3/26/2012 by Prema Nakra, Ph.D.

 

Strategically located at the crossroads of Southwestern Asia and Southeastern Europe and bordering the Black and Mediterranean seas, Turkey is well-positioned to offer and take advantage of global business opportunities. In part 1 of this series of articles, I offered an introduction to the country. In this article I will identify the lure Turkey holds for multinational corporations and certain types of industries.

 

MULTINATIONALS DISCOVER TURKEY

 

Turkey has long been favored as one of the strongest leading emerging markets within Europe, with many multinational corporations establishing a presence there. In the auto parts sector, for example, Turkey is a major global player. Since 1996, this sector has grown by more than 12% a year as international manufacturers enter into joint ventures with Turkish partners. More than 150 foreign auto parts suppliers have formed partnerships in Turkey. Global parts manufacturers also use Turkey as a base for supplying both original equipment manufacturers and retailers in other markets. More than 60% of these parts go to European markets.

 

Favorable Industry Sectors

 

Multinational corporations representing many different industries have established their presence in Turkey. These include, but are not limited to: Unilever, Nestle, L'Oreal Paris, P&G, Coca-Cola, PepsiCo, Toyota, Pfizer, Johnson and Johnson, Kraft Foods, Harvey Nichols, IKEA, Philip Morris, BAT, R. J. Reynolds, JTI, Bosch, Siemens, General Electric, 3M, Intel, Adobe, IBM, Hewlett-Packard, Dell and Cisco. International grocery retailers Metro, Carrefour and Tesco have been present for some time. Newcomers in this sector including DSGi, Kesa and Best Buy signify the growing importance of the market to consumer electronics retailers.

 

Many multinational corporations have chosen Istanbul as the regional headquarters for their corporations. Coca-Cola Eurasia and Africa manages its operations in 90 countries from Istanbul. Microsoft has also established headquarters in Istanbul to oversee its operations in 79 countries.

 

Foreign Direct Investment in Turkey

 

The Turkish government welcomes and encourages foreign direct investment (FDI). Almost all industries are open to foreign investment and 100% foreign ownership is permitted both in the formation of new businesses and acquisition of existing businesses. From 2005 to 2010, Turkey witnessed a total of 581 mergers and acquisitions (M&A) transactions.

 

Despite the recent surge in inward FDI, Turkey still lags behind the world and developing countries in terms of inward FDI stocks as a percentage of gross domestic product. Turkey has not benefitted much from increased FDI flows brought on by globalization. Turkey's level of FDI is lower than the level in many other emerging markets in many sectors and much lower than what one would expect from a country of its size and importance.

 

Turkey's initial dismal performance in attracting FDI was due to its ambivalence and, at times, outright hostility toward FDI through the early 1980s. This was followed by political and economic instability until the early 2000s. More recently, events such as the 9/11 attacks on the World Trade Center and other acts of terrorism by a religious minority have left many people in the West unable to differentiate between moderate Muslims versus Islamic fundamentalism and extremism. In addition, the bureaucracy can also be blamed for Turkey's relatively lower FDI.

 

In part 3 of this series of articles, I will discuss the many positive value propositions that make Turkey a promised land for many global marketers.

Source: International Business Training at http://www.i-b-t.net/index.asp