandinavian and North European markets. In addition to these mergers, it bought the Graetz brand, a leading electronics manufacturer widely known in Germany’s natural hinterland. All in all, Vestel’s exports revenue added up to $2.7 billion in 2007, and the company is angling to hit $2.9 in 2008.

Ülker to complete facilities in Egypt and Pakistan

The Ülker Group realized the biggest acquisition in history by a Turkish company in 2007, buying Godiva for $850 million. Atilla Kurama, the CEO of Yıldız Holding, Ülker’s parent company, said the Godiva purchase reinforced his company’s success in the chocolate market: “This acquisition also carries the importance of indicating the progress gained by Turkish companies on the way to globalization.” Ülker is planning to complete the construction of production facilities in Egypt and Pakistan in the first quarter of 2008. Upon their completion, Ülker will be operating in eight countries.

The Eczacibaşı Construction Group is another such company that represents Turkey abroad. It exports to more than 75 countries while exhibiting and selling in more than 150 stores and 2,000 points of sale. Eczacibaşı subsidiary VitrA Ireland Ltd., established in 1998 in the city Arklow, is still the only floor tiles producer in that country. It recently increased its capacity with further investments, carrying the factory’s market value to over $20 million. In 2005 the group bought Engers Keramik in Rheinland Pfalz, Germany’s central district, for ceramics and tile production. Furthermore, Eczacibaşı took over all the production and marketing activities of Villeroy&Boch, the world’s oldest and most famous ceramics producer, in March 2007. It has two factories in Germany and one in France.

Eczacibaşı is responsible for more than 50 percent of all the exports in the field of construction alone. Its market shares are 13 percent in Germany, 10 percent in Austria, 6 percent in Britain, 3 percent in the US and France, 2 percent in Italy, 8 percent in Israel and Scandinavia and 10 percent in New Zealand. The company aims to become the world’s third-biggest ceramics producer by 2010. It currently occupies the fifth rank.

Goldaş eyes Europe for expansion

Goldaş, Turkey’s largest gold and jewelry producer, currently exports to 48 countries and has determined continental and eastern Europe as primary growth areas for the next three years. CEO Sedat Yalınkaya said they were planning to upgrade in retail business by opening new stores both in the domestic and foreign markets. “In 2008, we are projecting to expand in Czech Republic, Romania, Germany and Ukraine,” he noted and added that growing in foreign markets has always been a major target for the company.

Goldaş’ share are being traded on the Frankfurt and Berlin stock exchanges in addition to the İstanbul Stock Exchange (İMKB). “Assortie” stores are the name of Goldaş’ sale points in foreign markets, and the company has 150 such stores in the world. Goldaş will increase this number to 450 by 2010. “As a group, we are planning to become involved in the construction and mining industries as well this year. We already have gold mines in Turkey, Mali and Ghana, and we are also planning to start running mines in China in 2008,” Yalınkaya said.

Mavi Jeans marks a different success story. It opened its first foreign business in the US market, the motherland of denim, and has succeeded in becoming a respected name there. Founded in 1991 Mavi has liaisons in over 50 countries with 174 Mavi shops and more than 4,000 dealers. It has big showrooms in major world cities such as İstanbul, New York, Los Angeles, Vancouver, Montreal, London, Frankfurt, Berlin, Munich, Hamburg, Düsseldorf, Copenhagen, Brussels, Sydney, Paris, Toronto, Milan, Amsterdam, Zurich and Salzburg. It plans to record some $60 million in exports this year.

Arçelik is another Turkish home appliance manufacturer known worldwide; almost 75 million homes around the globe use its products. Its brand Beko leads the British air conditioner market. Beko is also number one in the Belgian and Lithuanian stove markets. In the Turkish market, Arçelik and Beko occupy the first and second places, respectively.

Beko has some 250 stores in foreign countries selling only its own products. The company plans to increase these stores to 500 within the next three years. Moreover, Arçelik also serves customers in 106 countries with brands like Blomberg, Elektra Bregenz, Arctic, Altus, Leisure, Flavel, Grundig and Arstil.

Arçelik is also tracking the Chinese market very closely. It bought Changzhou Casa-Shinco Electrical Appliances Co. Ltd for $8 million last year and changed its name to Beko Electrical Appliances Co. Ltd., thus entering the Chinese market. Its main target in exports was to earn at least half of its annual turnover from foreign sales as of 2007. Although the figures have not yet been calculated, Arçelik expects to have exceeded this target.

Tofaş, an outstanding auto manufacturer, increased its number of exported vehicles by 15 percent in 2007 over the previous year and sold 100,170 vehicles to 75 countries. It produces in cooperation with Italian Fiat, and Fiat’s Doblo was among last year’s most successful products in world markets.

D-8 Director, Amb. Kia Tabatabaee, applaused the news, calling to mind similar a recent encouraging news about The Indorama Group of Indonesia, whose remarkable expansion had extended to spun yarn investment in Turkey, PTA in Nigeria, and fertilizer in Egypt. As an emerging market specialist with plants in seven countries - Indonesia, Thailand, India, Sri Lanka, Turkey, Nigeria, Egypt, the group has said it would invest US$ 75 million during 2007-2008 towards expansion and modernication of its yarn manufacturing facility in Indonesia. Indorama also produces cement, fabrics and medical gloves with 2007 turnover and total assets estimated at US$1.6 billion and US$ 2.2 billion respectively and its products shipped to over 85 countries across the five continents (click here to read related news).

He said that Turkey is doubtlessly a very active player of D-8 organization and development such as this hopefully will encourage more similar expansion by other companies of D-8 countries to reach the global economic player status within their sectors. D-8 is very keen in supporting efforts by its member countries to intensify business expansion among D-8, through a set of agreements to ensure smooth facilitation in boosting the intra-trade. “We believe that once D-8 has put Preferential Trade Agreement, Visa Agreement, Custom Agreement, and other trade facilitations in place soon, joint investment and investment by private sectors will significantly increased within D-8 countries,” he said in his office on Wednesday.

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