Turkish furniture sector is set to enlarge its world-wide presence

By Business in Turkey, News about Turkey No Comments

The Turkish furniture sector is enlarging its presence globally. As a country that exported $3.5 billion worth of furniture last year, Turkey is planning to launch two shopping malls in the United States and Dubai in the upcoming months.

As the Turkish furniture sector maintains its position in the global market in terms of exports, it is focused on building a global brand and continuing sales channels abroad.

Koray Calışkan, director and shareholder of the country’s oldest furniture showroom, Modoko, said the U.S. mall is scheduled to open in the first half of this year in Kansas, while the Dubai project will be ready in two months.

These new furniture shopping centres will sell Turkish products from many brands.

The project was launched jointly by Modoko, another large MASKO furniture showroom and the Kayseri Organized Industrial Site (OIS), said Çalışkan to Anadolu Agency (AA).

Shopping malls in Dubai and the United States were the company’s first target, adding that it plans to open more stores in the United States and around the world, he added.

Turkey and the United States also recently declared a goal of $100 billion in bilateral trade volume, and the furniture sector was among the top five sectors targeted by that goal.

“This project will provide Turkey with a global brand and a permanent outlet for the promotion and export of the country’s furniture products,” said Çalışkan.

Regarding the US project, Çalışkan said studies for the shopping centre were continuing, adding that much of the work had already been completed.

The mall in the United States will offer services such as management, sales, assembly and logistics.

“We are awaiting the approval process and incentive procedures, which will be announced in the first half of 2020,” he continued.

Çalışkan said that these shopping centres will significantly increase Turkey’s exports, adding that each shopping centre is expected to achieve high sales in a short period of time.

Stating that the country’s furniture exports have reached $3.5-4 billion compared to $100-150 million over the past 15 years, he added that the sector’s target for 2023 is $10 billion.

The planned furniture shopping centre is also foreseen to provide support to secondary sectors such as household goods and carpets, and to generate new opportunities for small businesses, which currently lack sufficient capacity to export goods.

The project will also boost the value of Turkish brands abroad.

Source: https://www.dailysabah.com/

Chinese Geely to produce a ‘virus-free’ car

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Chinese automaker Geely, which also owns Volvo, has announced that it will develop a  virus-free car that will protect drivers and passengers against viruses.

“Geely Auto transferred 370 million yuan (around $ 53 million) to develop healthy and smart cars that will clean the air and filter viruses, as part of the fight against coronavirus,” the company said in a statement.

“Geely Auto’s R&D and design teams in Europe, the USA and China will work together to develop environmentally sustainable materials with anti-bacterial and anti-viral properties that can be used on ventilation surfaces and frequently touched surfaces such as buttons and arms.” as it is stated.

“Prevention of the epidemic requires a long-term effort with the participation of all segments of the society. People spend a lot of time in their cars, which are the most common means of transportation. Cars are like their second home,” said An Conghui, Chairman and CEO of the company.

Geely’s virus-free car project has been compared to “Biological Weapon Defense Mode” in Tesla’s Model X and Model S vehicles by auto experts and users on social media.

Tesla uses HEPA (High-Efficiency Particle Trapping) filters, which he calls “100 times more effective” than the filters of luxury cars in these models. The company says these filters eliminate 99.97 per cent of bacteria, virus, pollen and fungal spores, and the filter captures small particles up to 0.3 micrometres.

The company tested a Model X vehicle in 2016 by placing it in a giant transparent tent filled with air pollutant particles.

He explained that the Biological Weapon Defense Mode completely cleaned the vehicle’s air within minutes after it was activated, and even the system started to clean the air outside the car. However, after the experiment, some experts pointed out that viruses can have particles smaller than 0.3 micrometres.

“If you are concerned about anthrax and plague, a good filter system will probably protect you. But if you believe that all bioterrorist substances are bacteria, you’re protected to a limited extent,” he added.

Source: https://www.sondakika.com/

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Major Turkish Construction Companies

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As of August 2019, 44 Turkish companies are included in the list of the “Top 250 International Contractors of the World” published by the international construction sector magazine ENR (Engineering News-Record) based on the revenues earned from contractors’ activities abroad. Turkey, while maintaining the second place after China ranks first in the list with that number, and the US with 36 firms ranked third.

Turkish construction firms increased their share in the Middle East market from 9.7% to 10.4% in 2018, while its share of the Asian market shrank from 4% to 2.1%. Their shares in the African and European markets remained unchanged at 5.6% and 7% each. 130 projects with a value of $5.6 billion were undertaken abroad between January and July 2019. Up to the first half of 2019, 9.682 projects of a value of $386 billion have been contracted by Turkish companies for services in 124 countries abroad.

The construction market grew modestly by 1% to $477.3 billion annually in 2018 worldwide, while it increased from about $500 billion to $544 billion between 2012 and 2014.

Seven Turkish companies were listed among the top 100 companies on the Engineering News-Record (ENR) list – Ronesans 33rd, Limak 67th, Tekfen 69th, TAV 71st, Yapi Merkezi 77th, Ant Yapi 87th and Enka 92nd.

Here you can read more about the Turkish construction companies which take place in the top 100 construction companies in the world:

https://yeniexpo.com/english/general-topics/top-5-residential-and-commercial-construction-companies-in-turkey/

  • Rönesans Holding: The holding was established in St. Petersburg, Russia, in 1993. Rönesans Holding is active in different fields such as; real estate development, energy, industrial facilities, and healthcare. The holding is actively working in 23 different countries and ranks 33 in the ENR’s list of the world’s largest construction companies. The holding comes in 9th place among the contracting companies in Europe.
  • Limak Group: Limak Group was founded in 1976, and since then the group companies have been working in different fields such as; construction, tourism, cement, infrastructure, energy contraction, aviation and food. The construction company has finished more than 100 projects which worth 10 billion dollars. These projects include airports, dams, power plants, industrial facilities, oil and natural pipelines, holiday villages, building complexes. Limak Group is one of the contracting companies of Çanakkale Bridge project.
  • Tekfen Holding: The company was established in 1956, and it is an international contractor with significant accomplishments in Turkey, the Middle East, North Africa, Caucasia & Central Asia, East & Central Europe. The company’s activities cover massive civil engineering works, refineries, petrochemical plants, satellite cities, industrial processing plants, pipelines, marine structures, power plants and electrical and communications works.
  • TAV Construction: The company is a member of the TAV Group which was established in 1997 by Tepe Group and Akfen Holding. TAV was created to develop Istanbul Atatürk Airport, then in 2003 TAV construction was established, and in a short time, the company realized important projects in airport construction.
  • Yapı Merkezi: The company was founded in 1965 for the construction projects. The company is a holding which includes 8 different companies for its various activities. Those activities can be listed as follows: prefabricated buildings, cable-stay systems, heavy lifting, ground anchorage, education, GRP pipes, rail systems, tunnels, bridges, viaducts, industrial and general service buildings, water collection and supply systems, restoration, mass housing and city planning etc.
  • Ant Yapı: The company was established in 1991 in Turkey and based in Istanbul. It has offices in Russia, England and America. The companies in the holding is actively working in the following fields; residences, holiday estates, schools, hospitals, rest and recreation facilities and they maintain contracting and project development works for the main company.
  • Enka: The company was established in 1957 in Istanbul. The company has completed 124 projects in Turkey, of which total amount $7 billion and another 396 projects with a value of $40 billion in foreign countries. The holding is working in the following areas: health, safety & environment, design & engineering, human resources, quality management, information technologies, machinery & equipment, finance & accounting, legal affairs and security.

Below you can see the full list of Turkish construction companies which are in the ENR’s top 250 construction companies. The primary objective of these companies is to increase the global share of Turkish companies to 7%, which is equivalent to USD 50 billion in business volume per year by the 2030s.

The Construction Industry in Turkey in 2020

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It is predicted that the construction industry in Turkey just like it is in other developing economies in 2020 will continue the tradition of positive segregation in the medium and long term. The trend of Turkey’s economic growth traditionally based on the construction and real estate market together with textile, automobile, aviation and defence industries. Yet the construction industry has a locomotive role in employment with the sectors that it interacts with.

While the overall economic confidence index increased by 14 per cent in the January-October period in 2019, the increase in the construction sector confidence index was realized as 15 per cent. As of November 2019, the October confidence index data experienced a significant recovery in Turkey, which has experienced the most stable financial climate of the recent period. The usual “high coefficient response” of the sector was also observed here. The general economic confidence index increased by 4.5 per cent in October ‘19, while the construction sector confidence index rose by 8.3 per cent. Here, the reflection of the general trend and the rapid improvement in consumer confidence indices on the construction sector also stands out as an important factor.

Housing sector

As the Turkish Statistical Institute (TÜİK) announced on Jan. 15. House sales decreased by 1.9% or 26669 units in 2019 compared to the previous year, according to data from the Turkish Statistical Institute (TurkStat). Approximately 511,700 houses were sold for the first time from January to December, while the rest were second-hand sales. You can read more details regarding the number of house sales in our article 1.35 Million Houses sold in Turkey in 2019.

Commercial real estate industry

The total demand increased to 6.46 million m² with the introduction of a new office area of 100.910 m² in Istanbul, where almost a third of the country’s economy revolves. The 78,382 sqm lease made in the last quarter of 2019 is 4.8% lower compared to the same period last year. With the acceleration of economic recovery and stability in foreign exchange rates, the rapid recovery in the third quarter of 2019 is expected to continue in 2020.

Number of Shopping Centers has not changed

The total number of shopping centres with 453 across Turkey as of year-end 2018, has not changed in the last quarter of 2019. Although this is a historical situation encountered for the first time, the number of shopping malls in the project phase was 44.

As of the last quarter of 2019, 13 million 453 thousand square meters of leasable area stock in Turkey will reach 16 million square meters with the implementation of new projects.

Shopping malls have become a part of urban life. Despite the economic difficulties and relative falling numbers of visitors, the turnover index increased by 3.5% annually in September 2019.

Touristic facilities hosted 41 million tourists

The number of tourists, which increased by 27 per cent in 2017, increased by 21.6 per cent in the first 10 months of 2018 compared to the same period of the previous year. The increase continued in the first 9 months of 2019 and reached 41 million, with a total of 14.5%.

In the third quarter of 2019, revenues increased by 22% compared to the same quarter of the previous year. During this period, with an income of 14.3 billion US dollars, the average expenditure of visitors per person was 649 US dollars. The increase in this figure, which was 612 USD in the same period of last year, can be considered as a power source for the sector. Within the scope of the New Economic Program, the tourism income target for 2021 has been determined as 42 billion USD.

In our previous article, we have announced the record in the tourism sector in 2019 which you can read in our blog. It can be said that tourism will grow in 2020 and a new record is expected in the Antalya region with at least 14 million tourists.

Mega Projects of Turkey

In the New Economic Program (YEP) announced in September 2019, it has been repeated that projects that have been or have not been tendered but whose construction has not started will be suspended. It was stated that new and extended business plans will be created for those whose financing conditions are suitable from the ongoing projects to support the construction industry in Turkey.

The latest situations in some of the existing mega projects of Turkey are as follows:

Istanbul New Airport: Istanbul Airport, which started its operations in April 2019 with the biggest moving operation in aviation history, continues to approach its potential. A total of 41.8 million passengers travelled at the New Airport between January and October 2019 with arrival and departure flights. On the other hand, it has been announced that the operator of the airport has decided to restructure the maximum amount of 5 billion Euro of IGA’s debts.

The Istanbul Financial Center: Three new contracts, totalling TL 3.7 billion, have been signed for the constructions. As the authorities stated that the construction of the project will be completed by the end of 2020, and the companies will move and start working there in 2022.

Çanakkale 1915 Bridge: The construction of the bridge, which started on 18 March 2017 and undertaken by a consortium by 4 companies, two of them Turkish and two Korean, continues. Middle opening of the bridge is identified as 2023 meters to symbolize the year of the 100th anniversary of the founding of the Republic of Turkey and the bridge will be the world’s longest suspension bridge with a clearance from the tower. Çanakkale 1915 Bridge is planned to be completed in 2023.

Canal İstanbul: The project, which came to the agenda for the first time in 2011, whose purpose was to completely close the Bosporus to tanker traffic, was postponed after the macroeconomic crisis in 2018. It was announced that the technical studies and environmental studies for the project were completed. Following the preparation of the Environmental Plan which will clearly show if there are any hazards for the environment, the tender stage will start.

City Hospitals: Although the efficiency of city hospitals has been discussed in recent days, the budget resources will continue with the use of the PPP (public-private partnership) system. Along with Ordu, Sakarya and Sancaktepe, 10 hospitals are planned to be built with state resources.

SWOT Analysis of the Construction Industry in Turkey

Strengths

• Turkey’s geopolitical position increases the centre of attraction for Middle Eastern countries

• Young population ensures continuity of housing and infrastructure investments

• Cheap labour force caused by migration relatively limits the increase in costs

• There are important sector representatives with international experience and institutionalism.

 

Weaknesses

• Impacts and fragility caused by the deterioration in financial conditions

• Increase in the cost of building construction

• Low economic confidence of individuals in the long term

• Weak institutionalization in the sector

• Technological developments in the world have not been caught in the sector yet

Opportunities

•Turkey’s being the second-largest country in the international contracting services creates a climate of trust that paved the way for all sectors

• The geographical location keeps international demand alive

• Natural demand is high due to the young population

• Low housing ownership feeds potential demand

• The government’s practices to encourage housing purchase and savings are getting stronger

• The current value of TL keeps foreign demand high

• The need for urban transformation creates supply appetite in the medium and long term

Threats

• Fragility in financial markets

• The sensitivity of economic trust to financial markets

• Geopolitical uncertainties

• The supply-demand imbalance caused by wrong investment decisions in some segments

• Downward pressure on prices due to high idle capacity

• The decline in oil and natural gas prices also reduces the income of energy exporting countries and this negatively affects the construction activities and the business volume of Turkish contractors.

• Real value application in the land registry

• Valuable housing tax application

2020 Expectations

After a growth trend in average close to potential in Turkey sharply weakened in 2018 and in 2019. On the other hand, the recovery process of the construction industry in Turkey that started with the second half of 2019 and the growth estimates between 3% and 5% in 2020 provide an improvement in future expectations. The sector maintains its high potential in almost all areas in the long term. Short-term vulnerabilities also strive to be overcome with public support. Despite the increasing production costs, the funding costs that came down in the last period of the year are an important development for the sector’s turnover.

In this process, projects and urban transformation practices for the development of health tourism, which are also included in the New Economy Plan, are also important for the sector’s mobilization. There is another important fact that Turkey has been encountering earthquakes and as a result, the government has been transforming the old buildings into new ones. Regardless of all the crises construction sector stays alive and active in order to meet the needs of the Turkish society. Implemented urban transformation projects increase the property market of Istanbul which is helping the construction industry in Turkey to increase its share in GDP.

How can Coronavirus Spread Impact Global Business?

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Coronavirus spread is not only threatening people’s health, but it has also become a risk for world economies. Due to the virus, China’s Asian neighbors and commodity exporters will also face difficulties, according to economists.

What is Coronavirus, and what is the situation now?

“Coronavirus is a virus that causes diseases in birds and mammals. It causes respiratory tract infections, which are generally not serious but have a risk of death, diarrhea in cows and pigs, and upper respiratory tract diseases in chickens.” as it is defined on Wikipedia. However, the current Corona Virus outbreak is more than this, according to scientists, and has enormous effects on human life and business life around the world but mostly on China at the moment.

The Chinese scientists are currently working on developing the vaccine to this virus, which is spreading inevitably fast. Together with government scientists in China, the United States and Australia, as well as those working at Johnson & Johnson, Moderna Therapeutics, and Inovio Pharmaceuticals, are all engaged. As of 30.01.2020, 170 Chinese citizens lost their lives due to the “new coronavirus,” and around 7.711 people are confirmed to have the infection.

All the countries around the world are on alert and warned by the World Health Organization to take action against the SARS-like virus, and it has been confirmed to be detected in almost 20 countries at the moment, and the WHO declared a global health emergency.

coronavirus spread

coronavirus spread

The economic impact of coronavirus spread

Asian stocks and currencies fell on January 30 as the number of people who died rose, and more cases were reported worldwide. The effects of the virus are already severely impacting China’s economy, the second-largest in the world, as companies cut back on business travel and tourists cancel trips during the traditional Lunar New Year holiday period.

A government economist said the crisis could reduce China’s first-quarter growth by 1.5-2% or less as the crisis affects sectors ranging from mining to luxury goods.

Also, it is stated that the outbreak will create a drop in Chinese tourism revenues in other parts of Asia, especially in Hong Kong and Thailand.

Turkey is among the major trading partners of China. In 2019, Turkey 19.1 billion dollars while imports with China, exports were $ 2.6 billion. Since 2002, the amount of foreign direct investment from China to Turkey reached $ 1 billion 38 million. The number of Chinese tourists came to Turkey last year to 450 thousand. Tourism is expected to be negatively affected at the first stage due to coronavirus.

As a result, tourism all over the world, including Turkey, will have a great loss since the Chinese government banned package tours outside China for a month, which can be extended later.

As economist Eswar Prasad, former head of the International Monetary Fund’s China unit stated, “A broader spread of this disease has the potential to disrupt travel, trade and supply chains throughout Asia, with knock-on effects on the world economy, since Asia is now a key driver of global growth.”

On the other hand, a weakening of the Chinese economy would affect oil demand as the country is the world’s largest importer of crude oil – importing a record 10.12 million barrels per day in 2019 – and the world’s second-largest oil consumer, according to data from the General Administration of Customs.

Important events canceled due to the coronavirus spread

Xiamen Natural Stone and Technologies Fair, one of the world’s largest natural stone fairs planned to be held in China on 16-19 March, and the World Indoor Athletics Championship, which is planned to be held in Nanjing, China on 13-15 March, were delayed due to the coronavirus outbreak.

What are the reactions of important brands?

HONDA

Honda Motor stopped production until February 9 to support efforts to prevent a coronavirus outbreak at two motorcycle factories in China. No explanation was made as to when production will resume at Honda Motor’s 3 automobile plants in Wuhan. The facilities were planned to be operational again on February 3 after the Chinese New Year holiday.

TOYOTA

The Japanese automotive giant announced that it had stopped its production in Tianjin and Guangdong in China until February 9. In addition to Honda and Toyota, PSA Group, owner of General Motors, Nissan, Renault, and Peugeot, also stopped production in China due to coronavirus.

APPLE

The company authorities have stated that they are following the situation in China very closely. They have reduced the number of working hours of their employees in Apple stores in China and limited their travels. The factories which are producing for Apple have stayed closed for more than it is expected, and the mass production, which is planned to start in the third week of February, may be delayed due to the coronavirus.

GOOGLE

Google is shutting down all its offices in China temporarily, which are located in China, Hong Kong, and Taiwan, according to the technology website, The Verge.

FACEBOOK

Together with other U.S. companies, Facebook has also restricted travel to China to keep its employees safe. As Business Insider stated, the company stated that they would not allow the staff to go to China unless it is necessary, they would have a special permit requirement for the staff who had to go to China and would be very sensitive to the issue.

IKEA

Ikea announced that they have temporarily closed all its stores in China due to the coronavirus outbreak. They have 30 stores around China, and half of them closed while the rest shortened their opening hours.

STARBUCKS

Kevin Johnson, CEO of Starbucks, told CNBC that they have closed more than half of its stores in China and wouldn’t hesitate to close more if necessary. The remaining Starbucks shops required people to have their temperatures taken and to wear masks.

International Flights and Transport Links

Turkish Airlines, British Airways, American Airlines, Air Canada, Iberia, Air France, KLM, Lufthansa, Delta Airlines, El Al Israel Airlines, Seoul Air of South Korea and Lion Air Group of Indonesia have canceled, suspended or reduced their flights to and from China because of coronavirus. Other airlines have also started to cancel or suspend their flights to and China since the death toll and number of infected cases increase.

Kazakhstan government declared that it had stopped issuing visas to Chinese citizens and will cut all primary transport links with China. Passenger train services, cross-border bus journeys are suspended as well as regular flights between the two countries.

The government of Russia has also announced that they will limit the number of passenger trains starting from 31.01.2020 and will be active between Moscow and Pekin only.

Comments

Within the light of all this information, the coronavirus spread may have inevitable consequences on the world’s economy, and these consequences may be negative or positive for some countries, depending on their situation. Depending on the progress of the spread of the coronavirus, the world’s economy may experience great changes.

Although the negative effects have been stated in this article, it should be noted that for some countries which are competitors with China in terms of production facilities such as Asian countries, Middle East countries and Turkey, etc., this outbreak may have a positive effect. In the case of a nationwide quarantine in China, all the production facilities and factories would be shut down, and manufacturing would stop. At that point, international brands would look for other alternatives to continue their production. Obviously, among all the other countries, Turkey has an outstanding advantage of its location.

Not only Turkey’s geopolitical position puts the country one step forward, but also production facilities of high quality and high capacity, cultural similarities between European countries are all its advantages compared to Asian and Middle Eastern countries. As a result, Turkey may be the new production hub for important international brands who would like to benefit from the ease of transport, accessibility of the manufacturers, cheap workforce, and customs union with the European countries.

French