There is a silver lining at the global supply chain crisis for Turkey: The country is becoming an attractive alternative to the gates of Europe for foreign firms.
Turkey takes advantage of son geographical advantage to woo companies while the cost of sea freight and pandemic-related supply chain disruptions are pushing some European companies to reduce their addiction on Asia.
President Recep Tayyip Erdoğan has promoted a new slogan for exports: “Manufactured in Turkiye,” market products in Turkish instead of the “Made in Turkey.”
The country’s exports reached a record $225.4 billion (TL 3.07 trillion) last year, with a target of 300 billion dollars set for 2023.
“Numerous international companies act to provide more of Turkey”, Burak Dağlıoğlu, head of the investment of the presidency officea declared to Agence France-Presse (AFP).
He said the country offers automakers or textile companies a “competitive talent pool of sharp industrial skills,developed service industries, perfect geography location and state-of-the-art logistical infrastructure.”
Ikea furniture store announced last year this wanted for move part of its production to Turkey.
italian clothes group Benetton told AFP it wanted to “increase its production volumes in countries closer to Europe, including Turkey.”
Peter Wolters, Vice President of the Netherlands-Turkey Chamber of Trade, said the business group received “requests from the home and garden, textile and fashion sector and also yacht building industry who to look for for new the partners in Turkey.”
Japanese electronics entrepreneur Kaga Electronics will build factory in Turkey, moving part of production from China and Southeast Asia, it also noted back in December.
The company said it hoped to take advantage of Turkey’s strategic location and develop orders in the Middle East and Europe. “Kaga hopes to leverage son new production base at win commands related to auto-related parts as well,” he said.
Skyrocketing transport costs
He became extremely expensive ship goods from Asia.
Like a result of shortage of containers, the cost of freight between China and Northern Europe has increased ninefold since February 2020, according to the Freightos Baltic Index.
While a freighter can take weeks to travel from Asia to Europe, Turkey is only three days away truck.
A study by McKinsey consulting group published in November placed Turkey in the third position among countries with the best potential for textile supplies by 2025, behind Bangladesh and Vietnam but ahead of Indonesia and China.
“Clothing companies are also are looking to change their sourcing country mix…to secure the supply chain,” global wrote the authors of the report.
The report states that Turkey offers “lower production costs due to a declining read.”
The lira fell by 44% against the dollar since 2021.
Erdoğan approved a model based on reduce borrowing costs, which says boost production, employment and exports, and also ultimately help Turkey solve it’s chronic current account deficit problem and help stabilize the Turkish lira.
the declining reading is however problematic for several industries due to the country’s dependence on imports for energy and raw materials materials.
“It’s not like Russia, for example, which has many raw materials materials”, said Roger Kelly, leading regional economist covering Turkey and Russia at the European Bank for reconstruction and development (EBRD).
He said Turkey also faces competition from countries within the European Union.
“I don’t think we should ignore those countries in Southeast Europe like Romania or Bulgaria, which are in fact in the EU – which helps them to some extent – and also have low production costs and strong production bases as well. »