Turkey is on the way to becoming a new hub of the supply chain

The supply shock in February last year and the demand shock that resulted in the closure of the global economy revealed weaknesses in the production strategies and supply chains of companies almost all over the world.

With the recovery of economies, there was a break in production and supply chains, especially for Asian countries, in the face of growing demand.

The exponential growth in long-distance transportation costs continues to make Turkey an attractive investment and manufacturing hub, offering space and cost advantages for many foreign international companies.

EUROPEAN COMPANIES GO TO TURKEY

European companies, especially those that supply products from Asian countries such as China; Due to production delays, rising freight costs and the container crisis, it is moving to closer and more stable centers such as Turkey for supplies.

FITCH RATINGS ANALYSIS: WINNING COUNTRY TURKEY

According to a recent analysis by the international rating agency Fitch Ratings; Turkey is the country that has benefited the most from the change in the supply chain in Europe. Turkey; Then comes the Czech Republic, Poland and Romania.

Recently, many international companies operating in the fields of food, medicine, furniture, electronics and packaging have announced new investment plans for Turkey, which has a strong logistics infrastructure and industrial potential.

Due to the quality of production and logistics capabilities, the global supply chain to Turkey from a network connected to Asia, and especially China, has led to an increase in investment in Turkey in this area.

BRANDS FOCUSING ON INVESTMENT IN TURKEY

Swedish furniture company IKEA, Polish ready-to-wear clothing company LPP, German pharmaceutical company Boehringer Ingelheim and Belgian packaging company DW Reusables are looking to invest in Turkey.

Pressure on companies is growing in response to both geopolitical risk and the vulnerabilities of the pandemic.

In the face of supply chain risk, leading manufacturers want to create more suppliers.

The Benetton Group, based in Italy, said it would gradually move away from cheap manufacturing hubs in Asia and increase production in Serbia, Croatia, Turkey, Tunisia and Egypt.

Benetton Group CEO Massimo Renon commented on the increase in production. “It’s a strategic decision to have more control over the production process and shipping costs.” used expressions.

Daniel Grieder, CEO of German fashion company Hugo Boss, also told Manager Magazine that they plan to produce more products in centers close to where they sell their products.

Grieder, “We will significantly expand production in the near future. Then we can react more quickly to trends and more quickly to bottlenecks. This is a real competitive advantage.” gave its price.

SUPPLY CHAIN ​​IN CORONAVIRUS

Harvard Business School Professor Dr. Willy C. Shih, in his assessment of the subject, noted that the temporary trade restrictions on some products, especially critical medical supplies, and the lack of other products show the disadvantages of dependence on certain countries, “These developments, along with the US-China trade war, have led to an increase in economic nationalism.” used the expression.

Noting that consumers continue to demand low prices, Şih said that companies that sell North American labor-intensive production from China to Mexico and Central America, and companies that supply materials used in Western Europe will transfer production to Eastern European Union countries, Turkey, he said. and said he took office in Ukraine.

Shih said Chinese companies that want to maintain their global market share are now looking to Egypt, Ethiopia, Kenya, Myanmar and Sri Lanka for low-tech, labor-intensive production.

Turkey, which connects Europe and the Middle East, is stepping up its promotion and logistics efforts to take advantage of changes in the global supply chain. “Our door is always open to international investors” gives a message.

“Let’s win together”

“No one who trusts and invests in Turkey will regret it. On the contrary, he is always happy with the huge profits he has made.” President Recep Tayyip Erdogan called investors. “At a time when the global production and logistics system is being rebuilt, I invite all investors in Turkey and around the world to take advantage of the opportunities and opportunities that Turkey offers them. I want to say again that our doors are open to investors.” gave your message.

Rector’s Office of Investment Burak Dağlıoğlu, Turkey is at the forefront with a strong production and supply network on every platform, he said. “We attach great importance to and encourage investments that will reduce foreign dependence, increase employment and accelerate technological transformation.” he said.

Daglioglu, countries that manage crises such as the Kovid-19 epidemic well, said that tomorrow will be global players. “Turkey, with its dynamic, competitive, agile and flexible structure, is one of the countries that has successfully managed the epidemic process with its successful actions. With all these developments, we have entered a period where supply security is more important everywhere. We believe that it will take a place and attract significant investments. “ gave its price.

WHAT DOES TURKEY OFFER TO BANJALI COMPANIES?

While the restructuring of global supply chains provides opportunities for Turkish exporters, participation in the global value chain stems from a country’s ability in certain areas and provides significant opportunities for countries.

Proximity to markets, natural resources, human capital, physical capital (capital), corporate capital, logistics / communications, labor competitiveness, and market access are presented as capabilities that enable participation in the global value chain.

While the immediate impact of the epidemic has affected production and supply chain disruptions, the global recession and the demand and supply shock, companies are expected to increase resilience in the supply chain and show national and regional growth. production capacity in the long run.

Aware of the changes in the global value chain, the Turkish government has set up a working group with all stakeholders to prepare Turkey for the post-Kovid-19 value chain.

With Turkey’s strategic position, free trade network, strong logistics infrastructure, diversification of production, high incentives, high-value skilled labor, strong industrial group and liberal investment environment, the country provides a favorable environment for international companies to join the global value chain.

Turkey’s strategic location as a production, export and management center in the region has become a magnet that attracts multinational companies and allows them to participate in the global value chain.

With a GDP of $ 26 trillion, a 4-hour flight to the market

Turkey is a four-hour flight from the European, MENA and Central Asian markets, home to 1.3 billion people and $ 26 trillion in GDP.

Turkey has a Customs Union with the EU and a Free Trade Agreement (FTA) with more than 20 countries. Turkey has a diversified production base, supported by a developed infrastructure and uninterrupted business services, with strong links to global value chains. In addition, the government actively promotes participation in the global value chain through special incentives and workforce development programs.

Turkey offers tax breaks or tax breaks to investors, salary and education support, exceptions, incentives for production, employment and R&D.

At a time when protectionism is on the rise, a liberal policy framework is playing a crucial role in transforming the global value chain, and Turkey’s foreign direct investment law attracts investors with a strong legal protection mechanism.

HIGHLY USED LABOR AND STRATEGIC GEOGRAPHY

Jens Dallendorfer, vice president of sales for Emerging Markets at WILO, a German-based water pump manufacturer that is developing solutions to water shortages with its technology, described the political steps taken to make economies independent (freeing them from dependence). About China) continues to affect the economies of all countries of the world.

Dallendorfer, based on the possibility that a new form of globalization of the Wilo Group will result in greater regionalization of value chains in the three major economic centers of North America, the EU and Asia. ‘from region to region’ He explained that he has been responding to these changes for many years.

“From region to region” Jens Dallendorfer, as part of their strategy, stated that they are trying to meet customer needs by producing regionally or locally:

“Wilo has been relying on the Turkish market since 1992. We believe that Turkey has the potential to become an export hub to third countries due to its highly skilled workforce and its favorable and strategic geographical position between Europe and Asia.”

“TURKEY IS A GOOD REGION FOR NEW SUPPLY CHAIN ​​INVESTMENT”

Mattias Hedwall, an international trading partner at Baker & McKenzie, an international law firm, said he saw Turkey as a good place for new supply chain investments between Baker and McKenzie customers.

Hedwall, “I think we will see more strategic considerations about where and how supply chains will be set up. This will include tax and employment effects, relocation costs, entry and exit and visa problems for workers, investment opportunities and speed. Adapt to future changes.” used expressions.

Hedwall said the Kovid-19 epidemic provided a unique opportunity to observe how various systems and processes in the supply chain react to sudden severe stress and change. “What can be seen now is the acceleration of structural analysis, which takes into account the development of technology and sustainability, which can provide opportunities for more supply chain innovation. Many companies are both more economical and lead to diversification of the supply chain. makes it less fragile. ”Brings production closer to customers, which can also be opened. Countries that understand these trends will benefit greatly. “ he said.

“TURKEY CAN HAVE A CHANCE TO BECOME A CABITTLE PRODUCT CENTER”

PwC Turkey Management Consulting Services Company Partner Tolga Baloğlu said that in recent years, international companies aim to increase low-cost production factors, increase sales, gain profitable incentives and strategic purchases, and direct them to the Far East for global supplies.

Baloğlu, “This is leading to a transition from globalization to regionalization. Turkey is at the forefront of potential centers with diversity of production and proximity to growing markets.” he said.

Baloğlu stressed that Turkey can increase its potential by increasing its global competitiveness. “While Turkey has recently made progress in technology, infrastructure and labor market, macroeconomic space and product market efficiency have declined. The macroeconomic environment and labor market are areas with the highest development potential. could become an even more attractive place for a manufacturing, trade and logistics center. “ used expressions.