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Look east to Turkey as source of growth and trade

Today, times have changed and stark truths face many Scottish businesses.

TRADING HUB: Residents and visitors to Istanbul board the subway in the city's Eminonu area. Picture: Getty
TRADING HUB: Residents and visitors to Istanbul board the subway in the city's Eminonu area. Picture: Getty

Scotland is a market of only five million people, and the UK and the EU are in difficult economic times.

Faced with these realities, Scottish companies seeking growth need to once more look outwith the European trading areas and outwith their comfort zones. The world no longer stops at the German border.

Some of the biggest obstacles to doing business in emerging markets are the misconceptions that exist about those markets, primarily driven by what we see on television.

Mention Russia and some people immediately think of Mafia assassinations, corruption and cowboy business practices. The reality is very different, and there are many Western companies doing business legally and safely in places such as Russia, and making above-average returns for shareholders.

A perfect example of a country suffering from misconceptions, but which offers significant opportunities, is Turkey.

Turkey is only a four-hour flight direct from Edinburgh, but the popular image of the country is of a holiday destination.

My own experience of visiting Turkey regularly and doing business there is far from this stereotype.

Turkey is the powerhouse economy at the centre of a region of huge resources and potential.

It is the gateway to the Black Sea region – Bulgaria, Romania, Ukraine, Georgia, Russia – as well as the Caspian region, Central Asia, and the northern areas of the Middle East.

Turkey is the 17th-biggest economy in the world, and if it were in the EU it would be the 7th-biggest economy.

It has a population of 75 million, with 500,000 students graduating each year from outstanding universities.

The banking system is world class, and after compound GDP growth of 5.2% from 2002 to 2011, GDP in 2012 was forecast to rise by "only" 3.2%.

Many of the biggest names in world business have chosen Turkey as a regional hub.

Microsoft runs its Middle East and Africa region from Turkey, as does Coca-Cola. Unilever runs North Africa, Middle East and Russia from Turkey, citing the stable business environment, talent pool, growth potential and strategic location in the region.

In 2011, Diageo spent £1.3 billion to acquire Mey Icki, the leading spirits company in Turkey – a lot of money for a drinks business in a Muslim country.

This reality is a far cry from the popular idea of Turkey, so why are more Scottish businesses not thinking about Turkey, and indeed other emerging markets?

First of all, companies need to re-orient their maps. For most firms, Turkey is the edge of their regions. Their business is either run from Western Europe or Dubai, and in both cases it is a peripheral country.

If you put Turkey in the centre of the map, you will then see it as the centre of an economically crucial region.

Secondly, companies need to get beyond stereotypes. There is plenty of data available to indicate which markets are attractive to a business.

The key step is then to board a plane and see the market yourself. Meet local businesses, talk to the embassies and the chambers of commerce. Talk to potential customers and companies who are doing business in those countries.

I recently worked with a Scottish company which wanted a business in Kazakhstan. Turkey was not on their radar, as for them it was part of Western Europe.

However the partner I found for them in Kazakhstan was a Turkish company, a subsidiary of a $4bn Turkish industrial conglomerate.

We met the partner in Istanbul and agreed a partnership to cover not just Kazakhstan, but seven other countries, including Turkey, all run from Istanbul.

This gave the Scottish company access to a market five times greater than they had forecast and with one point of contact.

Recently, I spoke to the manager sent by the company to Istanbul to run the business. He was extremely positive about life and business in Turkey. Business is ahead of expectations and the ease of doing business has surprised him. The infrastructure is excellent and travel in the region is easy.

His family has settled into an apartment near the Bosporus straits, and his wife and children are loving the city.

A sure sign of their happiness is that they were not coming home for Christmas, preferring to spend the holidays in Istanbul.

Turkey is just one example of how countries you may think are tough for business can turn out to be major opportunities.

In today's climate, Scottish companies cannot afford to ignore such potential.

Andrew Peterson spent almost two decades at Procter & Gamble running businesses in Africa, Asia and Eastern Europe. Now based back in Scotland he helps Western companies set up in emerging markets.

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