Case: Turkish food manufacturers demand European quality solutions
Through the past few years, Turkey has had great economic growth and is considered the 20th largest economy in the world according to the Danish Ministry of Foreign Affairs. Hasan Bursalioglu, agent from Varo Specialmaskiner, accounts for the potential for Danish suppliers to the Turkish food production industry.
Published in 2015
Varo is one of the leading players in Scandinavia within the development and production of special machines and automated production equipment to the food tech industry. Varo is not fully established on the Turkish market yet, but has an agent (Futem Temsilcilik Ltd.) on the market to examine the potential of the market.
Hasan Bursalioglu, agent for Varo is 32 years old, Bsc in Computer Engineering from ISIK University and Msc in Business Information Systems has been working for Futem Temsilcilik Ltd.) for five years. Here, Hasan Bursakuiglu gives brand-new status from the market.
Demand for innovative solutions
Large food manufacturers are located in Turkey and the country has developed into an interesting market to food technology exporters. Greater productions have led to an increased demand for high quality equipment, which also includes Danish solutions to the food tech industry.
“The Turkish manufacturers are interested in high tech equipment, as they need to optimize the production facilities in order to meet the demand. As the Turkish suppliers are not very innovative, and their products are mainly good replicas of European solutions, Danish suppliers need to offer valuable and innovative products as well as high capacity production machinery in order to differentiate from the Turkish suppliers,” Hasan Bursalioglu explains.
Three important points when entering the Turkish market:
- Find a good agent in Turkey: It is crucial to learn the ethics and working environment of Turkish customer and agents
- Bargaining is tough in Turkey: Be well prepared to negotiate about the price
- Make a good impression: People in Turkey will hear about your products and performance
Source: Hasan Bursalioglu, Agent, Varo Specialmaskiner A/S.
Investments despite a stagnated market
Turkey is considered a huge economy. However, due to political and social issues as well as troubles with surrounding countries, the economic boom seen in the past few years has been negatively affected as the insecure future keeps people from investing. Right now Turkey is in a position where people want to stand by rather than invest further in the country.
“The strong Danish players in Turkey within the food tech industry have made good turnovers in the past years, but they are not going to increase this year. There are still investments in Turkey, but they are not as good as they have been the past few years,” Hasan Bursalioglu says and continues:
“However, there is nothing unusual about this change. The market development is always up and down. In times with a stagnated market, suppliers can concentrate on building up new relations that are usable when the investments rise.”
Not rich enough to buy cheap products
Because of the stagnated market, the Turkish producers focus on optimizing their production and performing economies of scale. Therefore, there is a great demand for quality solutions with a high capacity, and there is a big potential for Danish suppliers to provide the Turkish producers with quality equipment with high food safety.
“The Turkish producers started to focus on making money while producing. With this development, Turkish producers demand equipment of a higher quality and a capacity that enables them to perform larger productions,” Hasan Bursalioglu explains and continues:
“European companies can supply Turkish producers with the quality equipment they demand. The Turkish producers are aware that high quality machines secure a more stable production as the machinery lasts longer and has shorter downtime. Therefore, they are willing to invest in quality, innovative equipment with low operating costs and minor labor costs.”
Team up with a Turkish agent
If you are interested in establishing your company in Turkey, Hasan Bursalioglu recommends finding an agent on the market to serve as your local office in Turkey. He emphasizes that you will fail as an exporter if you are not familiar with the market dynamics. Most Turkish producers have an office in Istanbul, which is the big commercial centre of Turkey. Production facilities are spread all around Turkey but within maximum 1.5 hours flight from Istanbul.
As well as getting closer to the customers geographically, the Turkish agent also speaks the local language. Additionally, when you want to enter the Turkish market, cultural differences have to be taken into account.
“When entering the market, it is important to note that Turkish negotiators are good at bargaining, and negotiating about the price is an essential part of doing business in Turkey,” Hasan Bursaliogu explains and continues:
“Moreover, communication in Europe is very direct compared to communication in Turkey. When you call a customer in Turkey, you will spend a few minutes talking about the weather, your family etc. before getting to the business part. It is not as easy to knock on the door and do business. Rather you need to build up a relationship,” Hasan Bursaliogu says.