Some benefit from crisis

As the production costs in China start to increase, European companies that traditionally prefer the Far East for import orders, begin to knock on Turkey’s door.

The long awaited opportunities to be generated by the global economic crisis are finally knocking on Turkey’s door. Out of all the companies across the sectors, those dealing in electronics, white goods and ready wear benefited the most from the situation.

European countries, which used to prefer to import from China, had a change of heart due to increasing production costs in China and have started to lean toward Turkey. As it became impossible for China to meet the European demand, Turkey has become almost an "oasis" for European retailers with its quality and rapid production.

European countries have also reduced their orders from millions of units to 5,000 or 10,000 units. The situation benefited the Turkish companies, especially those operating in electronics, white goods and ready wear industries. Turkey’s two giants in electronics and white goods, Arçelik and Vestel, have set new records in terms of exports to European countries within the last three months, during which the crisis displayed an up trend. Sales boomed "far above expectations," particularly in the United Kingdom, within the last three months, said Aka Gündüz Özdemir, managing director of Arçelik, Turkey's biggest producer of household appliances, who is also the president of Koç Holding's Durable Goods Group.

Arçelik, Vestel sales
Nearly 25 million units of Arçelik and Beko brands were sold to the U.K., he told business daily Referans. Market research reveals that this up trend is not temporary, Özdemir said. "I suppose a great opportunity has emerged for 2009. This may just be the best outcome of the crisis," he added. Due to the crisis, western European consumers in particular have oriented toward affordable goods, Özemir said. "In addition to the fact that our goods are cost effective, they also loom large with quality, a fact that increases our sales rapidly. We have started to collect the fruits of our investments. This is the first occasion that proves the "crisis creates opportunities."

Noting that the trend that started in the U.K. is likely to spread over all Europe in short a period, Özdemir said, "We will soon attain similar figures in other countries as well. Due to the fact that we are not working with contract manufacturers, we will have major advantages in our television and white goods exports next year. We foresee attaining significant increases in our sales to Belgium, Italy, Germany and France."

But, the situation may change should China establish a factory in Europe, he warned. "This does not seem possible for the time being, since it is difficult to make production in Europe. On the other hand, we have the capacity to provide services to both western and eastern Europe via our factories in Romania and Russia."

October and November's exports of Vestel, Turkey's biggest television maker, increased significantly as the European economies entered recession, said Ömer Yüngül, the firm’s chairman. The company doubled its sales in September, when the global economic crisis began. Vestel’s monthly exports for the month reached $200 milion.

The crisis European banks experience also plays a role in the export increase, according to Yüngül. The banks that used to issue long-term letters of credit in the previous period have now started to issue short-term letters of credit, he said. As a result of that move, European companies prefer to use countries nearby for their short-term small orders, instead of the Far East, he said. There are good developments also in the ready wear sector, said Süleyman Orakçıoğlu, chairman of Orka Group, known in Europe for its Damat and Tween brands. The increase in orders from Europe will be more visible in January and February, since these are the delivery dates of the orders, he said.