COVID-19 restrictions caused mass disruption in Chinese production. As organizations look for fast partners, Turkey is emerging as the new production powerhouse. Manufacturers are now capitalizing on this shift. Adapting to customer demand as well as increasing output through digitalization, Turkish companies are ready for a new era in production.
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It can often feel as though everything we own has been made in China. In 2018, 28% of all manufactured goods worldwide were produced in China. In total, this amounted to an estimated $4 trillion USD value. China has been growing as a global production superpower over the past two decades. In 2010, the country officially surpassed the United States as the largest global manufacturer.
Enter COVID-19. With trade wars already threatening economic alliances between the U.S. and China, tensions emerging as a result of the COVID-19 outbreak seem to have been the final straw.
Countries around the world have criticized China for its handling of the virus. A sentiment reflected in the actions of global businesses. Several large multinational companies are shifting their industrial partners to ones outside of China. Where will they go? Enter Turkey.
Turkey has been attracting attention as a likely destination for manufacturing during the market shift. Production facilities in Turkey share the attractive low cost, high output proposition which encouraged companies to move production to China in the first place.
With a weakened Turkish Lira as well as a strategic geopolitical position, Turkey stands out among other G20 countries to become the world’s dominant manufacturer in a new economic era.
“Turkey has potential to reach out to the companies worldwide due to the quality of
goods which are made in Turkey and Turkey’s geographical position,” explains Aziz Can, board member of AKC Lighting and Opportunity Network member. His company has been importing, manufacturing, and exporting lighting goods in the country since 1996. Now AKC Lighting is further extending its business relations in new markets abroad.
Production exports on the Rise
Turkish enterprises have seen the effects of increased demand since before the COVID-19 outbreak. In early 2019, Turkish export revenues peaked at $180.5 billion, up nearly $40 billion in just three years. Manufactured goods made up 25% ($45 billion) of those major exports.
Turkish steel exports, in particular, have risen dramatically in the last two decades. In fact, Turkey was the third fastest-growing steel producer in the world between 2001 and 2011. Now, it’s the 8th largest producer globally and the 2nd largest steel producer in Europe in 2019.
Growth in the industry has been driven by strong domestic consumption. As steel production in Turkey grew from 15 million tons in 2001 to 33.7 million tons in 2019, its steel consumption per capita has increased to 405 kg in 2019. A trend that is only expected to continue growing. Beyond strong domestic demand as well as dynamic steel-using industries, Turkey’s location also supports exports and production.
Tursam Galvanize, a manufacturer of steel structures that specializes in hot-dip galvanizing with one of the largest zinc baths in Turkey, has been witness to this growing demand. Founded in 2004, the company has become a leading manufacturer, capable of using innovation to provide more production with less energy.
Digitalization to Boost Growth in Turkey
The economic impacts of the pandemic have been felt across industries and borders, devastating workforces, supply chains, and production capacities. Most CEOs are taking losses.
Against all odds, Tursam has not only stayed afloat but has been able to expand in the first half of 2020. According to Marketing & Sales Director Deniz Özcan, this has been possible through digital integration.
“We would not have been able to compensate for the loss of domestic demand without joining Opportunity Network. Even with travel restrictions, we found new buyers and sellers on this digital platform.”Deniz Özcan
Opportunity Network, a business deal matching platform for CEOs and investors, is not the only digital platform to step up in this crisis. Turkey has seen a boom of digital startups in the last several months as local entrepreneurs offer a variety of solutions for challenges presented by the pandemic. The production industry in particular has historically been slow to integrate digital technologies into its business or sales processes. Now, as the global production industry turns its attention to the country, Turkish companies are picking up the pace.
“We’ve seen an increase in interest across the board. Not only are Turkish companies more eager to leverage the benefits of a digital network such as Opportunity Network, but their global counterparts show a growing interest in Turkish business opportunities,” explains Fatih Kaya, Opportunity Network’s Country Director in Turkey.
As Turkish companies expand their global reach and continue to offer a viable replacement for lost production partners, it seems possible that a post-COVID world will be one with a new global production superpower.
Country Director at Opportunity Network