Turkey’s Attractiveness is Increasing Sourcing in Turkey After Covid-19
With a young population and a skilled labour force that is more accessible than in other countries and improved infrastructure, Turkey appears to be an attractive destination for foreign companies wishing to relocate their production. That’s why it is believed that another field which will develop is sourcing in Turkey after Covid-19.
The proximity to Europe is particularly suitable and favourable for companies wishing to relocate their production activities in Turkey. The strategy is not to abandon China completely, as investors first choose to add extra production facilities in Turkey. The objective is to be able to respond to an urgent need during this pandemic, as many companies are entirely dependent on the supply chain in China. They, therefore, want to be able to diversify, so that in the event of an incident in China, they have another alternative option at their disposal. In addition, since wages in China are rising, so very soon, the country will no longer have a competitive cost advantage. Turkey’s growth is promising for the near future and showing remarkable strength and adaptability. For many reasons, investing in Turkey is easier for a foreign company.
Covid-19 tests the relationship between international companies and their Chinese suppliers
The coronavirus epidemic in China could lead global buyers to find new suppliers, especially in sectors such as textiles, clothing, and steel, turning to Turkish companies as an alternative.
This period has revealed flaws, and as such, it has advantages. Securing sources of supply has become the number one priority. There was a need to move away from single-source supply situations and to create alternatives. The pharmaceutical sector is an example of this, with the production of excipients and active ingredients: 70 to 80% of raw materials come from India and China. Purchasing departments have broadened their scope of influence and areas of intervention and have become more productive. We can see that by mid-April, companies were already in the process of organizing the economic recovery, with the desire to learn lessons from this crisis. Companies must prepare themselves for a crisis management environment and try to meet urgent needs despite climatic, geopolitical, or health hazards.
This crisis has brought business and supplier relationships into question: some have been strengthened, while others have weakened. Companies have focused on building close relationships with key suppliers. We see more demand for sourcing in Turkey after Covid-19, mainly to find other commercial and/or industrial partners.
Turkey, an alternative strategic solution for sourcing
This period may seem complicated, and enormous pressures are currently causing companies to focus, in a hurry, on the essential, i.e., protecting the health of their teams. For others, this will allow them to think differently about their model, their organization, and their strategy for the future.
Do you plan to take any strategic measures to deal with this situation?
If you need advice and support for your future projects in terms of organization, finances, and strategies, do not hesitate to contact us!
We are ready to support you so that your projects can be successfully accomplished. Here are some solutions that may be suitable for your business plan and you can also see all of our services on our website:
– Optimization of procurement via sourcing: e.g., production in China transferred to Turkey,
– Import/export management,
– Remote quality control service,
– Support for industrial and/or commercial establishment,
– Directing and managing your Turkish subsidiary on your behalf,
– Advice for mergers and acquisitions of local players…
New “Sourcing” references of ERAI Turkey
Search for industrial partners (Sourcing) in Turkey: Due to Covid-19, two French companies have chosen to transfer their production from China to Turkey. ERAI Turkey carried out two sourcing files for these companies. The goal is to find the ideal partners in order to establish new sourcing partnerships. On-site meetings will start as soon as international flights are officially opened.
Creation of a subsidiary in Turkey: A German company that wanted to set up a new company in Turkey did not want to postpone this project in such a crisis, and managed, despite all the bureaucratic restrictions, to complete the company registration process in April. During this period, the recruitment process was concluded in order to complete the operational team. All IT equipment was imported from Germany. A team of 8 people was installed in the offices of ERAI Turkey at the beginning of May 2020.
Government institutions (Chamber of Commerce, Customs, SSI, etc.), which were not working full time during this period, and restrictions in institutions abroad, created an obstacle to meet the project deadlines. Thanks to the expertise of ERAI Turkey, the project is finalized on time.