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Turkey: where good ideas pay off

Creato il 03 aprile 2012 da Istanbulavrupa

Turkey: where good ideas pay off(pubblicato sul numero di marzo di Develop.med)

Elena Pallotta showed no fear when he decided to start a new adventure abroad: graduated engineer from Florence, Miss Pallotta holds a Master’s degree in business administration and has a long experience in strategic consulting and in the property development. Today she is a successful ice-cream producer. She opened her first shop last July, 3 new ones will follow in the next months and 30 in the next five years. Her company is one of the 906 Italian companies in Turkey. DevelopMed met her and other key actors working to promote the economic relations between Italy and Turkey.

Confindustria (Italian Employers’ Federation) and ICE (Italian Institute for Foreign Trade) are organising, together with other institutional partners, a business delegation in Istanbul, from May 1st to 4th. Companies working in the industrial machineries’, infrastructure, energetic and renewable sources’ sectors are invited to the meeting, which will schedule a high-level institutional conference, in-depth sectoral meetings and bilateral encounters with Turkish companies. The goals of the event are clearly underlined in an ICE’s official press release: “strengthen economic relations with Turkey and explore the industrial cooperation opportunities offered to Italian companies”. The country, led over the past ten years by the Justice and Development Party (JDP), is in fact one of the fastest-growing economic actor (+8% GDP-growth in 2011), a modern economy able to attract – also in order to adjust its structural deficit in the balance of payments – many foreign direct investments. According to the data published by ICE’s office in Istanbul in the February economic note, Italy is Turkey’s fourth commercial partner: the overall interchange was $21.3 millions in 2011 (+28% over the previous year), with an active for Italy of $5,6 millions. Official figures published by the Ministry of Finance – though not always fully reliable – number 906 Italian companies operating at the moment in Turkey, investing circa $98 millions in 2011 (+300% over 2010).

Italian officials and analysts, however, warn to put figures in the right context. The February’s note also states that “even considering the dynamism of the actual relations between the two countries, the Italian market’s share on the overall Turkey’s import keeps fluctuating around relatively low values: 7,1% in 2004; 6,5% in 2005; 6,3% in 2006; 5,9% in 2007; 5,5% in 2008, 2009 and 2010. In 2011 the value rose at 5,67%.” Italy plays a secondary role also in the amount of investments and the number of companies: Netherlands ($1573 millions), US ($1403 millions) France ($985 millions), UK ($895 millions), and Germany ($520 millions) invest significantly more; on the other hand, in Turkey there are more German (4779), Britain (2334), but even Iranian (2140) and Azerbaijani (1049) companies than Italian ones.

Italian companies represent 3.1% of the total. They mainly operate in the banking, infrastructure, and defence-military sector. Most of them are very old and important companies: Generali (insurance company), which will celebrate in 2013 its 150th year of activity; Astaldi (construction company), which is building the Kadıköy-Kartal subway on the Asiatic part of Istanbul and a new bridge in the Golden Horn; Ferrero (chocolate and confectionery industry), which started the construction of a production plant for Nutella and other products scheduled to be finished in 2013 (a $90 millions investment); Indesit (appliance manufacturer), Barilla (food) and Pirelli (tyre products and energy).

But there are also a lot of innovative entrepreneurs. Among the biggest ones we have Unicredit (bank), which shares, along with the Koç group (the biggest industrial and financial Turkish group), the control of Yapi Kredi, the 5th bank in Turkey, 900 branches and 17000 employees. Nicola Longo Dente, head of international and multinational relationship banking, arrived in Istanbul in July and he is already enthusiastic; in his office in Yapı Kredi Plaza he explained to Develop.med why it is a really good and profitable idea for the Italian companies to invest in Turkey: macroeconomic stability, a constant economic growth, a large market with high consumption levels, a customs union with the EU, skilled but still relatively low-cost labour force, sustainable costs of transportation, privatization, tax benefits, dropping bureaucratic obstacles. “In Turkey also politics is business-oriented”. There is no comparison with other parts of Asia: even though the labour cost is slightly higher, the difference in terms of quality is remarkable and the craftsmanship has a strong tradition. Furthermore, orders are flexible and not necessarily tied to large quantities. It is also important to underline the similarities between the Italian and the Turkish business classes: joint ventures (for example Tofas between Fiat and Koç) work out very well.

There are of course also some negative elements: for example, the dangerous tendency to private debt, or the still very low investments in research and development and a consequent growth in the import of technological products. Last but not least, “the arrogance rising from success, leading to intoxication and overdoing”. Nicola Longo Dente actually agrees with the ICE’s February note, as it is states that “the way Italian companies should undertake is to continue to believe in the Turkish market’s strategic value and to become more proactive in some crucial sectors for the country’s development (environmental protection, technology for the renovation and territory, infrastructure, renewable energies)”.

The Italian Chamber of Commerce in Turkey

A growing number of Italian enterprises, more frequent business delegations: to deal with that with enthusiasm and expertise, is the 1885-founded Italian Chamber of Commerce in Turkey, based in the prestigious “Italian House” in Istanbul (together with the Italian Cultural Institute) and in Ankara. Fatih Ayçin, former Pirelli-employee, has been general secretary over the past 10 years and confirms the strengthening and deepening in the Italian-Turkish relations – with some worries. The Chamber, a private institution with 600 members, offers information and (linguistic, bureaucratic and other kinds of) consulting to enterprises and organizes formative and representative events. It also organizes institutional and business delegations (almost 30 yearly) to Turkey, plus a series of Turkish buyers’ delegations to Italy: it collaborates with the exhibitions in Milan and Verona (where it brought almost 150 buyers and 300 exhibitors) and with a growing number of regional and local chambers of commerce (just to name some of them: Lombardy, Piedmont, Calabria, Trieste, Naples, Salerno).

There is attention, interest and attraction, there are huge business chances. Nonetheless, Mr Ayçin complains about the Italian entrepreneurs’ lack of inclination to risk for the internationalization and a superficial and burlesque knowledge of Turkey in our country, which contributes to the small Italian presence regard our competitors: Germany and the Netherlands, for example, are much better in taking advantage of back-coming migrants, the second-(and third- and fourth-)generations going back to Turkey for business.

The 16 flavours of business

Who was not afraid of an adventure abroad is Elena Pallotta: a Florentine engineer with a Master in business administration, she has a long experience in strategic consulting and in the property development. Today, she is a successful ice-cream producer. She opened her first shop last July, 3 new ones will follow in the next months and 30 in the next five years.

Everything was perfectly planned: from the name (Muà, the “sound of a smacking kiss on the fingers’ tips”) to the logo, from the ice-cream made only with Turkish and natural products to the unmistakable style of cups and uniforms, from a sophisticated and not-intrusive marketing campaign to a spreading-out of the Italian spriti through language and kindness. Entrepreneur by vocation, Miss Pallotta invested in the Mediterranean Sea for her dream, and chose Turkey for its financial and political stability, for the market’s characteristics (many young people, a growing middle class), for a not-fierce and a manageable concurrency in the ice-cream sector. She had to fight against some bureaucratic obstacle (in particular linked to the translation of documents) and took advantage from the abolition of the obligation for foreign enterpreneurs to have a Turkish partner. Miss Pallotta’s model is that of a small neighbourhood ice-cream shop (the first one is in Yeniköy, on the Bosporus), easy to replicate, employing 3 to 5 workers depending on the season and offering 16 tastes by turns (just seasonable fruits, no strawberries in winter), involving children in classes to learn how to do ice-cream from whose parents take advantage as well, seducted by the Italian tastes.

Good ideas pay off. ICE’s suggestion is to get rooted in the country and to link trade and exports to productive and strategic settlement: “there is no doubt that the consolidation of market shares should rather pass through a direct control of local production, in consideration of the fact that exports, if they are not tied to a real industrial collaboration and productive investments, cannot ensure a strong and long-term presence in the country”. The business delegation in May will need to treasure it.



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