This document provides an overview of the Turkish textile industry and its competitive position globally. It begins with an introduction to the textile industry in general and the history of textile production in Turkey. It then analyzes the competition in the global textile industry using Porter's Five Forces framework and identifies competitive advantages of the Turkish industry, such as low labor costs and a favorable geographic location. Finally, it provides a brief comparison of the Turkish and German textile industries and performs SWOT and PEST analyses of the Turkish industry.

1. EGE UNIVERSITY
FACULTY OF ECONOMICS AND ADMINISTRATIVE SCIENCES
BUSINESS ADMINISTRATION
GLOBAL MARKETING COURSE
TURKISH TEXTILE INDUSTRY
AND ITS COMPETITION POWER
Submitted to : Keti VENTURA
13080002898 Baris Istipliler
13080002866 Gamze Saba
Erasmus Student – Janina Werner
Erasmus Student – Julia Grün
Erasmus Student – Kim Noelle Rastert
2012

2. Outline
1. Introduction to Textile Industry
1.1 Textile Industry in General
1.2 History of Textile Industry in Turkey
1.3 Geographic Concentration of Turkish Textile Sector
2. Competition in the Textile Industry Worldwide
2.1 General Information about Turkey’s Position in the Worldwide Textile Market
2.2 Porter’s Five Forces Framework
2.3 Porter’s Five Forces Framework In Regards to the Turkish Textile Industry
2.4 Competitive Advantages of the Turkish Textile Industry
2.5 German Textile Industry in Contrast to the Turkish One
2.5.1 Information about German Textile Industry
2.5.2 Comparison between Turkish and German Textile Industry
2.6 SWOT and PEST Analysis of the Turkish Textile Industry
2.6.1 Definition of SWOT-Analysis
2.6.2 SWOT-Analysis of the Turkish Textile Industry
2.6.3 Definition of PEST-Analysis and Application to Turkey
3. Practical Insights into Turkish Textile Industry – Interview with Emre Kızılgüneşler,
President of Aegean Region Committee of Garments Exportation
4. Future Outlook on Turkey’s Textile Industry
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3. 1 Introduction to Textile Industry
1.1. Textile Industry in General
The textile industry emerged by the basic need of humans to “cover their bodies” (Güleryüz,
2011, p. 3). From an industrial point of view, it emerged in England after the industrial revolution.
The textile industry is primarily concerned with the production of yarn, and cloth and the
subsequent design or manufacture of clothing and their distribution. The raw materials used in production
may be natural, or synthetic using products of the chemical industry.
Mainly there are four sources for textile production: animal (wool, silk), plant (cotton, flax, jute),
mineral (asbestos, glass fibre), and synthetic (nylon, polyester, acrylic) materials. In the past, all textile
products were made by natural sources, but today most of the companies are using chemicals to create
textile products.
Products of the textile industry are found in every human’s everyday life. They include not only
clothing but also bed sheets, towels, bathrobe, blankets, voiles, carpets, gray cloth, weaves, and tents. This
shows that the textile industry is concerned with the production of a wide range of products.
1.2. History of the Textile Industry in Turkey
The history of textile production in Turkey origines from the Ottoman Empire period. Especially,
in the 16th and 17th centuries, it was at the peak period of its time. Ottoman Empire’s econonomy was
heavily relied on textile and it was at an advanced level.
Figure 1 : History of Textile Industry
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4. In the 20th century, between 1923 and 1962, a great development has been made by Turkey. In
1933, all textile fabrics and small work places were gathered under the umbrella of Sumerbank. It was a
great power resource by helping education of new workers for the industry and investing for the industry.
After the establishment of Bursa Textile Research and Education Center, the sector has become more
powerful. In the 1990’s the share of textile industry in comparison to other sectors in the Turkish
economy extremely increased. By the help of export orientations, such as Agreement on Textile and
Clothing and joining Customs Union, Turkish textile industry started to play an important role.
Nowadays, Turkey is one of the big players in the industry. Turkey was the EU’s second largest supplier
of textiles and clothing, after China, with a 13.3% share of the EU import market in 2010, according to
data from Eurostat (Official Blog, TCP, 2011). We see some Turkish brands in the global market,
respected by many countries such like Mavi. On the other hand, there are so many Turkish producer for
the big global brands such as, Levis, H&M, Zara, or United Colours of Benetton.
Table 1 : Annual Textile Export of Turkey, General secreteriat of ITKIB (2012)
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5. Table 1 depicts that the export rate increased in 1997 after joining Customs Union with EU in
1996. Turkey reached $ 3.562.462 of export in 2003.
Table 2 : Leading Markets for Textile Export of Turkey, General secreteriat of ITKIB (2012)
According to WTO statistics for 2008, Turkey ranked the 7th country in the world with the share
of 3,8% and Eurostat statistics the 2nd in the EU market share with the share of 17,5 %. As far as country
groups are concerned, Turkey exports 49% of textile products to EU countries. Second important group is
former USSR countries including Russian Federation, Ukraine, Uzbekistan with the market share of 14%.
On the country basis, the most important export markets for the Turkish textile industry are
Russian Federation, Italy, Germany, Romania and Poland.
1.3 Geographic Concentration of Turkish Textile Sector
When we analyze employment numbers, numbers of textile companies and export figures of
textile industry, there are basicly three areas that are leading Turkish textile industry: Marmara, Ege and
Cukurova region.
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6. Figure 2: Textile Concentrated Areas in Turkey
MARMARA :
Three big cities lead the textile industry in Marmara: Istanbul, Bursa and Tekirdağ. Marmara is
the leader in industrialization in Turkey so that one can imagine that it takes a big slice from the pie. This
region has 56% of the total textile employment in the country and 67 % of the total textile related
companies (Ministry of Labor and Social Security Statistics). Approximetely, 71% of the total textile
exports of Turkey is made by Marmara region (Turkstat).
EGE :
The most important cities in the region are Denizli and Izmir. This region has a focus on
production of home textiles, towels and bathrobes. Ege has a share of 12% of the textile employment and
11% of the total textile companies. 10% of the total textile exports is made by Ege.
ÇUKUROVA :
The most important cities for this region are Adana, Kahramanmaraş and Gaziantep. There are
also important companies in this region. For example, it has 12 of the textile companies that have ranked
in the top 500 firms in whole Turkey. This region observes higher growth in terms of the textile exports,
textile employment and textile related companies than any other (Kutluksaman, May 4, 2012, p. 18-20).
Cukurova region is the 7th largest cotton producer in the world.
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7. 2 Competition in the Textile Industry Worldwide
2.1 General Information about Turkey’s Position in the Worldwide Textile Market
Turkey is the ninth largest supplier of textile and seventh largest supplier of clothes worldwide in
2011 (European Union excluded, see figure 1). Some developments over the last years improved Turkey’s
position in the worldwide textile market, for instance the customs union agreement in 1996 between the
European Union and Turkey and free trade agreements (FTA) with Hungary and Bulgaria. In the
domestic area, many local Turkish companies negotiate licensing contracts with companies abroad, in
order to compete globally (U.S. International Trade Commission 2004: 39-42).
Figure 3: Turkey’s rank among textile exporters worldwide according to their exports in 2011
World Trade Organization – International Trade and Market Access Data
2.2. Porter’s Five Forces Framework
A major task for managers is to analyze competitive forces in order to identify opportunities and
threats in their business’ industry. One approach to develop such an analysis is known as Porter’s Five
Forces model (see figure 4). It gives insights in the forces, which influence competition, supports the
analysis of competitors and helps in shaping the own strategy. Porter (1979: 2) argues: “The collective
strength of these forces determines the ultimate profit potential of an industry”. The stronger the forces,
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8. the more limited are companies in an industry to raise prices and earn higher profits. A threat in the
industry can be seen as the result of strong competitive forces, because they depress profits. Conversely, a
weak competitive force allows a company to earn greater profits and can be seen as an opportunity (Hill /
Gareth 2008: 42-43 and Porter 1979: 3).
Figure 4: Porter’s Five Forces
Framework
Michael E. Porter (1979)
The following part describes briefly the single threats: The threat of new entrants means, that
newcomers might face the following barriers: spending high efforts in overcoming customer loyalty to
other brands or companies, initial capital requirements, cost disadvantages independent of size and access
to distribution channels (Porter 1979:3-5). If bargaining power of suppliers is high, in case the product
is unique, the industry contains a small number of suppliers or the suppliers do not have to consider
competitive products in the market (Porter 1979: 5). The bargaining power of customers is high when
the buyers buy in large amounts or the product is a replaceable standard product (Porter 1979: 6). A
substitute product is threatening, because of its effect of limiting profits and growth of an industry
(Porter 1979: 7). The circumstances under which the intensity of rivalry between companies is high
when for instance industry growth is slow or fixed costs are high which leads companies to fight for a
strong price competition (Porter 1979: 7).
2.3 Porters Five Forces Framework In Regards To The Turkish Textile Industry
An industry analysis from 2007, which was about the competition between textile and apparel
manufactures, took place in Istanbul. It roughly gave insight in the evaluation of the Turkish textile
industry in the framework of Porter’s five forces model. The following paragraphs explain Porter’s five
forces in regards to the Turkish textile industry.
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9. The notice of entrants by established companies in the Istanbul apparel and textile manufacturing
industry is low. They do not seem to spend high attention towards the threat of new entrants, since the
number of competitors in the market is large. The biggest problem for new entrants might be the heavy
reliance on references and the strong and deep relationships between competitors and customers. Without
any company awareness among clients, it is difficult to build up customer loyalty. A possibility for
newcomers to overcome these threats is entering the market by bringing some kind of customer base and
knowledge along. Capital and investments to start up a new company do not need to be very high in this
industry, because a high percentage of production cost comes from low labor costs. Cost disadvantage
independent of size is for example the limited know-how in apparel manufacturing of new actors which
might lead to disadvantages compared with experienced companies. The access to distribution channels
might be a hindrance, because beginners do not have much experience in their customers’ wants and
needs (Ahlquist / Andreasson 2007: 27-31).
An evidence for a weak bargaining power of suppliers is indicated by the large population of
suppliers in the market. The customers are able to ask for best terms and even play suppliers off against
each other. The consequences are decreasing prices and similar prices among suppliers (Ahlquist /
Andreasson 2007: 31-32).
Since many manufacturers exist, customers are able to find alternative manufacturers when
needed. This situation is an indication for a strong existing bargaining power of customers in the
Turkish textile industry. To overcome this threat, manufacturers should seek for greater differentiation of
their products. The durations of contracts are very short and brought quantities are very high. These
circumstances add to a strong bargaining ability of customers (Ahlquist / Andreasson 2007: 32-33).
The barrier of substitute products can be seen as less strong, since it is difficult to substitute
clothes and other textiles. Some argue that there are possible substitutes, because of new trends. But
despite, the main argument remains: there is no substitute for apparel (Ahlquist / Andreasson 2007: 34).
The Turkish textile and apparel sector contains thousands of producers. Many of them are small
and medium sized businesses, family owned. Although the population of competitors is very large, the
high export rate indicates, that the competition force and intensity of rivalry between the companies is
low. Turkish producers of textiles and apparel have the characteristic to implement the same strategies
from their neighbors. This attitude might lower the competition between them. Some interviewees of the
industrial analysis regard competition from abroad as more dangerous than domestic competition
(Ahlquist / Andreasson 2007: 22, 35).
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10. About the competition in textile markets it can generally be said that the competition intensity is
high, because the characteristics of the markets, for example low required investments or low skilled
employees, set very low entry barriers. However, it can be indicated, as a special fact of the Turkish
textile industry, that the competition intensity in the Turkish textile market is lower than general, because
of strong relationships between companies and consumers. Many companies seem to have fix customers,
so they do not run fights with competitors to catch their consumers. For new entrants can be concluded
that an entry in this business is especially difficult initially. This is linked to the just mentioned strong, on
traditions based bonds between consumer and companies. Without an existing network, know-how and
contacts, entering in the Turkish textile industry might be very problematic. But once established solid
and trustful customer bonds and a focus on differentiation, the company might be able to position itself in
a stable environment.
2.4 Competitive Advantages of the Turkish Textile Industry
Turkey possesses several advantages in its production, mainly on the fields of production factors,
labor and technology, compared to competitive countries like China or India.
Turkey has two advantages in regards to the factors of production. First, the cotton from the
Aegean region is regarded as highly qualitative, which makes Turkey one of the leading cotton producers
in the world. The second advantage is about Turkey’s production in spun yarn, which ranks Turkey
among the six largest spun yarn manufacturing countries worldwide. In 2000, Turkey produced
approximately 5 percent of total world output in spun yarn with increasing outputs in the following years.
So Turkey possesses raw materials for textiles directly.
Turkey also possesses advantages in labor. Labor costs in Turkey are very low and employment
contracts are usually settled over one to six months, which makes the industry a very flexible one. Labor
cost in Turkey as a percentage of textile output was in 1997 nearly 10 percent. In India the figure was in
1998 10 percent, too. In other countries it was much higher, for instance in Italy (12 percent), in Portugal
(14 percent) and in the United States (17 percent).
The third basic factor of advantage lies in Turkeys advanced technology. The textile sector could
make an important step towards modernization since the implementation of the European Union-Turkey
customs union. Turkey imported a large number of textile and apparel machinery in the last years. As
results, Turkey has the largest capacity for the manufacturing of yearn, weaving and finishing in whole
Europe. Furthermore, because of long established Turkish-German commercial relationships, many
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11. employees in Turkish mills have worked in German factories and acquired additional knowledge (U.S.
International Trade Commission 2004: 36-38).
Turkey’s geographic location can be sees as an advantage, too. Turkey has a favorable location
between Europe and Asia which leads to lower transportation costs in comparison to what other countries
are able to offer. American merchants favor Turkey because Turkey is able to offer shorter lead times and
therefore faster shipping times than any of its competitors in Asia (Etkin / Helms / Turkkan / Morris
2000: 70 and U.S. International Trade Commission 2004: 42).
2.5 German Textile Industry
2.5.1 Information about German Textile Industry
The textile and clothes industry is the second largest consumer goods industry in Germany.
Nearly 120,000 people work in approximately 1,200 small and medium sized companies for this industry.
The export quota of German textile accounts 43 percent. Germany is ranked as 3rd largest producers of
clothes in the European Union (Hauser 2010: 7). Germany’s exports of textile in 2011 to the world were
accounting for US $ 16,158.9 million and exports of clothes were US $ 19,645.8 million (see figure 3). In
2011 the textile industry could close its business year with a positive turnover of +7 percent. But this
year, the branch experienced a stagnant phase, as a result of the durable enduring financial and economic
struggles in Europe. One part of Germany’s textile industry has to be highlighted here: high technical
textiles. Memon and Zaman (2007: 120) explain technical textiles with the following definition:
“Technical textiles as defined as textile materials and products manufactured primary for their technical
performance and functional properties, rather than for their aesthetic and decorative it characteristics.”
In the sector of technical textiles, Germany is one of the leading sellers worldwide. Today, Germany’s
global share in this segment is about 45 percent. One reason for this development is a close cooperation
between the companies and textile research institutes. In recent years the German textile industry was
characterized by structural changes in their organization and production. Similar to Turkey, Germany had
great problems with the low price competition from Far East, too. Decreases in production and offshoring
(global outsourcing) marked the last years in this industry (Deutsche Bank Research 2011).
2.5.2. Comparison between Turkish and German Textile Industry
In contrary to Germany, where the car industry makes up an important part of the economy, the
textiles and clothing industry is one of the driving forces of the Turkish economy. Turkey’s textile and
clothing industry employs with about 750,000 people in more than 40,000 companies more workers than
Germany. Turkey’s textile made up 23 percent of its overall exports in 2001. Turkey exports nearly 70
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12. percent of its textile and apparel products, which is a higher number than Germany’s 43 percent (U.S.
International Trade Commission 2004: 36, Republic of Turkey, Minister of economy 2012: 1-3). In
comparison to German textile industry, Turkey’s textile industry does not target high technique textiles,
but the production of workaday clothes and home textiles. This is favored by Turkey’s abundance in raw
materials like cotton and synthetic, compared to Germany. In 2011 Turkey exported textiles of the total
value of US $ 10,772.4 million (see figure 3). The reason why Germany’s export sales are higher than
Turkey’s even though Turkey is considered more as a textile manufacturing country than Germany might
be because of the difference in prices between their focuses, mainly the price differences between high
textile products and regular woven and kitted goods (Republic of Turkey, Minister of economy 2012: 1-3,
Istanbul Textile and Apparel Exporter’s Associations 2012: 1).
Turkey displays a country, in which many foreign companies undertake investments and
partnerships. Nearly 249 mostly Western companies, like Hugo Boss or Levi Strauss, use Turkey’s
conditions to operate in this sector and establish their own textile and apparel productions. Domestic
apparel producers, on the other hand, concentrate on manufacturing non-branded goods and selling them
to retail chains, where they can be branded (Chowdhury 2009: 42, cited from State Planning Organization
(SPO) 2004, p.24). Germany is not regarded as a manufacturing location for foreign companies.
Production costs would be too high in Germany. Rather, foreign companies sell their productions to
Germans. Moreover, domestic German apparel and clothes manufactures concentrate on producing
clothes with strong brands for the upper market and for exclusive premium segments (Hauser 2010: 7).
2.6 SWOT and PEST Analysis of the Turkish Textile Industry
2.6.1 Definition of SWOT-Analysis
In order to analyze the current as well as the future state of a company or an industry, it is
necessary to do a system analysis. A well established tool for this is the so-called SWOT-Analysis. The
SWOT-Analysis is described as a strategic planning tool which evaluates the Strengths, Weaknesses,
Opportunities and Threats involved in a project, an idea, a business or an industry. A SWOT-Analysis
might create a series of strategic alternatives (Hill and Jones, 1992:14).
Its key purpose is to identify the strategies that will create a specific business model that will best
align an organization’s or industry’s resources and capabilities to the requirements of the environment in
which the firm operates. In other words, it is the foundation for evaluating the internal potential and
limitations and the probable opportunities and threats from the external
environment (Managementstudyguide.com, 2012). It is possible to take control over the internal factors,
but this is essentially impossible for the external factors.
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13. Internal Analysis
External Analysis
Figure 5: SWOT-Analysis; Own depiction (2012)
Strengths are the company’s resources and capabilities that can lead to a competitive advantage.
Weaknesses are resources and capabilities that the company does not possess but that are necessary, this is
resulting in a competitive disadvantage. Opportunities are conditions in the environment that allow a
company to take advantage of organizational strengths, overcome organizational weaknesses and
neutralize environmental threats. Threats are conditions in the environment that may stand in the way of
organizational competitiveness or the achievement of stockholder satisfaction (Harrison and John, 2004:
5-6).
The general idea is that strategies should be made to take advantage of internal strength and
opportunities arising from external environment, to overcome internal weakness and neutralize threats
found in external environment (Harrison and John, 2004:6).
TOWS matrix is the essential completing tool to SWOT-Analysis. It enhances deploying
strategies systemically considering the relations between Strengths, Weakness, Opportunities, and
Threats. The consequences of the internal and external factors can be replaced in a matrix called TOWS
Matrix is shown in table 3. TOWS matrix helps to systematically identify relationships between threats,
opportunities, weaknesses and strengths, and offers a structure for generating strategies on the basis of
these relationships (Weihrich, 1982:45-66).
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14. External Opportunities (O) External Threats (T)
TOWS Matrix
Internal Strengths (S) SO ST
Strategies that uses strengths to Strategies that uses strengths
maximize opportunities. to minimize threats.
Internal Weaknesses (W) WO WT
Strategies that minimize Strategies that minimize
weaknesses by taking advantage weaknesses and avoid
of opportunities. threats.
Table 3: TOWS Matrix (Weihrich, 1982)
2.6.2 SWOT-Analysis of the Turkish Textile Industry
The following applies the just described theory of SWOT- Analysis to Turkey’s textile industry.
Strengths
Turkey offers richness in raw materials, since Turkey is ranked seventh in the word with a cotton
production of 375.000 tons (The General Secretariat of ITKIB, 2012). Another strength are its
competitive labor costs. The average labor cost in Europe is exactly 21,79 €, whereas the average costs in
Turkey are around 7,00 € (European Commission Eurostat, 2012). But Turkey still provides qualified and
well educated labor force. With 3.5 million students in tertiary education and approximately 600,000
graduates from universities per year, Turkey has a World-class engineering education (Invest in Turkey,
2012). All around Turkey one can find the term Turquality which describes the quality of products made
in Turkey (Invest in Turkey, 2012).
Weaknesses
One of the biggest weaknesses the industry faces is the informal black market sector which can be
found in every city on the bazaars. Lots of profits of brand companies get lost there and it creates a weak
image of Turkey as a selling point. On top of that it suffers from its inability to create a large number of
brands. Only a handful of brands are known outside of Turkey, for example Mavi.
High input and energy costs are another obstacle. In order to increase competitiveness of the
manufacturing industry, the infrastructure industries that supply inputs to the manufacturing industries
should improve productivity. Energy costs must be lowered and supply security ensured.
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15. Opportunities
A big opportunity for Turkey is its geographical location. Located between Europe and Asia its
position allows Turkey an easy distribution and short logistic periods to its main export countries, which
are especially Europe and Russia, due to the geographical proximity (The General Secretariat of ITKIB,
2012).
Another plus is the liberalization of Turkey and its trade policies in combination with the Turkish
government policies for industrial development and investment incentives. The Turkish Ministry of
Science, Industry and Technology planned to release policies for the “Improvement of Investment and
Business Environment”, “International Trade and Investments”, “Skills and Human Resources”,
“Technological Development of Companies”, etc (Republic of Turkey, 2012).
Threats
The industry expectations of danger would comprise economical and political uncertainty which
can occur for example when the government is changing from a conservative one to a liberal or the threats
can arise from the current and possible problems in Syria (International Property World, 2012). The
threats include as well even lower labor costs in low labor countries such as China, Bangladesh and India
with average labor cost of around 2,00 € (InChin Closer, 2012). The distance to the US-Market and the
growing Far East can cost the Textile Industry valuable market shares.
Having seen the strong and weak sides of the sector supported or hindered by opportunities and
threats, it is only right to address what can be done to improve the current situation with a future vision in
mind. The following TOWS Matrix provides a framework that presents a future vision regarding the
industry.
External Opportunities (O) External Threats (T)
1. Geographical location 1. Economical and political
TOWS Matrix 2. Liberalization of Turkey uncertainty
3. Government policies 2. Low labor countries
4. Investment incentives 3. Problems in Middle East
4. Distance to other markets
Internal Strengths (S) SO ST
1. Richness of raw material 1. Increase market share in 1. Making investments in China
2. Competitive labor costs European and Russian markets. and other low labor countries.
3. Qualified labor force 2. Opening business 2. Opening new headquarters in
4. Quality of product development and planning the US und Asia.
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16. department for new technologies. 3. Opening research and
development departments.
Internal Weaknesses (W) WO WT
1. Black market sector 1. Create brands with high Overcome weaknesses by making
2. Inability to create brands quality. them strengths (move towards SO-
3. High Input costs 2. Opening E-Businesses and Strategy)
logistic departments. 1. Joint Ventures with Asian firms.
3. Lobby for stricter anti- 2. Reduce the threat of competitors
plagiarism rules. by making new investments in
high quality image .
Table 4: TOWS Matrix of Turkish Textile Industry; Own depiction (2012)
2.6.3 Definition of PEST-Analysis
The PEST-Analysis, also known as STEP-Analysis is, like the SWOT-Analysis, a strategic planning tool
which analysis the general external environment of a company/industry (Czinkota and Kotabe, 2001:57).
The PEST-Analysis is a useful tool for understanding market growth or decline, and as such the position,
potential and direction for a business. The PEST-Analysis refers to the Political, Economic, Socio-
cultural and Technological factors that influence an organization or industry, their strategies, structures
and means of operating (Senior and Fleming, 2006:16-17). Figure 6 illustrates the PEST factors that exist
as part of an organization’s environment. All, at some time, will have an impact upon the organization.
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17. Figure 6: PEST factors, Senior and Fleming (2006)
Political Factors
Turkey is a democratic, secular and social state governed by the rule of law. It has been a multi-
party parliamentary democracy since 1947. Legislative power is vested in the 550-member Turkish Grand
National Assembly (TBMM), whose members are elected for four-year terms by the votes of Turkish
citizens over the age of 18. The government of Turkey is pro-western and is actively working towards the
integration of Turkey into the European Union. They have implemented actions towards a major
economic reform which, as can be seen by the growing economy are working to improve the conditions in
the country. The government has been in office since the end of 2002 with its Prime Minister Recep
Erdoğan. Erdoğan is also chairman of the ruling conservative AP Party (International Property World,
2012). Turkey has a progressive tax system with individual tax rates from 15%-35% and a corporate tax
rate of 20% (International Property World, 2012). Right now Turkey is in a military conflict with Syria,
which can lead to political instability.
Economic factors
As already mentioned in the SWOT-Analysis the middle-income country’s biggest competition
are low labor countries like China, India and Bangladesh.
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18. Turkey’s unemployment was at 8.2% at the end of 2011, which is lower than the average EU
unemployment rate (10,0%) but it leaves space for improvement (European Commission Eurostat, 2012).
The average currency exchange rate in 2011 was 1€ = 2.33 TL, 1€ = 1.99 TL (2010) and 1€ = 2,16 TL
(2009). The current low value of TL makes it easy for Turkish firms to export (European Commission
Eurostat, 2012).
The GDP real growth rate was sinking to 8,5% in 2011 from 9% in 2010. The crisis hit Turkey
hard in 2009 with a growth rate of -4.8% (European Commission Eurostat, 2012). The high growth rate
right now boosts the domestic demand.
Socio-cultural factors
One of the social system strengths in Turkey is that they have growing proportion of young
population as they have more than half the population being aged below 30 (European Commission
Eurostat, 2012). This will allow Turkey to increase their employment rate by getting the most out of the
young labor force. Some of the most important social welfare schemes that the government has been
providing are unemployment insurance, medical insurance, insurance for work-related injuries, maternity
insurance and housing security. The system is financed primarily by contributions made by employers
and through the payroll deductions of employees. Turkey has historically shown weak performances on
various social parameters, mainly because of its policies on such matters. The human development index
(HDI) of Turkey is 0.704 and the country is ranked 92th among the 177 countries rated (International
Human Development Indicators, 2012).
Technological factors
Turkey has been slower in adopting technological advances than the EU countries, although
policy measures have been undertaken to expedite this. Total expenditure on R&D in 2006 as a
percentage of GDP was 0.6%, compared to 2.3% in the OECD countries (European Commission
Eurostat, 2012). Nevertheless, over the past decade, Turkey’s telecommunications industry has been
booming due to the liberalization of the market. The number of mobile telephone subscribers increased at
a CAGR of 22%, from approximately 23 million in 2002 to 62 million in 2007 (Trading Economics,
2012). However, the levels of patenting remain extremely low, despite a rapid increase in recent years.
The R&D climate is expected to improve, as the government has been taking several initiatives towards
developing the technological landscape of the country by encouraging foreign entities, prominent
universities and research organizations to foster a culture of innovation.
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19. 3. Practical Insights into Turkish Textile Industry – Interview with
Emre Kızılgüneşler, President of Aegean Region Committee of
Garments Exportation
Interviewee: Emre Kızılgüneşler
- President of Aegean Region Committee of Garments Exportation
- Founder and current CEO of "Farbe Tekstil Turz. İnş. Enerji San. ve Tic. A.Ş."
Interviewer: Barış İştipliler
Duration: Approx. 30 Min
Location: Buca BEGOS 3. Bölge, Buca-Izmir
Date: 13.12.2012, 10.15 am
1. What are the core competitive advantages of Turkish textile (or specifically garment) industry
compared to global industries?
There is a powerful background which contains high investments of capital (machinery,
technology) and education which creates 3 generations. This foundation is so powerful that Turkey's 20 %
export comes from this industry.
Cotton- We are one of the rare countries which yield cotton and manufacture it from farm to the
shop. After China and Italy, Turkey is one of the best at this competition.
We have enough competency to produce every product.
We have the technology to be elastic and versatile. For instance; we can produce 300 from
product A today and the day after we can produce 300.000 product Z. And the other day, we can again
produce 100.000 from product A for example. We can react well.
We have so many people which are educated well.
2. Is the level of integration which was succeeded by Turkish firms enough according to you? What
should be done to encourage current domestic firms to operate multi- or internationally?
The fields of export, manufacturing and brand management are the things that are totally different
from each other in textile industry. It needs so much effort to produce a whole collection and sell it as a
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20. brand. For example, as Farbe Textile, when we tried to do this, we could produce only shirts and sweat-
shirts; so where are the other parts of a collection such as trousers, jeans, jackets, shoes, suits? You should
invest, according to me at least US-$ 20 million in it and still it is 50 % risk that you can bankrupt with
this investment.
People should not think so aggressively on this brand management issue and there should be a
well planned and segmented project to be conducted. Otherwise, it is so easy to create a logo and print
this to your products, there are so many brands which do this but I see them as "soap-foam" which will
not last for long. Therefore, manufacturing is the best thing I can do and I do it. I know how to produce,
how to sell but I am not so good at marketing (franchising) it.
There is only Italy which is capable to do and succeed in all of them, manufacturing, selling and
marketing together. Cotton, Damat, Sarar, LCW have the brand but they do not have manufacturing for
example; they have only their emergency production facilities which is used only to supply the needs of
collections, that cannot be purchased from market. They make collections by using their supply chains
and then they focus their efforts to market and sell them; they cannot lose their power to produce. Mavi is
the only brand which tries to do that, but personally, I am not sure about their success.
I see first Damat and then Sarar as the best Turkish firms that succeed brand management well all
around Europe.
3. In which segments do you think the adding value level is the highest? Or is there a niche that
should be exploited by Turkish firms in multi-national arena? Which sector most we operate and
export in? Which one is the most powerful and what is its credibility in national area?
I will give some facts to you to explain this issue. We have an index of value/kg in which the
jewelry has the biggest values of course. Then the garments come with US-$ 27.5. For instance, it is US-$
25.5 for defense and US-$ 18 for automotive which we are always "very proud" (!) of. Also, in textile,
from field to the shop, we add our own value and all our citizens create and earn from that value.
However in automotive, US-$ 15 of this value came out of Turkey as import; and they are assembled
together here.
Also when we evaluate it in respect of trade balance, we export US-$ 16 billion in a year and
import only US-$ 4 billion. That means we cover the trade deficit of Turkey; if we had five more
industries like garments in Turkey, there would not be any problem of trade deficit. Therefore, I think the
answer is clear.
20

21. 4. Are there any endorsements or supports for Turkish SMEs to widen their knowledge about
global commerce and settling in the form of an inter- or multinational organization? Are they
efficient and effective enough?
I think that the Ministry of Economics is really effective in these politics. Turquality, for example,
is a program that offers much to producers. They provide them money for 50 % of their rental loans, give
extra credits to producers. They also give support when you try to open a new shop as a company for
example. In international area, Turkish government organizes fairs or invites VIP committees to the
country to create a good opportunity for the companies to sell their products or make agreements. There
are also, some education and consultancy events in the fields of sales management, marketing,
production, design for SMEs.
In general I appreciate the efforts of government and Ministry of Economics. I can evaluate them
as a well organized and managed company. However, now we have an export of garments in the level of
US-$ 16 billion and textile in US-$ 9 billion. Despite, we know that in places like Laleli, Merter,
Osmanbey there are still so many producers that export to Iraq, Russia, Iran, Syria without the overseeing
of authority. And with the addition of these numbers, our actual export level is about US-$ 32 billion.s
There is also a handicap for Turkish industry, the price of workforce. We pay 4-9 times more for
workforce in average when we compare it to our competitors like Bangladesh, China, Pakistan. In Italy it
is even more but they have an export level of over US-$ 60 billion. However, our strengths that we
mentioned before, maintain our position in global markets.
5. How would you evaluate textile industry in Turkey after 20 years in respect of globalization?
Also before 20 years, was it better or worse? Do you see any possible threats like import?
When I first entered to this sector in 1996, the people said me that the industry was collapsing and
asked if I am mad. However, I survived and performed well for about 17 years and now I think my
children can also continue to do this job. The development motive and the power of our industry are
capable to do this.
The biggest threat of Turkish textile and garments industry in the future is the branding which
cannot succeed. Right now, we do not have 100 brands in Turkey overall and to reach our goals, we do
not have any global brands.
21

22. 6. Which role should be (necessarily) worn by Turkish countries to spread their activities to a
region (Europe, Balkans, etc) or to the world? (Innovative, image-holder, price/performance
monster, etc?)
Now, we do all of them. However by the time, we will develop into the way of extensive use of
branding and strategies of marketing as Italy does.
7. We know that Turkish garment and textile industry has developed over the last 30 years.
However we cannot hear the names of Turkish brands all over the world and Europe like Italians,
Americans or French brands. What do Turkish firms do wrong not to have the decent power of
competition in the garment industry and brand loyalty in the minds of customers globally? Is it
something that they can control or is it the conjuncture of the national economic dynamics?
We can think it as USA, Europe vs Turkey. The situation is of course important. This encourages
the firms of these countries and they courage to do things like Billabong, Roxy, Quicksilver with the help
of marketing.
8. What are your (or government's) current short-term and long-term plans to increase the
efficiency of Turkish textile industry around the world?
US-$ 500 Billion of export with five high quality global brands is the target of Turkey in 2023 as
you know. And for this aim, we will be reaching US-$ 52 billion of export with 1-2 global brands. There
are 7000 companies right now. However none of them is capable to do that.
However, it seems palatable when we look at Italy's current position in the market as we take
them as model for us. I see our future is good, with possible brand management projects and well invested
capitals.
22

23. 4. Future Outlook on Turkey’s Textile Industry
Currently, the sector‘s main goals are to produce high value adding, original and high quality products
and to sell them at reasonable prices instead of just producing low cost goods. By this Turkey’s image
shall be changed from being a mass producer of ready wear to a creator of new designs, fashions and
quality labels turning out higher priced products. Therefore, importance must be given to R&D as well as
to cooperations between governmental institutions and universities. This trend has already started. Like
this young Turkish designers are emerging and product diversity can be found. One reason for this
positive trend are pattern design competitions organized by various institutions that foster the
development of young and innovative Turkish workforce in this industry (DEIK Foreign Economic
Relations Board, 2012).
Also Turkish government puts much emphasis on the future development of its textile sector. The
government targets for an annual textile sector export by 2023 which is the 100th anniversary of the
Turkish Republic of US-$ 85 billion (DEIK Foreign Economic Relations Board, 2012). As a figure of
comparison in 2010 it was US-$ 24 billion, in 2009 US-$ 21 billion and in 2008 and 2007 each US-$ 25
billion. This means that within 13 years (from 2010 to 2023) annual export of Turkey’s textile industry
shall be almost four times higher.
Taking the historic development, the current strengths, weaknesses, opportunities and threats in account
that were explained intensively in chapters one to three one can say that Turkey’s textile industry has
profitable and bright future ahead, especially if it uses its modern technology and high quality at low
wages in a beneficial way. Nevertheless, the industry is vulnerable because of the threatening imports of
textiles from even lower-cost countries from Asian region. Also one has to wonder how trade relations
with the main importers of Turkish textile products will develop in times of economic hardships and
crises.
23

24. References
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Apparel Industry”
http://pearl.plymouth.ac.uk:8080/bitstream/handle/10026.1/327/Determinants%20of%20knowledge%20tr
ansfer%20in%20Turkish%20textile%20and%20apparel%20industry.pdf?sequence=4
(06.11. 2012)
-CZINKOTA, M. and KOTABE, M. (2001): “Marketing Management”, 2nd edition, USA, South-Western
College Publishing.
- DEIK FOREIGN ECONOMIC RELATIONS BOARD (2012): “Turkish Business Outlook
2012”, http://canerel.com/tr/publish/Turkish_Business_Outlook_2012.pdf (01.12.2012)
- DEUTSCHE BANK RESEARCH (2011): Textil-/Bekleidungsindustrie: Innovationen und
Internationalisierung als Erfolgsfaktoren, Aktuelle Themen 519, 6th of November 2012
https://www.dbresearch.de/PROD/DBR_INTERNET_DE-PROD/PROD0000000000275049.pdf
(25.11.2012)
- ETKIN, L.P. and HELMS, M.M. and TURKKAN, U. and MORRIS, D.J. (2000): "The economic
emergence of Turkey", European Business Review, Vol. 12 Iss.: 2: 64 – 75.
- EUROPEAN COMMISSION EUROSTAT (2012):
http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-HA-11-001-03/EN/KS-HA-11-001-03-
EN.PDF
http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=de&pcode=teilm020&tableSe
lection=1&plugin
http://epp.eurostat.ec.europa.eu/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tps000
10&language=de (08.12.2012)
- GESAMTVERBAND DER DEUTSCHEN TEXTIL- UND MODEINDUSTRIE (2009):
„Konjunkturberichte“, http://www.textil-mode.de/deutsch/Themen/Konjunktur-Statistik/K291.htm
(25.11.2012)
- GESAMTVERBAND DER DEUTSCHEN TEXTIL- UND MODEINDUSTRIE e.V. (2011): „Zahlen
zur Textil- und Bekleidungsindustrie“, Berlin, http://www.textil-
bekleidung.de/uploads/media/Zahlen_zur_TuBI_Statistik_2011.pdf (01.12.2012)
- GESAMTVERBAND DER DEUTSCHEN TEXTIL- UND MODEINDUSTRIE (2012):
„Konjunkturbericht Oktober 2012“, http://www.textil-mode.de/app/so.asp?o=/_obj/D38C527A-03FA-
41F1-8663-BF54B58EEF82/outline/2012-10_Konjunkturbericht.pdf (01.12.2012)
- GÜLERYÜZ, Ö. (2011), “Küresel Gelişmeler Işığında Türkiye’de Tekstil Sektörü Ve Geleceği”,
http://eprints.sdu.edu.tr/879/1/TS00936.pdf; (28.11.2012)
24

25. - HARRISON, J. and JOHN, C. (2004): “Foundations in Strategic Management”, 3rd edition, USA,
South-Western College Publishing.
- HAUSER, J. (2010): “Support to Export Promotion and Investment Attraction in the Republic of
Moldova - Export Marketing Survey: German Market for Textile and Clothing”, The European Union’s
Tacis Programme for Moldova,
http://www.miepo.md/public/files/Publicatii/Market_Survey_Textile_Germany_en.pdf (06.11.2012)
- HILL, C. and JONES, G. (1992): “Strategic Management – An Integrated Approach”, 2nd Edition,
Boston, Houghton Mifflin Company.
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http://inchincloser.com/2010/11/10/indias-manufacturing-labour-costs-above-chinas-in-2010/
(19.12.2012)
- INTERNATIONAL HUMAN DEVELOPMENT INDICATORS (2012):
http://hdrstats.undp.org/en/countries/profiles/TUR.html (13.12.2012)
- INTERNATIONAL PROPERTY WORLD (2012):
http://www.internationalpropertyworld.com/investment-property-
turkey/political_factors_turkey.htm (13.12.2012)
- INVEST IN TURKEY (2012):
http://www.invest.gov.tr/en-
US/investmentguide/investorsguide/Pages/DemographyAndLaborForces.aspx (08.12.2012)
- ISTANBUL TEXTILE AND APPAREL EXPORTER’S ASSOCIATIONS (2012): “Turkish Textile
Industry”, http://www.itkib.org.tr/english/about/sectors/textile/textile_info.pdf (27.11.2012)
- KUTLOKSAMAN, M., and MUTLU, I., and SAUNDERS, J., and UNLUASLAN, E. (2012):
“Turkey’s Textiles and Apparel Cluster Microeconomics of Competitiveness”,
http://www.isc.hbs.edu/pdf/Student_Projects/2012%20MOC%20Papers/MOC%20-
%20Turkey%20Textiles%20and%20Apparel%20Cluster.pdf, (04.05.2012)
- MEMON, N.A. and ZAMAN, N. (2007): “Pakistan lags behind in Technical Textiles”, Journal of
Management and Social Sciences. Vol. 3, Iss. 2,: 120-127
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http://blog.tcp.gov.tr/?p=4125 and http://www.itkib.org.tr/english/about/sectors/textile/textile_info.pdf,
- PORTER, M. E. (1979): “How Competitive Forces Shape Strategy”, Harvard Business Review,
Presidents and Fellows of Harvard College: 137-145, http://prolog.univie.ac.at/teaching/LVAs/KFK-
LM/WS07/Porter.pdf (25.11.2012)
25

26. - REPUBLIC OF TURKEY, MINISTER OF ECONOMY (2012): “Clothing
Online“, http://www.tcp.gov.tr/english/sectors/sectoringpdf/hg-clothing_2012.pdf (25.11.2012)
- REPUBLIC OF TURKEY, MINISTRY OF SCIENCE, INDUSTRY AND TECHNOLOGY
(2012): http://www.sanayi.gov.tr/Files/Documents/TurkiyeSanayiStratejisiIngilizce.pdf
(08.1202012)
- SENIOR, B. and FLEMING, J. (2006): “Organizational Change”, 3rd edition, London, Pearson
Education.
- STATE PLANNING ORGANIZATION (SPO) (2004): “A General Outlook General Directorate for
Economic Sectors and Coordination”, The Republic of Turkey, Prime Ministry, State Planning
Organization, Sector Profiles of Turkish Industry, Industry Department, February, Ankara.
- THE GENERAL SECRETATRIAT OF ITKIB (2012):
http://www.itkib.org.tr/english/about/sectors/textile/textile_info.pdf (08.12.2012)
- TRADING ECONOMICS (2012): http://www.tradingeconomics.com/turkey/research-and-
development-expenditure-percent-of-gdp-wb-data.html (08.12.2012)
- U.S. INTERNATIONAL TRADE COMMISSION, OFFICE OF INDUSTRIES, OFFICE OF
ECONOMIES (2004): “Textiles and Apparel: Assessment of the Competitiveness of Certain Foreign
Suppliers to the U.S. Market”, Vol. 1, Washington D.C.: L-34-L 45
- WEIHRICH, H. (1982): “The TOWS Matrix: A tool for situational analysis”, Long Range
Planning, Vol. 15 No. 2
26

27. Apprentice of Tables:
Table 1: Annual Textile Export of Turkey
General secreteriat of ITKIB (2012)
Online: http://www.itkib.org.tr/english/about/sectors/textile/textile_info.pdf
Table 2: Leading Markets for Textile Export of Turkey
General secreteriat of ITKIB (2012)
Online: http://www.itkib.org.tr/english/about/sectors/textile/textile_info.pdf
Table 3: TOWS Matrix
Weihrich (1982): “The TOWS Matrix: A tool for situational analysis”, Long Range Planning, Vol. 15 No.
2
Table 4: TOWS Matrix of Turkish Textile Industry
Own depiction (2012)
Apprentice of figures:
Figure 1: History of Textile Industry
Turkey’s Textiles and Apparel Cluster Microeconomics of Competitiveness
ssshttp://www.isc.hbs.edu/pdf/Student_Projects/2012%20MOC%20Papers/MOC%20-
%20Turkey%20Textiles%20and%20Apparel%20Cluster.pdf
Figure 2: Textile Concentrated Areas in Turkey
Figure 3: Turkey’s rank among textile exporters worldwide according to their exports in 2011
World Trade Organization – International Trade and Market Access Data
http://www.wto.org/english/res_e/statis_e/statis_bis_e.htm?solution=WTO&path=/Dashboards/MAPS&fi
le=Map.wcdf&bookmarkState={%22impl%22:%22client%22,%22params%22:{%22langParam%22:%22
en%22}} (29.11.2012)
Figure 4: Porter’s Five Forces Framework
Michael E. Porter (1979): „How Competitive Forces Shape Strategy“, page 6, Harvard Business Review,
President and Fellows of Harvard College
Figure 5: SWOT-Analysis
Own depiction (2012)
Figure 6: PEST factors
Senior and Fleming (2006): “Organizational Change”, 3rd edition, London, Pearson Education.
27