volume 8 issue 36 - immib special issue

16

PUBLISHER TurkofAmerica, Inc.

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20

32

INDEX

12

7452

5046

12 TURKEY’S FOREIGN TRADE MINISTER ZAFER CAGLAYAN Turkey’s Foreign Trade Minister Zafer Ça¤layan, who spoke to

TURKOFAMERICA magazine about the trade issues between

the two countries, said “We are carrying out our activities

both through state-wide private sectors and through the fed

eral government in order to gain more benefits from exports,

and we will continue these efforts with the same momentum.”

16 JOSE W. FERNANDEZ, ASSISTANT SECRETARY OF STATE Turkey is one of six “Next Tier Markets” identified as

priorities by President Obama’s New Export Initiative (NEI).

This initiative recognizes the importance of the Turkish

market to the United States and provides resources for

identifying growth opportunities in specific sectors.

20 ISTANBUL IRON AND STEEL EXPORTERS’ ASSOCIATION Steel products are exported to more than 160 countries in the

world. Namik Ekinci, President of Istanbul Iron and Steel

Exporters’ Association answered TURKOFAMERICA’s

questions.

32 ISTANBUL MINERAL EXPORTERS’ ASSOCIATION According to Business Monitor International forecasts, the

mining industry in Turkey is expected to grow by 71.3%

between 2009 and 2013. The industry is expected to

reach a value of US $12.76 billion by 2013.

46 ISTANBUL CHEMICALS AND CHEMICAL PRODUCTS EXPORTERS’ ASSOCIATIONThe industry exported 4.9 billion in 2008 and this increased

by 7.5% in 2009, reaching 5.2 billion dollars. On the other

hand, Turkey's chemical industry imports totalled $20 billion

in 2009, falling by 21 percent when compared the previous

year.

50 PETKIM PLANS TO CREATE A REGIONAL FORCE IN PETROCHEMICALS The Turkish petrochemicals market is one of the fastest-

growing in the world, with a twofold GDP multiplier over the

last decade. Petkim Petrokimya Holding A.fi., the leading

petrochemical company in Turkey, has been exporting

different petrochemical products to the US market for

20 years.

52 ISTANBUL ELECTRICAL-ELECTRONICS, MACHINERY AND INFORMATION TECHNOLOGY PRODUCTS EXPORTERS’ ASSOCIATION The Electrical-Electronics and Machinery Industry is considered to be one of the major sectors of Turkey, as it is the source of information technology used by thedeveloped nations to ensure competitive advantage.

74 ISTANBUL EUROPEAN CAPITAL OF CULTURE 2010 Istanbul with its great importance in world history and

unmatchable cultural heritage is already one of the world’s

metropols. I would like to repeat what we say to the

European society to our American friends as well:

“Make Istanbul your next stop!”

They have a very good point in asking how to en-ter the U.S. market. When we look at last

year’s U.S. import numbers, even though itdecreased 23 percent compared to 2008 and itwas not a good year for the U.S. or the rest of theworld, either, the country’s imports totaled 1.9trillion dollars.

To consider only one month, May 2010, the U.S.’simporting of goods and services reached $194.5billion. Imports increased to $194.5 billion in Mayfrom $189.0 billion in April. The U.S.’s monthlyimports figures equal or surpasss Turkey totalyearly exports, which was 102 billion in 2009.

The numbers are enough to get foreign exporterswho have not yet encountered the market excited,but the real point is, how can they get started?

Anybody who does business in the U.S. could giveyou a very long list about what a businessmanshould do. First, find a lawyer, then an accountant,and so on. Those are crucial elements, but I havetwo simple pieces of advice. First, be patient, andsecond, find someone who knows marketing anddon’t forget that you have to spend money tomake money.

I have already assumed that you are patient, so I’llgo into the second one, marketing.

One of the most important decisions that a Smalland Medium-size Business (SMB) has to makeis how much money to allocate for its marketingbudget. "How much should I spend on marketing?"

Scott C. Margenau, the founder and CEO of Image-Works Studio and award-winning web designand branding firm, says both the Counselors toAmerica's Small Business (SCORE) and the U.S.Small Business Administration (SBA) define thevariable for a proper marketing budget to bebetween 2% and 10% of sales, noting that forB2C, retail, and pharmaceuticals, it can exceed20% during peak brand-building years.

Most Fortune 500 companies typically spend about5 – 7% of expected gross revenues on marketing.

This could be a good starting point for companiesthat are just thinking of expanding their businessesinto the U.S. market. According to Tony Fannin,President of BE Branded, who specializes inintegrated marketing and work with Fortune 500companies, if you are introducing a new line,a new service, or a revamped brand position, ittakes about an additional 12 – 15% in marketinginvestment.

If I give a specific example for a mid-size Turkishcompany, the revenue of which is between $5 to$7 million, the company should spend at least$300,000 to $500,000 a year on marketing.

INTERNET TECHNOLOGY SPENDINGOnce you decide to spend money on marketingfor market reports, research, advertising withnewspapers, magazines, and printing coupons,then the Internet has to be on the other side ofmarketing.

Investing in technology is a smart move for manysmall businesses. The U.S. has a population ofover 300 million, and 240 million of them, 77percent of the country, are internet users. If youwant to establish a good business model, theInternet must be an indispensable marketing toolfor you.

Forrester Research, an independent technologyand market research company, conducts anInteractive Marketing Forecast which makespredictions for the next five years. ForresterResearch estimates social media marketing togrow at an annual rate of 34 percent – faster thanany other form of online marketing.

Forrester estimates that $716 million will be spenton the medium in 2010, growing to $3.1 billion in2014. Social media will be a bigger marketingchannel than both email and mobile.

Using all the tools of marketing helps yourbusiness grow, but first you have to be confidentin your products and services. If you believe inyour product; I wish you good luck and welcometo the United States. !

How Should Bus›nessmen Overcomethe D›ff›cult›es ofEnter›ng the U.S. Market?

FROM EDITOR

By Cemil Ozyurt [email protected]

The U.S. market is a

very attractive

market for

businessmen all over

the world who want

to get a piece of the

pie. Whenever I meet

manufacturers

overseas, their first

question is, how they

can sell their

products to the U.S.?

TurkofAmerica • 09

10 • TurkofAmerica

The Turkish state minister for foreign trade definedthe aim of his visit to the United States as an oppor-

tunity to discuss investments in Turkey. "The aim ofthis visit was also to raise U.S. awareness aboutTurkey," Turkey's State Minister Zafer Caglayan told.Caglayan said he visited four states and held importantmeetings, particularly with the executives of leadingU.S. companies.

This was the first time a Turkish trade delegation head-ed by a minister visited the four states in USA.Caglayan said his visit was a part of Turkey's exportstrategy, and Turkey would welcome American busi-nesspeople after they organized such visits for a fewmore times.

The minister said many companies would visit Turkey incoming days, and hoped that Turkey would continue tobe a power in its region. "We should increase our traderelations with the United States," Caglayan also said.

Caglayan visited California, Texas, Illinois, andGeorgia, and met executives of several U.S. companiesincluding Boeing, Kraft Foods, American InternationalRadio, Investigroup, MacLean Power Systems, CocaCola, Exxon, JP Morgan, General Electric Oil and Gas,AECOM, BP, Shell, ORR Textile Co. Ltd., and ShawEnergy and Chemicals Group.

COCA COLA’s CEO MUHTAR KENT The Turkish state minister for foreign trade said on

Friday that Turkey's aim was to raise its exports toUnited States to 32 billion USD first and then to 62 bil-lion USD.

Turkey's State Minister Zafer Caglayan visited CocaCola headquarters in Atlanta, Georgia, and saidTurkey's exports to the United States were actuallyaround 3.2 billion USD. "We have the potential to raise our mutual trade to 100billion USD," Caglayan said during his visit. Caglayanreferred to a business council two countries would setup with participation of two ministers and 12 business-men from each countries, and made public the firstTurkish businessman to take part in the council asCoca Cola's CEO Muhtar Kent.

Also speaking in the meeting, Kent said Turkey neededa politically and economically strong United States,and the United States also needed a strong Turkey.Kent said Coca Cola had invested more than 1 billionUSD and employed 2,500 people in Turkey.

"Istanbul is the head of operation group of Eurasia andAfrica, and 96 countries are connected to Istanbul,"Kent also said. Before the meeting, Kent introducedseveral U.S. businessmen to Minister Caglayan, includ-ing head of CNN International.

With net annual revenues of nearly $31 billion in 2009,the Coca Cola company is the largest nonalcoholic bev-erage company in the world. Consumers enjoy 1.6 bil-lion servings a day of the company's more than 3,300products, which include sparkling and still beveragessuch as waters, enhanced waters, juices and juicedrinks, ready-to-drink teas and coffees, and energyand sports drinks. (AA)!

State Minister

Caglayan visited

California, Texas,

Illinois, and Georgia,

and met executives of

several U.S. compa-

nies including Boeing,

Kraft Foods,

American

International Radio,

Investigroup,

MacLean Power

Systems, Coca Cola,

Exxon, JP Morgan,

General Electric Oil

and Gas, AECOM, BP,

Shell, ORR Textile Co.

Ltd., and Shaw

Energy and

Chemicals Group.

TURKISH TRADE MISSION IN THE US

Turk›sh Trade Delegat›on V›s›ts Four States

Zafer Caglayan with Muhtar Kent.

Muhtar Kent with Cemil Ozyurt,TurkofAmerica's Co-Founder &Editor-in-Chief.


Turkish Trade Mission at World ofCoca Cola building in Atlanta, GA.

Kent with one of his guests.

Muhtar Kent and Zafer Caglayanpose with Coca-Cola mascot, theCoca-Cola Polar Bear.

Trade Minister Zafer Caglayanwith businessman EminKahyaoglu.

With 60,000 square feet, the World ofCoca-Cola features more than 1,200artifacts from around the world.


As of the

end of 2009,

Turkey’s total

share in US

imports is as

low as .24

percent and

Turkey is rated

47th among

the countries

that the

US imports from

the most.

SPECIAL REPORT

Turkey Sells Products to theWorld but Its Exports to TheU.S. Market Decreas›ng

Turkey’s Foreign Trade MinisterZafer Caglayan.


forts, are countries that are considered to be the world’s industrialcenters: the USA, Brazil, Russia, India and China; as our country isone of the most important trade and economic partners among the-se countries, the USA has an especially important place. However,trade relations between our country and the USA are far from ref-lecting the true potential.

What is the difference between the increased rate of Turkey’s ove-rall exports and its exports too USA?When we look at the developments in our economic relations withthe USA, we see that since the year 2000 the rate of our exports tothe US has been steadily decreasing. While Turkey’s overall ex-ports between the years of 2000 and 2009 have increased 267.8percent, its exports to the US increased only 3 percent. Turkey’sexports to the US was once 11.2 percent of its total exports but thispercentage decreased to 3.1 in 2009.

Also, our country had increasing levels of trade between the years2000 and 2004; however, since the year 2004 until the end of 2009we observe a trade deficit in the amount of $5.3 billion. When welook at the first 3 months of the year 2010, our exports comparedto the same time period of last year have increased 12 percent andreached $825 million in value.

What is Turkey’s share of imports to the world’s greatest importingcountry, the US?As of the end of 2009, Turkey’s total share in US imports is as lowas .24 percent and Turkey is rated 47th among the countries thatthe US imports from the most. Additionally, we see that thesenumbers have not changed in a significant manner within the past6-7 years.

As reflected by these data, it is obvious that our country does notreceive a sufficient share of the US market, which is significantlyimportant. Determining the reasons for our low share in US im-ports in the face of our overall increased exports and ensuring atrade balance is very important. In accordance with this goal, ourCounselate studies each US state whose importing practices are asactive as a developing country as well as distribution and consu-ming habits, which are are diverse and unique.

TURKEY CONCENTRATED SIX US STATESCan you give us more information about the US states that you con-centrate on?We’ve concentrated particularly on 6 US states. California’s importvalue is $277 billion and this amount is twice that of Turkey’s 2010import amount, which is $140 billion. New York’s import value is$211 billion; Texas’s is $254 billion; Georgia’s is $53 billion; Flori-da’s is $43 billion; and Illinois’s is $97 billion. In Turkey, we wantto pay more attention to these states whose importing levels are ashigh as these and we want to increase our opportunities.

Our observations that are found through our work are shared withour import shareholders and action plans that are prepared withinthe framework of state-wide observations are used for designingstrategies for entering the US market.

What are Turkey’s opportunities during this process? With its GDP of nearly $14.2 trillion, the US takes up about 20 per-

When we look at the developments in our economic relationswith the USA, we see that since the year 2000 the rate of our

exports to the US has been steadily decreasing. While Turkey’soverall exports between the years of 2000 and 2009 have increa-sed 267.8 percent, its exports to the US increased only 3 percent.Turkey’s exports to the US was once 11.2 percent of its total ex-ports, but this percentage decreased to 3.1 in 2009.

Turkey’s Foreign Trade Minister Zafer Ça¤layan, who spoke to TUR-KOFAMERICA magazine about the trade issues between the twocountries, said “We are carrying out our activities both through sta-te-wide private sectors and through the federal government in or-der to gain more benefits from exports, and we will continue theseefforts with the same momentum.” Ça¤layan told TURKOFAMERICAabout Turkey’s export strategy:

What is the importance of the North American market for Turkey’sstrategy?The strategy that was adopted by all countries as one of the bestways to get out of the global crisis was to export and gain morethrough global grade. In order to eliminate the likely negative im-pacts of the crisis on our country, we are also following a similarmethod and trying to continue our efforts to both increase thenumber of our export partners, as well as to make our exportpotential more competitive and concentrated on value-addedproduction.

We have great goals with regards to our exports and these goalsare not necessaryly in accordance with contemporary situation;they are based on a 13 year project plan. For the time being, we areworking on our plans for the year 2023 and we are receiving all ofthe information and support that we need for these efforts fromthose that we export to; they are our main partners and we are allpreparing our action plans together.

If we take into consideration the possibility of competitor countri-es having similar goals, what would need to be done until the de-signated year 2023?When the world economy goes into a steady growth period in thefuture, there will be both new opportunities and threats for our co-untry, but it is certain that the situation in the future will be a lotmore challenging than now. More countries will be into exporting.On the other hand, developing countries and the rising economieswill be our competitors, as well as markets for us.

There is no doubt that when we take into account all of these im-provements, in addition to the need to maintain the current exportmarkets while continuing our efforts, every year in a disciplinedmanner, towards reaching our goal of $500 billion export value, wemust also try to find out about the markets that have not been dis-covered by our exporters and increase our exports of new products.

“TRADE RELATIONS ARE FAR FROM REFLECTING THE TRUE POTENTIIAL”Which countries will be targeted under the goal of $500 billion va-lue? What is the signifancee of the USA under this plan?Under the framework of this goal, we are working, in coordination,towards determining new potential markets and we are conductinganalyses concerning how we can get into these markets. Amongthe 15 countries that are being focused on, as a result of these ef-

cent of the world’s economy and its import value of $1.6 makes itthe world’s greates importer. We are carrying out our activitiesboth through state-wide private sectors and through the federalgovernment in order to gain more benefits from exports; we willcontinue these efforts with the same momentum.

The standards and the business procedures in this market beingdifferent from our traditional markets and the European Union co-untries, to which we mostly export, each US state having its ownunique system, and the presence of great competition are of cour-se among the most important issues for our companies. On the ot-her hand, the opportunity to have access to all the information abo-ut the US market, following along with its rules and working underadvanced financial opportunities are making this market a greattarget for our exporters.

Will the importance of the European Union countries for Turkey’sexport strategy remain the samee in the future as well?With countries like Germany, France, England, and Italy among itsmembers, the 27 member-state European Union has been keepingits place and importance for our exports. Although the ratio of theEU countries in our exports, which was 56 percent in 2000, decrea-

sed to 46 percent 2009, this market is still very important for ourexports.

The impact of the global crisis began to lessen little by little by thebeginning of 2010; however, since there is a new wave of crisis insome Euro zone countries, such as Greece, Portugal and Spain, andsince this crisis leads to shrinking of domestic demands in certainEU countries, observing any kind of developments in these countri-es is more important than ever. As is the case with any period ofcrisis, the contemporary situation in the Euro zone also embodiesnew opportunities for exports. In the EU market, with which we es-pecially have long historical trade relations and in which our expor-ters have more say day by day, we are trying to increase our co-untry’s share both in terms of investments and trade.

We are treating our traditional US and EU markets not as rivals oralternatives of each other but rather as each very valuable econo-mic partners. So, as I mentioned previuosly, in order to reach ourexport goals for the year 2023, we are continuing our efforts to in-crease our shares in our traditional markets, such as those in theEU and USA, and also to ensure the establishment of a system thatwould mostly have value added products.

SPECIAL REPORT


Turkey’s Foreign Trade Minister Zafer Ça¤layan with Ömer Günefl, TURKOFAMERICA Magazine General Manager.


Within the past few years, Turkey has tried to have interdepen-dency in exports in countries other tthan those of the EU members.Can you tell us about the real contribution of this strategy to theecoonomy?With the impact of the global crisis, there has been a real shrinkngin world trade. As the demand in the European Union countries–with which we have the greatest share- have decreased as a resultof the crisis, our export levels have also dramatically been affected.For this reason, our goal under our regional strategy has been toease down the pressure on our exports by targeting new markets.Under this framework, our goal has been to increase trade with ne-ighboring and regional countries, as well as African and Asia-Paci-fic countries, and to permanently add on to the ratio of these coun-tries’ shares within our trade value. Our regional strategies, thatbrought great success in terms of diversifying our markets, havebeen quite beneficial in ensuring the least damage possible fromthe shrinking of the EU market. As a result of efforts carried out un-der this direction, our foreign trade value has increased from $20billion in 2000 to $88.3 billion in 2009. Our exports to Africa,which had a value of $2.1 billion in 2003, increased to $9 billion in2008 and to $10.1 in 2009. Also, the previously set up strategycreated an opportunity to be able to shift our exports to other regi-ons; while our exports to the 27 EU countries in 2009 decreaed ata rate of 26 percent, our exports to the African countries have in-creased 27.3 percent.

As of now, African countries are in the proper conditions for our co-untry’s investments. We believe that increasing the existing in-vestments in this region, which has great natural resources, wouldalso impact our political, economic and commercial relations in apositive way.

When we look at the situation with the Asia-Pacific countries, ourefforts to increase commerce and economic relations led our tradevolume to increase to $22.3 billion in 2005, and it increased to $41billion in 2008; however, due to the negative impact of the globalcrisis, this number was $32.5 billion in 2009.

EXPORT INCREASED TO $56.7 BILLION WITH REGIONAL COUNTRIES What are the improvements in efforts to advance trade relationswith neighboring and regional countries?Advancing the current relations with neighboring and regional co-untries is important not only for trade but also for maintainingprosperity and peace in the region. Our strategy for the neighbo-ring and regional countries, which was established in 2003, inclu-des 52 countries as of now. Under the framework of this strategy,our exports value of $6.9 billion (2000) with these 52 countries in-creased to $56.7 billion in the year 2008; and our imports from 13of these countries reached $73.5 billion. The ratio of our exportsto these countries increased from 24.7 percent to 43 percent bet-ween the years 2000 and 2008. Our relations have benefited posi-tively from our new policy of no-visa regulations with Syria, Libyaand Lebanon. The increased rates of our exports to some countriesfrom 2008 to 2009 are as follows: to Egypt, 84 percent; to Afgha-nistan, 71 percent; to Libya, 67 percent; to Palestine and Turkme-nistan, 43 percent; to Ethiopia, 40 percent; and to Syria, 28 per-cent. Our exports to Iraq increased 31 percent in 2009, in compari-son to 2008, and with the 5 percent export ratio among the coun-tries we export to, Iraq has taken the 5th place.!

WHAT FACTORS DECREASES THE ATTRACTIVENESS?

Factors such as distance, as well as lack of information about

the US market, decreases the attractiiveness of this market.

Is it possible to have alternative stimulating and supporting

programs that aare specially for the North American market?

When we consider the contemporary dynamics of global

trade, it is obvious that geographical remoteness or lack of

information about the export markets would not entail as

large an obstacle to entering the market as before. On the

other hand, according to the ‘gravity model’ in trade, as the

distance between the two countries increase, the trade vol-

ume has a tendancy to decrease. However, the volume of

the US economy overcomes these disadvanteges greatly.

Additionally, in order to reach the historical level of exports

reached in 2008 and achieve our set goals for the following

terms, it is definitely necessary to diversify our markets and

inform our exporters about the business opportunities in

these markets in an efficient and quick manner.

So, I do not think that the attractiveness of the US market

lessens because of the geographical remoteness or lack of

information. It is actually possible to assert that the US mar-

ket, especially in terms of having access to information and

practicing trade relations in accordance with the internation-

al norms, has great advantages for the exporters. We see

that our exporters follow the dynamics of this market very

closely, consulting groups speed up their work in the US mar-

kets, and the private sector carries out comprehensive activ-

ities to establish interactions with the leading importers. We

are happy to see our civil groups open up branches in this

market and increase the frequency of their visits to the US in

order to closely monitor developments.

For all of these efforts, what is important is the continuation

of these activities and the establishment of a long-term

approach. We will act in accordance with a particular pro-

gram, pay attention to the conditions required by the World

Trade Organization treaties, European Union and Commerce

Treaty, which make up the main axis of our trade policies;

and we will take strategic steps by working with our

exporters more closely than ever.


The tempo of economic engagement betweenTurkey and the United States is steadily

increasing. There is a level of excitement thattranslates into potential cooperation in manyareas – from renewable energy to developing thefinancial sector, promoting new and existing smalland medium sized companies, and economic coop-eration in third countries. While U.S. trade withTurkey was sharply impacted during the economicdownturn, two-way trade has risen by 37.8% to$5.6 billion for the first five months of 2010.

As much as 25 percent of Turkish exports enter theU.S. duty-free each year under the General Systemof Preferences (GSP) program. In 2009, the UnitedStates imported over $644 million in goods fromTurkey under the GSP program. President BarackObama and President Abdullah Gul recognized thepotential for our cooperation to grow and prosperwhen they agreed to raise our economic partner-ship to the strategic level during their first meetingin April 2009. Following this commitment, we heldthe fifth meeting of the Turkey-U.S. EconomicPartnership Commission on June 8 in Ankara,which Ministry of Foreign Affairs DeputyUndersecretary Hakki Akil and I co-chaired.

This new strategic economic partnership has anumber of concrete components: Turkey is one of six “Next Tier Markets” identifiedas priorities by President Obama’s New ExportInitiative (NEI). This initiative recognizes theimportance of Turkey's market to the United Statesand provides resources for identifying growthopportunities in specific sectors.

POWER PROJECTS The U.S. Export-Import Bank (Ex-Im) has identifiedTurkey as one of nine countries with extraordinarypotential for U.S. exports. Our goal is to offerattractive financing options to Turkish businessesand banks to facilitate the purchase of innovativegoods and services. In a time of constrained pri-vate sector lending, Ex-Im's infrastructure financ-ing can help create sustainable growth and a high-er standard of living in Turkey. Power projectssupported by Ex-Im over the last 14 years accountfor an estimated 20 percent of Turkey's gas-fired

power generation.

The U.S. Overseas Private Investment Corporation(OPIC) is providing a $100 million facility throughGaranti Bank for lending to Turkish small andmedium-sized enterprises (SMEs). We recognizethat financing for entrepreneurs is essential tosupport a vibrant business sector in Turkey, whereopportunities are constrained by a lack of venturecapital and conservative lending practices. OPICalso continues to support U.S. banks that havearranged loans to Turkish banks. U.S. financialinstitutions see stability in the Turkish bankingsector as an opportunity for growth and haveexpressed interest in Istanbul’s emergence as aninternational financial center. OPIC has two loanoriginators based in Turkey ready to work with U.S.companies and their Turkish joint venture partnersto package loan applications for OPIC considera-tion (see www.EDNACCESS.com). OPIC also hasthree OPIC-backed private equity funds withoffices in Istanbul to oversee their business opera-tions in Turkey and the surrounding countries.

ENTERPRENEURSHIP SUMMITIn April, President Obama's EntrepreneurshipSummit brought entrepreneurs from Muslim com-munities around the world to Washington to meetwith American counterparts and develop ideas thatwill lead to real economic growth. We are pleasedthat Prime Minister Recep Tayyip Erdogan agreedto host next year's Global Summit to advance thework begun at this year’s summit and showcasethe success of Turkey’s economy and its entrepre-neurs. I have also invited the TurkishIndustrialists’ and Businessmen’s Association tothe Maghreb Entrepreneurship Summit.

At the same time, in our government meetings wecontinue to address a number of issues of interestto the private sector. We have discussed our con-cerns with Turkey's new regulation governingproducts derived from agricultural biotechnologyand the lack of transparency in its developmentand implementation. We also continue to discussTurkey's efforts to gain additional access to theU.S. market for its agricultural products, and wewelcome its desire to increase business with the

Turkey is one of six

“Next Tier Markets”

identified as priorities

by President Obama’s

New Export Initiative

(NEI). This initiative

recognizes the

importance of the

Turkish market to the

United States and

provides resources

for identifying growth

opportunities in

specific sectors.

JOSE W. FERNANDEZ, ASSISTANT SECRETARY OF STATE

Turkey Is One of S›x “NextT›er Markets” for theUn›ted States

By Jose W. Fernandez*


U.S. in third country markets including Iraq, Afghanistan,Pakistan, and Central Asia. Success in this area will depend onbringing our two private sectors together.

I have received a warm welcome from our Turkish hosts during myvisits to Turkey. Both sides agree on the objective of achievingconcrete, measurable results. I am encouraged by the increasedtempo in our economic relations and look forward to even moreactive private sector involvement as we continue to grow our eco-nomic partnership.

*Assistant Secretary of State for Economic, Energy and BusinessAffairs!

JOSE W. FERNANDEZ

Jose W. Fernandez leads the Bureau that is responsible

for overseeing work on international trade and investment

policy; international finance, development, and debt poli-

cy; economic sanctions and combating terrorist financing;

international energy security policy; international

telecommunications and transportation policies; and sup-

port for U.S. businesses and the private sector overseas.

Fernandez came to the State Department after having

served as a partner in the New York office of Latham &

Watkins, and Global Chair of the firm's Latin America prac-

tice. Fernandez was named one of the "World's Leading

Lawyers" by Chambers Global for his M&A and corporate

expertise, an "Expert" in International Financial Law

Review's "Guide to the World's Leading Project Finance

Lawyers", and one of the "World's Leading Privatization

Lawyers" by Euromoney Publications. He is recognized as

a leading Corporate Finance attorney in the Latin

American market in the Chambers Global 2008 legal guide

and a leading Latin America attorney in the Chambers U.S.

2008 legal guide. He was featured by Hispanic Business

Magazine in its "100 Influentials List" for 2006 and 2007.

Fernandez graduated magna cum laude with high honors

from Dartmouth College, earning a bachelors degree in

history, and also received an honorary degree from the

college. He earned a J.D. from the Columbia University

School of Law, where he received the Charles Evans

Hughes Prize and a Parker School Certificate of

International Law with Honors.Assistant Secretary for Economic, Energy and BusinessAffairs Jose W. Fernandez

During 1980s, the Turkish iron and steel industryshowed great progress, which paralleled the

establishment of the electric arc furnace mills anddevelopments in the economic structure.

Today, with its integrated plants that have capacitiesranging from 1 million tons up to 3 million tons and with16 electrical arc furnaces whose capacities run from400.000 tons up to 2 million tons, the iron & steel indus-try has become one of the most developed sectors ofTurkey and makes a significant contribution to theTurkish economy. The Turkish Iron and Steel Industryhas reached 10th in world steel production and is 2nd inEurope, in 2009. Turkey’s share of the world’s crudesteel production rose 1.9% and finished steel consump-tion rose to 360 kg per capita in 2007; this is expected torise to 420 kg per capita in 2010. The Iron and SteelIndustry is the third largest exporting sector in theTurkish economy and is becoming one of the major driv-ing forces among Turkish total exports. Steel productsare exported to more than 160 countries in the world.Namik Ekinci, President of Istanbul Iron and SteelExporters’ Association. answered TURKOFAMERICA’squestions.

The iron and steel sector was one of the sectors that wasliving deep inside of the financial ccrisis which the U.S.mortgage crisis spread across whole world. Can you tellus about how you’re doiing in the in post-crisis period?

Before the mortgage crisis, our most important mar-kets were Dubai, Europe and America. As the crisisspread out of America to other countries, the buildingsector significantly slowed down, and this resulted inthe halting or postponing of new projects. The con-struction material suppliers were severely affected bythe contraction in the sector due to the very lowdemand for their products. As a result, the productionwas cut down and suspended for some periods by theproducers. The iron and steel sector was the mostaffected of all, as it naturally relies on stocks. As thestocks with very high costs were sold off for very lowprices, very huge losses occurred in the sector.

How have the experience of overcoming difficulties suchas econommic crises, the shrinkage of the market,increases in raw material prices, and anti-dumpinginvestigaations, made an impact on your future strategicplans?Such incidents caused us to be more cautious and actmore prudently; we kept our determination instead ofbacking down. About strategic planning, we will searchfor and cultivate new markets for export for the productsfor which we have a high production level, and we willalso give more importance to calculating our costs andplanning our pricing in order not to be subject to anti-dumping investigations. We will work with consultingcompanies to overcome the inherent and artificial obsta-cles present in our existing and potential export markets.

ISTANBUL IRON AND STEEL EXPORTERS’ ASSOCIATION

Can Turkey Become A Producer›n the North Amer›ca Market?

Nam›k Ekinci, Chairman of the Boardof Directors of Istanbul Iron and SteelExporters’ Association

“To be a producer in

North America is a

dream of most

Turkish producers.

We hope that these

dreams will become

real in the near

future.”


ficit of the previous year will be easily covered by this year’s export valuefor this product. There is also a good amount of increase in tube exports in2010. When we compare the first seven months for 2009 and 2010,we se-e that this year there is %20 increase in value thus we expect that the to-tal export value of tubes will exceed previous year’s levels as well.

The industry’s total export was $19.3 billion in 2008. How much timewill be needed to reach 2008’’s figures? The reason exports hit $19.3 billion dollars in 2008 was due to high unitprices. Now our export quantity is slightly higher compared with thoseyears, but the total export value is lower due to low unit prices. In orderto reach those previous levels, with the provision that the effects of theworld crisis are lessened, the existing facilities should operate at fullcapacity, new ones should be in a position to start production as soonas possible, and then prices should reach the previous levels. Afterthat, $20 billion dollars in exports will be easily exceeded.

After a period of trading goods with the United States, can Turkeybecome a producer iin the North America market? Do you believeTurkish companies have the ability, experience and knowleedge tomake this happen? To be a producer in North America is a dream of most Turkish produc-ers. We hope that these dreams will become real in the near future,because it is important not only to make investments in Turkey, butalso to be present in the countries where there are markets with highdemand and where production inputs are available.

Would you like to add anything? Our association is undergoing a restructuring period and working on dif-ferent areas concerning our sector. While our main objective is theincrease of our exports, we also work on providing the necessary marketinformation for structuring of the existing steel industry and new invest-ments.!

Turkey is among the world's 10 leadiing steel producer countries inthe industry. Over the next 10 years, how will Turkey be transform-ing? While China, Brazil and India increase their share of the market,how will the other major playerrs’ efforts affect Turkey? Turkey is a country that supplies its raw material and most of theinput for its manufacturing from the outside; however, at the sametime it successfully exports most of its production. This position willbe positively affected and our success furthered by the collaborationof the trade associations and organizations. Although China, Braziland India have very high production levels, they will also needimported steel for their future development. As other countries con-tinue their development plans as well, steel consumption will remainat significant levels. This will result in the installation of new facili-ties and modernization of the existing ones.

It’s known that certain Turkish product items in North American markethhave very strong following and that there are in demand. However Turkeystill has some potential prodduct groups to export to the U.S. market whicharen’t available yet. What should be done to export thhese product groups?The production levels should increase, production quality should be suit-able to the requirements of the importing country and the export pricesshould be competitive compared to rivals. When these factors are met,these products will take their place in U.S. and world markets.

In 2009, the iron and steel wire rod, steel pipe to the U.S. declinedbetween 18 to 79 percent when compared to the previous year. By theend of 2010, what sort of figures shouldd we expect?In the year 2009, as for most steel products, there were sharp decreasesboth in quantity and value of wire rod and tube exports, compared to theyear 2008. However when we look at Turkey’s export to the U.S. in the firstseven months of 2010, we see a significant recovery, especially in the wirerod exports, as the export value of the first 7 months has already tripled thetotal export value of the year 2009. For this reason, we believe that the de-



“The significant

opportunity that

exists for the Turkish

structural steel

industry is not in the

export of material,

but rather driving

demand by increasing

your domestic

market share.”

AMERICAN INSTITUTE OF STEEL CONSTRUCTION

Construct›on Industry HasNo Prospect for S›gn›f›cant Growth unt›l 2011

Hearst Tower in New York City, New York is located at 300West 57th Street, 959 8th Avenue, near Columbus Circle.


ficant downturn in orders and increased competition. But in the face ofthese challenges, both mills and fabricators remain viable and well posi-tioned to supply domestic demand in the decades to come.

What is the biggest obstacle the industry has to overcome in the nearfuture? The largest obstacle facing the US structural steel market in the near fu-ture is a loosening of credit in the US for developers to again begin to in-

vest in construction projects. Until funding becomes available,construction volumes will remain low, creating downward

pressure on the structural steel demand.

Turkey is the one of the leading steel producers and Tur-kish investors are seeking business opportunity in theUnited States. What would be your advice to them if they

wish to invest or to export their products too the the US?My advice would be to focus on and invest in your domes-

tic marketplace and increase the demand for structural steelwithin Turkey. US market share for structural steel is near 60% of

the construction market on a square footage basis. The significant oppor-tunity that exists for the Turkish structural steel industry is not in the ex-port of material, but rather driving demand by increasing your domesticmarket share. The most efficient manner of increasing market share is toengage structural steel professionals early in the design life of structuresto influence and optimize the project for structural steel.

What did the industry learn from the recession? We are part of a cyclical segment of the economy that goes through naturalperiods of growth and natural periods of contraction. Successful firms ma-nage with a long term perspective that allows them to weather these cycles.

What is the the structural steell industry’s share of the construction mar-ket and what does your organization do to increase it? Current market share for structural steel in the non-residential marketp-lace is 59%, based on square footage of construction starts. We employa staff of regional engineers throughout the United States who work di-rectly with owners, developers, architects and structural engineers pro-moting the benefits of structural steel. We support their efforts throughthe services of the AISC Steel Solutions Center, which provides both con-ceptual approaches for projects using structural steel as well as answersto technical questions relating to structural steel on a complementary ba-sis. In addition we support the marketplace with current design specifi-cations and tools for the use of structural steel.

AISC is an almost 100-year-old organization. How do you see the in-dustry's future? Will the strucctural steel industry become more important?Structural steel is a highly recycled product with a low environmental fo-otprint that will meet the needs of construction on a sustainable basis forthe foreseeable future. !

CONTACTAMERICAN INSTITUTE OF STEEL CONSTRUCTION

One East Wacker Drive Suite 700

Chicago, IL 60601-1802

Phone : (312) 670-2400

Fax : (312) 670-5403

www.aisc.org

The American Institute of Steel Construction (AISC), headquartered inChicago, is a not-for-profit technical institute and trade association es-

tablished in 1921 to serve the structural steel design community andconstruction industry in the United States. Current market share for struc-tural steel in the non-residential marketplace is 59%, based on square fo-otage of construction starts.

This September 24 marks the second annual day dedicated to the Ame-rica structural steel industry. During the first ever SteelDay lastfall, at more than 170 different locations across the nation,steel fabricators, mills, service centers, galvanizers, HSSproducers, bender-rollers, and others opened their facili-ties, jobsites, and offices, offering free tours and invitingthe AEC community and general public to see how thestructural industry contributes to building America. Itwas a massive event that provided tremendous exposu-re for the structural steel industry.

John P. Cross, PE, Vice President of American Institute of SteelConstruction talked to TURKFAMERICA about the structural steel industry.

Last year will forever be known for the collapse of the construction mar-ket. Could you telll us about the American structural steel industry’s ex-pectations for 2010? American Institute of Steel Construction (AISC) only represents the structu-ral steel segment of the steel market. The outlook for construction activityand therefore the demand for structural steel for 2010 is similar to the de-mand that was experienced in 2009. Clearly the construction industry inthe US is bouncing along the bottom of the recession with no prospect forsignificant growth until 2011. We anticipate the volume of constructionstarts in the US in the non-residential sector to be down 2% to 5% compa-red to 2009 with a small increase (2% to 4%) in industrial construction.

How has the financiall crisis affected the steel industry? Do you think theindustry will recover?Obviously for the structural steel market the downturn in constructionhas reduced demand and lowered the utilization rates of domestic struc-tural steel mills. Likewise, structural steel fabricators have faced a signi-

John P. Cross, PE, Vice President of American Institute of Steel Construction.


World Steel

forecasts that

global steel demand

will return to a trend

of growth in 2010 but

this growth is

expected to be

moderate.

WORLD STEEL ASSOCIATION

“The Turk›sh SteelIndustry Has ShownOutstand›ng Performance”


Could you share your prediction of growth rate for the region inthe next 10 years? World Steel does not issue a forecast on steel demand looking 10years ahead. Global steel production has been growing for thelast 50 years. In the 1950s, world steel production was about 200mmt. In the last 10 years, the pace of growth has accelerated andin 2009, the figure stood at 1,220 million metric tons.

The future growth in demand for steel will be driven mainly by theneeds of the developing world. The steel industry must continueto grow by 3-5% worldwide and by 8-10% in China, India and Rus-sia to satisfy these needs.

What is the importance of the Turkish steel industry for the worldsteel industry?Turkey is now the world’s 17th biggest economy with a GDP percapita surpassing USD 12,000 (at purchasing power parity). Since2002, the Turkish economy has experienced a very high level ofgrowth that has come with a low and decreasing level of inflation.A long list of reforms, re-structuring and stability programs hasbeen implemented as a response to the financial crises the co-untry had experienced in the late nineties and in 2001. With its di-versified economic base and stable banking system, Turkey is ex-pected to be among the first to recover as credit market and glo-bal demand conditions stabilize in 2010. 2011-2012 growth ratesmay reach pre-crisis record levels of over 6%. However, the Tur-kish economy may also be faced with more negative conditions in2010 if the global economic crisis, in particular the recent Europe-an debt crisis, leads to a continued decrease in the demand forTurkish exports.

By the close of 2009, Turkey was the world’s 10th biggest steelproducer with a total production of around 25 million ton, 2.2% ofglobal steel production. The Turkish steel industry has shownoutstanding performance and growth over the last 10 years andthe industry continues to grow fast. Crude steel production capa-city has grown from about 20 million ton in 2002 to around 35million ton in 2009, while its production grew by more than 50%during the same period.

How do you see Turkey’s pposition as an international steel tra-der? Turkey has also been an important player in the international ste-el trade. In 2009, Turkey’s finished and semi-finished steel pro-ducts exports amounted to around 17.5 million ton (the 7th big-gest in the world). The primary export markets for the Turkishsteel industry are the European Union, MENA and Gulf countries.The industry is well positioned with its status as the bridge bet-ween Europe and the Middle East and hence is in prime positionto take advantage of any growth going on in the Middle East andNorthern Africa. One of the main opportunities is the ongoing re-building in Iraq.

Turkey’s steel consumption has grown even faster than producti-on since 2001. Turkey’s steel consumption per capita has morethan doubled since 2001, from a poor 137 kg per year to over 300kg in 2007. The consensus among the local experts is that Turkeyhas the potential to reach a per capita consumption of 600 kg peryear.

The World Steel Association forecasts that apparent steel usewill increase by 10.7% to 1,241 million metric tons (mmt) in

2010 after contracting by -6.7% in 2009. With these projections,world steel demand in 2010 will exceed the pre-crisis levels of2007. In 2011, it is forecast that world steel demand will grow by5.3% to reach a historical high of 1,306 mmt. The resilience of theemerging economies, especially China, has been the critical fac-tor enabling the earlier than expected recovery of world steel de-mand.

The World Steel Association represents approximately 180 steelproducers (including 19 of the world's 20 largest steel compani-es), national and regional steel industry associations, and steelresearch institutes. World steel members produce around 85% ofthe world's steel.

Turkey has also been an important player in the international ste-el trade. In 2009, Turkey’s finished and semi-finished steel pro-ducts exports amounted to around 17.5 million tons (the 7th lar-gest in the world). Nicholas Walters, Communications Director ofthe World Steel Association, talked to TURKOFAMERICA.

Could you give us some idea of the industry outlook for 2010? Global steel demand in 2010 is forecast to grow by 9.2% to 1,206mmt, which is a recovery to the level of 2008. World Steel fore-casts that global steel demand will return to growth in 2010 butthis is expected to be moderate. As before the financial crisis, theemerging economies, especially China, will be the critical factorin driving world steel demand in the near future.

Apparent steel use reflects the deliveries of steel to the marketp-lace from the steel producers as well as from importers. This dif-fers from real steel use, which takes into account steel deliveredto or drawn from inventories.

Is the financial crisis over for global steel industry? The global economy is on the road to recovery and so is the glo-bal steel industry. Global steel production has shown a steady in-crease over the last few months but not all major steel producingcountries have yet reached pre-crisis levels.

Although a positive growth in steel demand has been projectedfor 2010 and 2011, uncertainty still remains, in particular in Euro-pe and North America.

As steel demand growth increases in emerging countries, howwill this shape the growth rate between BRIC countries and therrest of the world?Steel demand is closely linked to economic growth. Key driversfor steel demand are automotive, construction, transport andenergy. There are large variations globally depending on the sta-te of economic development of a country and its pattern of indus-trial production.

Countries with large scope for economic growth would have gro-wing steel demand which would help develop the steel industry.Emerging markets have been forecast to experience bigger eco-nomic growth than already developed nations like Germany, theUS, Japan, etc.

WORLD STEEL ASSOCIATION

2008 and 2009 have been very hard years for the steel industryworldwide. However, Turkey's recovery appears to have startedin the third quarter of 2009 and is expected to be rapid andstrong. Turkey’s major steel-using sectors are forecast to growmore than 10% both in 2010 and 2011. As a result, steel consump-tion in Turkey, which dropped by 9.5% in 2009, is forecast to re-cover strongly by 13.5% in 2010. A strong growth of 13% is fore-cast for 2011, which would enable Turkey to reach a record high.

What are the major concerns for the world steel industry? The two major concerns for the global steel industry are climatechange and raw materials.

The first one is climate change. To address the issue, World Ste-el has established four building blocks for its climate change po-licy, which involves actions by the world steel industry and mayhave policy implications for governments. They are 1) actions toreduce the CO2 intensity of steel 2) sharing best practices withinthe industry, 3) research and development on new breakthroughtechnology and 4) use of steel and new steels to save energy intransport, power generation, buildings, machinery and applian-ces as well as mitigating activities to manage the impact of clima-te change.

The second one is raw materials. The stability of the raw materi-als supply is a key issue for the steel industry. Iron ore and co-king coal are essential materials for steelmaking and the purcha-


NicholasWalters,Communications Director ofthe World SteelAssociation

se of these two material amounts to more than a half of the ove-rall steelmaking production cost.

The recently imposed price increase by the iron ore suppliers co-uld hinder the recovery of the global economy. World Steel sup-ports free and fair trade in steel. Competition between steel com-panies promotes innovation and efficiency. It promotes growth insteel use and serves steel’s customers and society as a whole.World Steel has also supported the consolidation of steel busi-nesses but not to the extent of endangering competition. Eventhe largest steel company in the world today accounts for lessthan 15% of total world steel production. !

ABOUT WORLD STEEL World Steel represents its member companies worldwide andacts as a forum for discussions and best practice. World Steelrepresents and speaks for the steel industry on issues whichaffect the industry. These include climate change, sustainability,technology, safety, and health. As the industry becomes moreglobal, there are more issues out there that have to be treatedglobally.

The World Steel Association represents approximately 180 steelproducers (including 19 of the world's 20 largest steel compa-nies), national and regional steel industry associations, and steelresearch institutes. World Steel members produce around 85% ofthe world's steel.


Borusan Mannesmann Boru (BMB) has been exportingproducts to the US market since 1972. BMB is a firm

that has been exporting welded steel pipes from Turkey tothe US market for the longest time. Their exporting start-ed 38 years ago in small amounts and reached 200,000tons in 2008. Borusan Mannesmann Boru is the first firmto export 24 m (80ft) long pipes to US. The Director ofBMB’s Pipeline Projects, Ozgur Fidanoglu, answeredTURKOFAMERICA’s questions:

How long have you been exporting to the US market?What are the annual increase rates of your expports?Borusan Mannesmann Boru has been exporting productsto the US market since 1972. So, we can say that it is a firmthat has been exporting welded pipes to the US fromTurkey for the longest time. In that sense, we believe thatwe led the sector. Their exporting started 38 years ago insmall amounts and it reached 200,000 tons in 2008.

Can you talk about the usage of the products you exportand their significance for the US maarket?The products we export may vary in time in accordancewith the changes within the market. Our exports to the USmarket, which at first consisted of industrial and standardpipes, such as water pipes, fire extinguisher pipes, cablepipes, and well pipes, now include natural gas and petro-leum transportation pipes in various sizes and quality,such as petroleum pipes, natural gas search pipes, andOCTG pipes for matching the API pipes which are used inproduction. Especially within the past few years, we haveachieved a great deal in exporting large natural gas pipesand our exports of large pipes that are plated inside andoutside have reached, just by itself, 150,000 tons withinthe past three years. We are the first and only Turkish firm

that has been successful in exporting large pipes fromTurkey.

The US market is known to be very competitive. In termsof competition, what are your advvantages in comparisonto other companies?The American market is one of the most competitive mar-kets we do business with. However, we can say that sincewe have been active in this market regularly for a longtime, making our brand known to the newcomers, andworking with the right networks, we do receive advan-tages along these lines. Due to our products’ quality andour ability to adapt quickly to the needs of the market, wehave made ourselves a solid place in the market eventhough we primarily produce items that demand moreknow-how.

The distance between Turkey and the US and the lack ofknowledge about the US market are listed as the most sig-nificant obstacles to trade. What needs to be done inorder for trade in your sector to be improved?The US market is a very challenging in terms of therequirements for entering it. The protectionist structure ofthe market, conservative behaviors of the clients whenselecting producers and the reluctance of clients tochange habits make it hard to enter this market. BMB’scompletely transparent and public-oriented institutionalstructure means that we would always remain account-able for the quality of our products. Americans place greatvalue on transparency and trust in their suppliers.Regardless of how successful you are as a firm with yoursales, it is very important to prove your trustworthinessthroughout the years and to show that you would stayalongside your customers in the bazaar no matter what

Borusan

Mannesmann Boru

(BMB) is a firm that

has been exporting

welded steel pipes

from Turkey to the

US market for the

longest time. BMB is

the first firm to

export 24 m (80ft)

long pipes to the US.

BORUSAN MANNESMANN

A 38 Year OldTurk›sh Brand ›nAmer›ca’s Steel P›pe Market


Also, in order to monitor our customers’ long-term projects, we are to openup an office in Houston, where we have many of our customers, and we areaiming to be closer to our customers through this office. In particular, at theend of the completion of the three natural gas projects, which we finishedrecently, we believe that we will be able to follow the new projects throughour office. We will serve our customers closely and will have a chance toserve professional services to customer from pre-sales to after sales service.

What are the working habits and trade related practices of the Americanfirms that do or do not maatch with those of Turkish businesses? Can you listus some differences that caught your attention?The difference between the two cultures and the way of doing business maybe causing difficulties. Also, the metric system and the norms with regardsto many products used in the USA being different from those in Turkey couldbe creating problems as well. The distance between the two countries alsoadds quite a value cost to the freights and lessens our competitiveness. Andwhen we take into account the fact that it takes one ship to reach the eastcoast of America about one month, the distribution time frame is alsoextended. Especially after the crisis when the demand fell, there emergeda somewhat invisible pressure to ‘buy American’ products domestically.And this is a factor that poses a difficulty for sales.

What three pieces of advice can you give to a firm that has never sold prod-ucts to the US but wiishes to enter the market?I would recommend that firms that would like to enter the US market shoulddevelop a long-term strategy and find the right sales channels in accordancewith this strategy; advance the quality of their products regardless ofwhether their customers are traders, distributors, or end-users; take pre-cautions to help make their brand known; and focus on the customers pri-marily, rather than on tonnage. Investment doesn’t only happen by build-ing a factory; investing in people and developing a long term investmentstrategy also accounts for a serious investment. The firms that desire toenter the US market need to be interested in making that kind of an invest-ment and to search for resources. I wish success to all those Turkish firmswho are on this long path.!

the conditions are. BMB has been exporting to the US market for 38 yearsand it has not left the market in any way, building long term and dependablerelations with its customers.

In order for trade to increase, we not only advance our products in accor-dance with the changing needs of the customers but also provide differentsolutions when the customers need them. Since we have the greatest rangeof products among the Turkish producers, we have flexibility when it comesdown to it. We are aiming to be able to predict the needs of the market andproduce accordingly. We have completed the export of 313 km of 42" and36" large diameter spiral gas pipes in 2009 in USA. To do this we built atemporary factory in the US; we provided the customer with more than theyexpected by delivering the product before the deadline and in this way webenefited greatly in value. We became the first firm that was successful inexporting 24 m (80ft) pipes to the US market. All the other export firms pro-duced their pipes in 18 m (60ft) sizes. So, we gave the customer a greatadvantage in manufacturing cost.

As BMB, our goal in all markets is not only to be competitive in terms ofcosts but also to provide our customers solutions, services aside from pro-duction, and be part of the solution by taking on the risk along with the cus-tomer; and by doing these we increase our value and get a special place inthe competition. When you can do this, the customers see you as their part-ners in solutions and sustainability in supplier-customer relations isachieved.

What is the greatest obstacle in trading with the US?We can say that the greatest obstacle for doing free trade with US is the anti-dumping cases. The method of calculating the anti-dumping taxes in thesecases can at times end up in a great amount of taxes and this impacts tradenegatively.

We believe that despite the anti-dumping tax regulations, the best way toincrease trade with the US in the pipe sector is to invest in quality and diver-sify the products. Both the dynamics of the market and the changing con-ditions of the customers, with the impact of the economic crisis as well, altera lot more rapidly. The firms which have a diverse selection of products andinvest in quality are in the market longer and are able to create relationshipswith their customers that are based on trust.

Has theere been a reduction in your exports due to the economic crisis?The economic crisis that emerged during the last quarter of the year 2008has created changing conditions in the US market. According to our calcula-tions, the large pipes sector in the US decreased from 2 million tons to below1.5 million tons; however, five local factories were built in the US while thedemand was still high and created a better capacity. For this reason,although we have been exporting 150,000 tons of these products over thepast 2 years, our exports of large pipes decreased in the aftermath of the cri-sis. However, in terms of commercial products, despite the rising stocks inthe US after the crisis, as BMB, we increased our share in the market.

What kind of structure do you havee in terms of your relations with the cus-tomers in US? Can you tell us what you do in order to meeet the demandsand needs of the customers on time and to keep customer satisfaction lev-els high?When we are determining our sales through different channels, we also con-sult our most recent customers about the products. This both enable us tounderstand the expectations of the latest customers of the product and tolearn the things we need to advance and to take precautions accordingly.

Ozgur Fidanoglu, the Director of BMB’s Pipeline Projects.


“The variety of

offered products

combined with

inexpensive pricing

gives even ordinary

Americans affordable

options to buy

natural stones,

although one might

think such stones

should be more

expensive than other

covering materials.”

ISTANBUL MINERAL EXPORTERS’ ASSOCIATION

Amer›can Consumers’ Cho›ce:Natural Stones of Turkey

Erdogan Akbulak, board Member of

Istanbul Mineral Exporters' Association.


years and beyond to reach the same figures; however, we believethat Turkey still can increase U.S. sales and will be able to introducenew materials into the market. The recession forced Turkey to enternew markets that resulted in an increased market share in the FarEast. With China’s increasing demand for Turkish marbles and tra-vertines, the Turkish stone industry was able to open hundreds ofnew quarries and increase the sale of raw materials to China, Taiwan,India and other countries. Obviously, this will contribute to introdu-cing new Turkish processed stone materials into the U.S. market. Infact, the Turkish construction industry is very active in North Africa,the Gulf Area, Russia and the CIS countries, and became the secondlargest industry worldwide. During this recession, we also learnedhow to better meet the requirements of contractors for commercialprojects, provided installation services for the ultimate satisfactionof the customer, and became their solution partner.

What is your expectation for the mining industry in next few years?What could the industry do in the U.S. market to increase marketshare? As previously mentioned, Turkey must invest in affordability, designand innovation to drive awareness and strengthen the Turkishbrands to compete with other countries. As natural stone is a greenproduct itself, we believe there are increasing opportunities and po-tential for our materials to reach farther in both the U.S. market andworldwide through large U.S. architectural firms. These large firmsspecify materials for massive projects with environmental sensitivityin mind. It should be our responsibility to keep them informed aboutthe development and progress of the Turkish stone industry combi-ned with building confidence in our abilities among the developers,architects and manufacturers. Thus, Turkey can obtain a large porti-on of orders for stone materials in prestigious and large commercialprojects that would result in the Turkish stone industry increasing itsmarket share and becoming a world leader. !

According to Business Monitor International forecasts, the miningindustry in Turkey is expected to grow by 71.3% between 2009

and 2013. The industry is expected to reach a value of US $12.76 bil-lion by 2013.

Currently there are 20-25 mining companies from Canada, the U.S., theUK and Australia operating in Turkey. The experience that they bring andthe relationships formed with local companies are in turn enhancing themining industry and transforming Turkey into a notable mining nation.The US market reached up to $400 million in exports from Turkey, butdropped approximately 30% after the economic crisis.

Mehmet Özer is the Chairman of the Board of Directors of IstanbulMineral Exporters' Association since April 2010. Erdogan Akbulak, boardmembers of Istanbul Mineral Exporters’ Association and Chairman of Sil-kar Madencilik San. ve Tic. A.fi., one of Turkey’s leading companies innatural stone industry serving with a variety of products including grani-te, marble, antiqued stones and mosaics, answered TURKOFAMERICA’squestions.

The U.S. is the leading market in a list of 10 countries and imports 10different mining prodducts from Turkey. What is the primary reasonfor this? When you compare the export statistics of Turkey to the U.S., espe-cially in the mining sector, it is apparent that almost more than 80%is natural stones; marbles and travertines respectively. The reason isthat Turkey has ample reserves and a large production capacity forfinished products of good quality. In past years, before the economiccrisis, there was steady and remarkable growth in the U.S. marketthat enabled Turkish manufacturers to invest more in production byincreasing their capacity and the variety of their offerings. In fact,Turkey owns a large portion of the world’s calcareous stone reser-ves, and with vertical integration, has contributed to a good qua-lity/price ratio for finished products, especially in tile and slab for-mats. The variety of offered products combined with inexpensive pri-cing gives even ordinary Americans affordable options to buy naturalstones, although one might think such stones should be more ex-pensive than other covering materials. Many of these materials co-uld also be available in home improvement centers. Therefore, thepenetration of Turkish stones is increasing and American consumersare getting access to top quality products as the economies of scaleapplies.

Why are Turkish stones less expensive thaan other countries’ pro-ducts in the U.S. market?One of the reasons Turkish stones are less expensive than other co-untries’ products, such as those of Italy, Spain and Greece, is thatthere are hundreds of manufacturers in Turkey producing similarproducts who are all in direct competition with each other. Productaffordability seems good for the end-users, but it’s also essential tocombine affordability with product variety, design and innovative of-ferings to differentiate ourselves in the market from other competi-tors. This approach will drive and increase brand awareness of Tur-kish materials in the long run.

What did you learn from the financial economic ccrisis? The U.S. market reached up to $400 million in exports from Turkey,but dropped approximately 30% after the economic crisis. Even gi-ven the economic recovery, it appears that exports will take several

MINERAL EXPORTS’ STATISTICS Years Minerals' Exports ($) Change (%) Share of Metal

Exports in Turkey's

Total Exports (%)

1992 335.400.000 - 2.28

1993 301.600.000 -10.07 1.96

1994 376.100.000 24.70 2.07

1995 563.000.000 49.69 2.60

1996 541.600.000 -3.80 2.28

1997 596.729.725 10.17 2.17

1998 531.651.983 -10.91 1.97

1999 577.464.276 8.74 2.17

2000 568.945.463 -1.45 2.05

2001 574.882.846 0.89 1.83

2002 684,659,766 19.26 1.95

2003 847,249,000 23.96 1.81

2004 1.207.714.995 42.54 2.00

2005 1.525.279.014 26.29 2.06

2006 2.080.719.636 36.43 2.43

2007 2.715.484.019 30.52 2.56

2008 3.241.019.283 19.98 2.55

2009 2.445.365.830 -24.55 2.47


Mining in the U.S. takes place in all 50 states, from goldmines in Alaska to sand and gravel mines in Florida.

Half of U.S. electricity comes from coal. The U.S. has a 240-year reserve of coal at our present rate of consumption, anenergy resource that is both domestic and affordable. Luke Popovich, Vice President of External Communicationsof the National Mining Association, talked about the in-dustry’s current and future role in the U.S. economy.

Could you give us some current statistics about the Ame-rican mining industry? Our coal industry produces 1.17 billion short tons annuallyand directly employs 135,000 people. Coal pays averagesalaries of between $68-72K annually, excluding benefits– almost two times the average wage paid in the states inwhich we operate. We have the largest coal reserves ofany country (28%), which is largely why coal generatesabout 49% of total U.S. electricity. About 97% of coal mi-ned here is for electricity generation; most of the rest ismetallurgical coal used in steel production. Our exportshave grown steadily for several years, with the exceptionof last year, owing to the recession, but exports still com-prise only about 15% of production.

How important is the mining industry for economic reco-very? How important is the mining industry for the U.S.ecconomy?Coal is the most affordable fuel for baseload power genera-tion in this country, so coal is vitally important to keep ener-

gy costs low, make US industries competitive and provideUS households with affordable electricity.

2009 was the safest year ever for American miners. Whatdo you do to improve miners’ safeety? How much moneyhas been spent on it? What are the fatality records in2010? We had two consecutive record-breaking safety years insuccession – ’08 and then ’09. A tragic accident in April ofthis year will clearly rule a safety record out for 2010. Wehave spent in the past two years about $1 billion comp-lying with new safety requirements and technologiesmandated in federal safety laws passed by Congress in Ju-ne 2006.

Coal mining was mmuch more important in past centuries.What should be done to transform the industry in the 21stCenttury in the U.S.? It isn’t much less important today given the roughly half ofUS electricity that coal generates. But we must develop car-bon capture and storage technology and make it commerci-ally available to power plants in order to meet or exceed en-vironmental standards. Clean coal technologies will conti-nue to be vital for the industry to prosper and retain its sha-re of the electricity market. We expect to also supplementtransportation fuels based on petroleum with coal-derivedfuels, but the capital investment for this will be an obstaclealthough the environmental profile of coal-to-liquid fuels issuperior to petrol-based fuels.

Coal-based generation, which already supplies half of Ameri-ca's electricity, is essential to maintaining reliable and affor-dable electricity. Can the mining industry continue to prosperin an increasingly competitive environment? Yes, with public and private investments in clean coaltechnology, we believe we can continue to use our priceadvantage and meet increasingly higher environmentalstandards.

What could be the importance of the miningg industry inthe next 10 years? It’s arguably our largest domestic fuel, so sustaining itsdevelopment and production will enable the U.S. to beco-me less reliant on imported fuels.

Can you give some information about clean coal technolo-gies? These are explained on our NMA website and include gasifi-cation technologies, scrubbers for power plants and of cour-se carbon capture technologies that are being tested now.Your readers can visit at www.nma.org.!

CONTACTTHE NATIONAL MINING ASSOCIATION 101 Constitution Ave. NWSuite 500 East Washington, D.C. 20001Phone: (202) 463-2600 Fax: (202) 463-2666www.nma.org

The American coal

industry produces

1.17 billion short tons

annually and directly

employs 135,000

people. The U.S. has

the largest coal

reserves of any

country (28%),

which is largely why

coal is used to

generate about

49% of all U.S.

electricity.

THE NATIONAL MINING ASSOCIATION

Amer›can M›ners Spend $1b›ll›on comply›ng w›thNew Safety Requ›rements

Luke Popovich, Vice President ofExternal Communications of theNational Mining Association.


Tile Partners for Humanity (TPFH) is a partnership bet-ween American tile industry and Habitat for Huma-

nity International, a nonprofit organization working toeliminate substandard housing around the world. Since2003, Alpharetta, GA based TPFH has donated morethan $20 million in tile and related materials to Habitatfor Humanity and other nonprofit organizations.

What exactly does TPFH do? The mission of TPFH is toenable donations of tile, tile-related materials, and la-bor to non-profit organizations such as Habitat for Hu-manity, to strengthen communities, and improve lives.Lynn Labuda, executive director at Tile Partners for Hu-manity, Inc., answered TURKOFAMERICA’s questions.

Can you tell us about your organization's accomplish-ments? What is your mission? In 2003, TPFH made a 5-year pledge to Habitat for Hu-manity on behalf of the tile industry to donate morethan $1.25 million of tile, tile materials and labor toHFHI and more than doubled that goal. In 2008, TPFHmade a new 5-year pledge to Habitat for Humanity of$2.5 million in donations and we are proud to announ-ce that we will meet and exceed this pledge in July,2010. Since 2003, TPFH has donated more than $20million in tile and related materials to Habitat for Huma-nity and other nonprofit organizations.

The mission of TPFH is to enable donations of tile, tile-related materials, and labor to non-profit organizationssuch as Habitat for Humanity to strengthen communiti-es and improve lives.

Who suppports your organization? How many tile busi-nesses work with your organization? TPFH is supported by the tile industry and accepts fun-ding and donations of tile, tile related materials, laborand installation training as well as other construction-related materials. We are guided by six industry organi-zations (The Tile Doctor, NTCA, TCNA, CTDA, CTEF, andThe Tile Heritage Foundation) whose representatives siton the TPFH Board of Directors, as well as representati-ves from MAPEI, Pan American Ceramics, Habitat for Hu-manity International and Mountain Resource Center.

TPFH partners with manufacturers, distributors, inde-pendent stores and contractors throughout the US.These industry partners provide tile, setting materials,tools, floor preparation materials, cleaners and sealers,and labor and installation training to Habitat affiliatesand other nonprofit organizations interested in buildingwith tile.

How do you finnd needy people to help? We have worked very closely with Habitat for Humanityover the past 8 years to assist affiliates in building thou-sands of homes. TPFH also partners with other worthynonprofit organizations that request donations of tilematerials.

Can you give us an idea of the amount of your donations? Approximately $20 million in materials since 2003.

Can international companies join your organization (forexample, could a Turkish company from Turkey supportyour organization?) Today, TPFH operates only in the US, but we would loveto partners with any Turkish companies that have a pre-sence in the US and are willing to donate materials tohelp us achieve our mission.

Would you llike to add anything? Tile Partners for Humanity was formed in December,2002 when Curt Rapp of The Tile Doctor and Gray LaFor-tune of the Ceramic Tile Institute of America realizedthat the industry’s excess tile disposed of in landfills co-uld be put to much better use. They worked with Habi-tat for Humanity International (HFHI) to create the part-nership which serves to utilize this excess inventory,raise awareness of HFHI within the industry and to soli-cit donations of materials, labor and other support forHFHI.!

In 2008, Tile Partners

for Humanity (TPFH)

made a new 5-year

pledge to Habitat for

Humanity of $2.5

milllion in donations.

TPFH will meet and

exceed this pledge in

July, 2010. Since

2003, TPFH has

donated more than

$20 million in tile and

related materials.

A NON-PROFIT ORGANIZATION

T›les for Human›ty

Lynn Labuda, executive directorat Tile Partners for Humanity.


AKDOa leading industry importer, distributorand designer of luxury stone products,

has been developing fashion forward mosaics for over20 years. Last financial crisis was not the first turmoilthat they faced in past twenty years. Each crisiscreates new opportunities for some businesses whowant to take risks.

AKDO experienced two positive things during thecrisis; they opened a manufacturing facility in in Chinaand a distribution center in Germany.

Hakki Akbulak, Bridgeport, CT based company’s

president, says they did not feel the crisis until July of2009 and from that point their sales performancedropped to 30% by the end of the year. “We startedreturning to the black at the end of March 2010 andmy expectation is our business will steadily increaseuntil the end of this year,” he says.

AKDO deals directly with the trade and sells naturalstone, glass, porcelain and mosaic to dealers and tothe commercial industry.

AKDO’s sister company, Silkar, owns and has exclusiverights to numerous quarries, is also looking to addnew quarries to expand the supply of raw materials.AKDO is focused on expanding its commercialbusiness within the US while utilizing the infrastructureand experience of Silkar. Hakki Akbulak answeredTURKOFAMERICA’s questions.

Do you think economic crisis is over? Or will it be oversoon?It is not easy to make a prediction when the economiccrisis will be over but I think it is helpful to look atthe facts to provide the best estimate. There areserious hurdles on our way to recovery, the highunemployment, the European debt and the risk ofdouble recession just to mention the significant ones.If we look at the US housing market, which is a hugepart of the US economy, there are similar situations,including huge increases on foreclosures, difficultiesin securing mortgage loans and the unwillingness ofbanks to finance new projects. On a positive note,the free fall is over and it appears the start to a slowrecovery has begun. I personally do not expect anydramatic changes until end of 2011.

How is your companyy's performance in the first threemonths of 2010 compare to the same period last year?What is your expectation for the end of 2010?Actually, we did not feel the crisis until July of 2009and from that point our sales performance dropped30% by the end of the year. We started returning tothe black at the end of March 2010 and my expectationis our business will steadily increase until the end ofthis year.

What did you learn from this economic crisis? I think this was a wake up call for all of us. It helped usrecognize our weaknesses and strengths in diverseareas. It forced us to make swift and decisive changesin areas where we did not have the right concepts,processes and structure. It was a good opportunity forus to learn that you need to change your mind set inorder to survive if the surrounding environment

“We started returning

to the black at the

end of March 2010

and my expectation is

our business will

steadily increase until

the end of this year.”

HOW DID WE DEAL WITH THE CRISIS?

“The Cr›s›s Helped Us Recogn›ze OurWeaknesses and Strengths”

Hakki Akbulak, AKDO Founder & President


changes. Business as usual has changed and we had to adapt andadjust to what our customers need from us to also survive.

What marketing or selling philosophies did you use in your company?We concentrated our marketing efforts on the top 15-20% of ourclients and implemented the necessary cost cutting measures.Targeting our top clients allowed us to focus on those customerswho are more inline with supporting our brand and values. For theseclients, price is not the only factor to close a deal and we believe thatfocusing on the right customer who believes in the AKDO productquality offering contributed to increasing their dedication to ourbrand. We also launched customer loyalty marketing programs withthese top clients that provided them with the opportunity to securemarketing tools for their showrooms based on set credit terms com-bined with a challenge to achieve sales goal by a set deadline. Thiswas a win-win situation for both parties and is contributing toincreasing our merchandising space in showrooms and guaranteedsales.

What are the 3 toughest challlenges facing the company after thiscrisis era?Obviously, we want to see our sales figures increase but not just bysacrificing our margins. We still believe there is room to expand ourbusiness not only in the US but also abroad. We did two good thingsduring the crisis; we opened up a manufacturing facility in China anda distribution center in Germany. We have to make sure in theupcoming months and years that all these entities, including ourmanufacturing facilities and quarries in Turkey are managed well.

Turkey has several economic crises in the past 200 years and youhave a sister company, Silkar, in Turkey. Operating in two countrieswithin this globbal economic crisis, did you need to develop differentstrategies? How did you manage the crisis in TTurkey?I think as a short answer “globalization” would be the commondenominator to these questions. Especially for our sister companySilkar, it was essential to reach out to the projects in Russia, CIScountries and when these markets were experiencing some economicalproblems, we concentrated our efforts on the projects in North Africa,Gulf countries and Far East. This approach helped us to survive theeconomical difficult times. Besides, the Turkish market was notcompletely dead so we were involved in some projects there too.

What are the current goals of your sister company, Silkar? Do theyhave new projects or plaans to invest? We have a defined set of goals that we outlined in the framework ofour Turquality efforts, which we qualified for as the only companydealing with natural stone in all of Turkey. As I mentioned above, wehave to implement efficient operations in all markets that we arealready in and also plan properly when penetrating new markets.Silkar is concentrating on building their retail oriented business bynetworking and utilizing the AKDO brand mostly in European countries.Additionally, enhancing their efforts to intensify our relationship withthe existing strategic partners combined with finding new partners inalternate markets. Silkar is also looking to add new quarries to expandthe supply of raw materials. AKDO is focused on expanding ourcommercial business within the US while utilizing the infrastructureand experience of Silkar. This expansion is in support of our retail businessand our approach in selecting the right clients by offering them betterservices and products in a less saturated market.!


Adamer, an Izmir-based natural stone company,is one of Turkey’s biggest exporters to the U.S.

market in the natural stone industry. They exportapproximately 123-130 containers of natural stoneproducts to the U.S. market every month. VedatZor, CEO of Adamer, talked about his U.S. strategyand achievements.

How long have you exported to the U.S.? What wasthe volume of your first export and what is it rightnow? We have been selling for seven years to the US mar-ket and we started with 4-5 containers monthlywith a payment risk, due to that fact that we soldopen accounts. Nobody wanted to buy materialwith any payment guarantee. They didn’t want topay without seeing the material. Now we are sellingapproximately 125-130 containers monthly only tothe US.

What was the major problem at the beginning andhow did you get over it? The biggest problem was a lack of trust in Turkishsuppliers. We developed the trust of our customerswith our reasonable prices, quality service, and on-time delivery.

What are tthe important rules for exporters in theU.S. market, which is very competitive? Actually the one and only answer that is that thekey is Reliability, Reliability, and Reliability. If youcan give this energy to your clients it means you ha-ve made the biggest step to stay safe in the sector.After that comes of course meeting the exact requ-irements of your clients, emphasizing that you area logical, organized, and professional company.

What is the imporrtance of your product which yousell to the U.S.? When you make comparisons withyour competitors, wwhat are the differences betweenyour products? Our biggest advantage in this sector is giving thebest service and the best high end materials for thebest prices. Providing much material at one shot isalso one of the reasons that makes us come intoprominence. The materials that we send serve allkind of people in the U.S. We do not aim to reachonly a specific class; our purpose is to introducenatural stone to everyone, and show that naturalstone doesn’t always mean luxury.

What should be done to increase trade volume bet-wween the U.S. and Turkey?

A new company

should pay attention

to is PAYING

ATTENTION, because

no one will forgive an

error at the beginning

of a business rela-

tionship when there

are so many

professional

companies with zero

errors around.

ADAMER

Izm›r’s Export K›ng of Natural Stone


kish materials, and this isn’t helping anybody, not even the ven-dors in Turkey. They are making “Turkish materials” synonymouswith “cheap materials.”

What are your future plans for the U.S. market? Our aim is to increase trade by expanding market access and redu-cing costs. Of course we want to improve and strengthen our rela-tions with our present customers, make new and strong agree-ments with new clients and to increase our variety of materials.

What three pieces of advice would you give to aa new company thatwants to extend its business to U.S. market?The first thing that a new company should pay attention to is PA-YING ATTENTION, because no one will forgive an error at the begin-ning of a business relationship when there are so many professio-nal companies with zero errors around. So, double checking can belife-saving.

Secondly, I can say that new traders often get so caught up in theexcitement and anticipation of trading that they let common sensego on holiday and trade with money they have no business puttingat risk. Any money you put in to the markets must be risk capital,money you can afford to lose and not impact your basic financial si-tuation. So be careful with which money you take risks

Lastly, you will not be a successful trader if you do not have a sys-tem. They come in all different shapes and styles, but if you don’thave a system you cannot be organized.!

First of all, we have to wake up and really see that we have a tre-asure in our hands because only after we become aware of this factwe can make others aware. The marketing of a product that you re-ally believe in will be always much more successful. And our co-untry is a spring of natural stones. After this is said, we need pe-ople in charge of our export business who speak the language andknow the customs of the country, who are up to date as to the re-quirements and credit standing of every buyer in their territoriesand who are in constant communication with all their clients. Peop-le who are ready at all times to take advantage of market fluctuati-ons to secure new business and who are able to give accurate in-formation, who can sell goods on merit without cutting prices, whocan win and hold the confidence of their trade and who will neverlose a customer once gained. After these attributes are establis-hed, there will be no reason not to increase our volumes with theexpected prices

What is your company’s annuaal growth rate? How many employeesdo you have? Also could you give us some information about yourreevenue? We have 45 people and due to the economical crises we did not in-crease our capacity. We focused more on keeping it as stable as inprevious years. We are the only exporting company with 18 billiondollars in sales yearly.

What would you like to say about the Turkish companies compe-ting with each other in the U.S. market? I can only say, very briefly, that they’re killing the market for Tur-

Vedat Zor, CEO of Adamer.


While Turkey is among the five greatest marketsin the gold jewelry sector along with India and

USA, it is also competing with Italy in the productionfield. According to a report by the Exports Promoti-on Center of Turkey, although Turkey has a goldsmit-hing capacity of 400 tons annually it only produces250-300 tons of gold jewelry. Turkey has a placeamong the first three leading gold jewelry producersin the world, with India and US being the other two.

In the year 2009, the country that showed the grea-test demand for Turkish jewelry was the UnitedArab Emirates. Last year, gold jewelry exports tothis country reached a value of $170.5 million. Thejewelry exports to the US were worth $114.2 millionand to Germany $71.2 million.

As indicated in the same report, Turkey’s exportswere worth $257.1 million in 1999; $352.5 million in

In the year 2009,

the country that

showed the greatest

demand for Turkish

jewelry was the

United Arab Emirates.

Last year, gold

jewelry exports to

this country reached

a value of $170.5

million. The jewelry

exports to the US

were worth $114.2

million and to

Germany $71.2

million.

ISTANBUL PRECIOUS MINERALS AND JEWELLERY EXPORTERS’ ASSOCIATION

Turk›sh Jewelry SectorWants US Custom TaxedTo Be L›fted


two separate jewelry fair organizations in Istanbul. The Turkish je-welry sector should become aware of the importance of brand ac-creditation efforts within the world market and should continue itswork more actively.

What are the advantages in terms of growing in the North Americamarket? In entering this market, what is the biggest disadvantageaside from the customs tax?

Ismet Naci Kurtulan: There is no disadvantage except for the cus-toms tax. And there is no advantage either. The USA is the greatestimporter in the sector of manufactured precious metal and jewelry.The biggest disadvantage is the special consumption tax that isapplied to precious stones in Turkey.

Ilyas Gencoglu: The advantage in the American market is that thejewelry sector knows this market well and there are establishedpartnerships. In the past, we used to have the advantage with che-ap labor; however, since the alternative markets, such as those inChina, India, Indonesia, and Malaysia, began production we no lon-ger have that advantage.

2000; $1.1 billion in 2005; and $1.6 billion in 2008. Due to the glo-bal crisis last year, Turkey’s exports of gold jewelry amounted to$1.0 billion.

Turkey, with its exports valued at $1.5 billion in the precious je-welry sector in 2008, was in 11th place. As Turkey has one of thegreatest production sectors, this sector employs 250,000 peopleand consists of nearly 6000 producers and 35,000 jewelers.

Since the exports to the US under the Gold Jewelry and Materialscategory were removed from the Generalized PreferenceSystem and made subject to customs taxes, there was a 45 percentdecrease in exports in 2008. “In 2009, the exports of USAdecreased %30”

TURKOFAMERICA asked Ismet Naci Kurtulan, the owner of KurtulanJewlery and a Board Member of the Istanbul Precious Minerals andJewelry Exporters, Ilyas Gencoglu, the owner of Mioro, and AlenBag, the owner of Bag Jewelry, about the expectations of Turkishproducers from the US market.

Is there another strategy that is being considered to deal with theproducts exported to the US that have been in decline?

Ismet Naci Kurtulan: As long as the US customs tax is in place, thisproblem will persist. I don’t think there’s much to do about it.

Ilyas Gencoglu: Gold jewelry exports to the US are carried out un-der six categories. One of these categories has been removed fromthe Generalized Preference System due to exceeding the limit.This situation also influenced the 45 percent decrease in exports,though its actual share in the market does not amount to this rati-o. The global crisis and the great increase in the prices of gold arethe other two reasons for such a decrease.

Alenn Bag: Not only the customs tax but also the increase of goldprices in record amounts affected the export level negatively. Mi-nimizing the usage of gold products and considering silver and ot-her precious metals as alternatives could be a strategy.

What needs to be done in order to utilize the experiences of thesector in the North American market with an aim towards increa-sing exports in the future?

Ismet Naci Kurtulan: If we do not take into account the customs tax,the problem is rather more about the shrinking of the US market.

Ilyas Gencoglu: The North American market maintains its place asone of the most important markets of the world. Even though the-re has been a shrinkage in this market, it still remains important.For this reason, our sector must continue its activities in this mar-ket and try to gain back the share it has lost. The North Americanmarket has to be understood well, and the gold jewelry and deco-ration goods have to be produced according to customer preferen-ces and purchasing power. This should be done by sales represen-tatives that know the market well.

Alen Bag: The efforts to lift the customs tax should continue. The-re has to be a solution for eliminating the negative effects on the

Ismet Kocak, Chairman of the Board ofDirectors of Istanbul Precious Minerals &Jewellery Exporters’ Association

ISTANBUL PRECIOUS MINERALS AND JEWELLERY EXPORTERS’ ASSOCIATION

Alen Bag: Turkey’s geographic location and its cultural heritagewill affect sales and marketing efforts positively. This advantageshould be utilized better. History and art should be the main the-me of Turkish brands and our products should be introduced asidefrom their industrial identities. For example, the theme of Istanbulbeing the European Capital of Culture 2010 could have been usedin our sales and marketing activities in North American markets.

Today in New York, which is the heart of the gold sector, there aremany businessmen, sales representatives, experts, and mastersthat have been to Istanbul’s Grand Bazaar. How could this poten-tial influence an acceleration in trade volume? Is your sector usingsuch networks in the US sufficiently?

Ismet Naci Kurtulan: Those people must certainly be people that wefeel a connection with, enjoy trading with and that have great poten-tial. These networks could not only be used but also be advanced.

Ilyas Gencoglu: Many of our Turkish colleagues continue their oc-cupations in the US. Our ties with them have been utilized in thepast and today. This market is very large and institutional firms arevery strong. So, these networks alone are not enough to grow thetrade volume.

Alen Bag: No, they are not utilized. And such people do not only re-side in New York but also in Los Angeles. These experts could beutilized in production design efforts.

Despite the potential of the sector and the presence of many experi-enced firms, exports decreased below the $1 billion line in 2009 du-e to the economic crisis. What are the goals set for the coming 10 ye-ars? Which countries are considered to be developing markets?

Ismet Naci Kurtulan: It is very difficult the foresee ten years in thefuture because our export level depends greatly on the prices ofprecious metals. The UAE, Russia, the Turkic countries and Chinaare among the countries that will have greater importance for us.

Ilyas Geencoglu: We can say that exports hit rock bottom in the ye-ar 2009. We are expecting exports to increase 10% this year. Solong that the prices of gold remain stable and fall a little, and theimpacts of the crisis lessen, exports would reach the value of $3

billion in ten years.

The markets of the developed countries are shrinking for our sec-tor. The search for alternative markets for our sector continues.The ties with the markets of the North and Central African countri-es, the Eastern European countries and the Balkan countries areamong the markets that should be advanced.

Alen Bag: As it is the case for all sectors, countries where the pe-ople have a greater purchasing capacity and an eye for quality,such as China, India and Brazil, are the targeted markets.

What are your expections from the US market?

Ismet Naci Kurtulan: As of the third quarter of 2010, I am expectingsignificant increases in our trade.Ilyas Gencoglu: The US market should be continuously given im-portance and there should be efforts to ensure its sustainability; itis a market with great purchasing power. We are aiming to accountfor 20% of the jewelry sector’s exports to the US market.

Alen Bag: As morale in the markets rises, there will be more positi-ve changes. However, since the jewelry sector is in the luxury con-sumption category, our sector would feel such positivity the last.

What is the characteristic that would give the Turkish firms primacyin the US market?

Ismet Naci Kurtulan: Our speedy and affordable production.

Ilyas Gencoglu:: The most important characteristic of the Turkish je-welry sector is its ability to produce quality items, provide fast mo-del developing capacity, and respond to the customer demands fle-xibly. Lately, arts and technology production methods have been pa-ralled and as a result we have begun to produce unique products.

Alen Bag: Since the firms’ owners mostly come from the producti-on field, they would be able to reflect the changes of the market inproduction in a positive way. However, the personnel in the salesand production units have to work collaboratively; otherwise, the-re could be negative consequences.

Is there anything you would like to add?

Ismet Naci Kurtulan: Until about two or three years ago, NorthAmerica was already a good market. I think it will regain its impor-tance towards the end of 2010.

Ilyas Gencoglu: The jewelry sector is a business field that requiresinnovation and dynamism. The entrepreneurial structure of oursector’s members has the strength to allow transformation.

The obstacles in front of the sector should be lifted through the estab-lishment of necessary legal steps and regulations. The jewelry sectoris among the last sectors that are recognized by the industry and tra-de organizations. However, it has a potential to grow. It should be gi-ven importance by the state and it should be given a chance.

Alen Bag: Thank you.!



According to the Department of Commerce, thebulk of jewelry sales occur during the holiday

season, November and December, and account forabout 32% of annual sales. Other key periods areearly winter for Valentine’s Day and the spring whensales are boosted by Mother’s Day and weddings.

Robert Headley, Chief Operating Officer of Jewelersof America, says suppliers in Turkey who can helpU.S. retailers to meet market challenges andchanges will have the greatest success. “I wouldstrongly encourage foreign companies who want toenter the jewelry industry here to do their home-work. The best way to understand the U.S. market isto stay informed,” he added. Headley answeredTURKOFAMERICA’s questions.

What does the American jewelry industry expect in2010 in terms of production, sales, employmennt, andexport-import?In terms of sales expectations, business has beensteadily improving so far this year. In fact, IDEXOnline Research analyst Ken Gassman has reportedthat sales were up nearly 8% for the first fiscal quar-ter of 2010, and they are tracking right now to reachtotal sales of around $63 billion for the year (up from$59 billion in 2009). Based on government forecasts,that number has continued to improve.

What effect has the financial crisis had on the jewel-ry industry? Has the industry recovered yet? Like all industries, the jewelry business is notimmune to the impact of economic cycles. But theunderlining factor is that jewelry remains timelessand a gift of choice in celebrating milestone events.Despite the downturn, the long-term outlook for jew-elry demand in the U.S. (and elsewhere) is positive.

For example, bridal demand—which has remainedstrong—is rising sharply and will continue to do so.In the short-term, we’ve already seen an improve-ment from the holiday season of 2008. Specialtyjewelers’ sales in the holiday season of 2009 wereup 12.2% and the market has seen continuousimprovement over the first half of 2010.

Turkey is one of the most important producers in thejewelry industry iin the world. What would be yoursuggestion to companies which want to expand theirbusiness to the UU.S. market? What are the mostimportant factors necessary to be successful in themarket as a foreiggn company?A key factor to success in the U.S. market (which rep-resents about half of the $140 billion worldwide jew-elry and watch market) is researching and under-standing the demographics and market influencersand how they are evolving.

In looking at the U.S. market, some important con-siderations are when and why people buy jewelry, aswell as the type of jewelry retailer. According to theDepartment of Commerce, the bulk of jewelry salesare during the holiday season (November andDecember, which account for about 32% of annualsales). Other key periods are early winter forValentine’s Day and the spring when sales are boost-ed by Mother’s Day and weddings. In terms of wherepeople buy jewelry in the U.S., specialty jewelers—those retailers whose main business is jewelrysales—account for about 48% of the market. Therest of the market consists of discounters (like Wal-Mart), traditional department stores, mass mer-chants, online retailers and other outlets.The key drivers of jewelry demand in the U.S. arebridal (which includes engagement rings and wed-

“Suppliers in Turkey

who can help U.S.

retailers to meet

these market

challenges and

changes will have the

greatest success. I

would strongly

encourage foreign

companies who want

to enter the jewelry

industry here to do

their homework.”

JEWELERS OF AMERICA

“The Best Way toUnderstand the U.S. Market Is toStay Informed” Robert Headley, Chief Operating

Officer of Jewelers of America

ROBERT HEADLEY As COO, Robert Headley serves as Jewelers of America’s inter-

nal leader, reporting to President and CEO Matthew A. Runci.

With Runci, he is responsible for developing Jewelers of

America’s overall vision. Headley joined the association in

February 2009, with the directive to integrate the association’s

strategic plan with ongoing operations.

Headley currently serves as co-chair of the Responsible Jewelry

Council’s Standards Committee. He also represents Jewelers of

America on the Boards of the Jewelers Vigilance Committee

and the Manufacturing Jewelers and Suppliers of America.

Headley worked for 20 years at Tiffany & Co., where he oversaw

the brand’s revered, and stringent, quality control standards.

There, he served as Vice President of Technical Services and

directed quality assurance and manufacturing administration.

Prior to joining Tiffany & Co., Headley spent eight years at Avon

products, supervising efficient systems for ingredient manufac-

turing, packaging and corporate quality assurance. He is a for-

mer naval officer.

ding jewelry), calendar events (like Christmas and Valentine’s Day)and life cycle events (such as birthdays, anniversaries and gradua-tions).

There are also a number of key trends impacting the jewelry busi-ness. These include consolidation, the growth of online sales, gener-ational spending (shifting from older to younger consumers) andother demographic shifts. For example, while the downturn hasstalled the trend somewhat, the rise of female purchasing power isjust one demographic trend that will have a long-term impact on theU.S. market. There’s also the impact of technology and the Internet.

Given these changes, jewelers in the U.S. are working harder thanever before to connect with customers in innovative ways—likesocial media—and are offering more choice and selection (frommore affordable pieces to more customization). Younger consumers,in particular, want their jewelry to be unique and they’re more con-cerned about issues related to the sourcing of their products—theywant pieces that are unique and beautiful and they want to feel goodabout their purchases.

Suppliers in Turkey who can help U.S. retailers to meet these marketchallenges and changes will have the greatest success. I wouldstrongly encourage foreign companies who want to enter the jewel-ry industry here to do their homework. The best way to understandthe U.S. market is to stay informed.

What are the biggest obstacles for the jewelry industry in nearfuture?Some of the factors influencing the industry include the rise of tech-nology and the internet, the need for more flexibility in terms ofproduct offering (both in terms of providing unique and beautifulpieces and offering a range of prices), and the need for moreaccountability and transparency. While there are challenges, jewel-ers who embrace change will succeed. In fact, the latest researchindicates that the market has stabilized and those who have made itthrough the downturn are the strongest and will continue to thriveand survive.

How do you ssee the industry's future in the U.S. market? According to research compiled by Ken Gassman, the U.S. jewelryindustry is expected to grow 4 to 5% annually. Could you give us some information about the association? Who canbe a member, how many members does it have, the benefits of mem-bership, etc.

Jewelers of America is the national trade association for businessesand organizations serving the American fine jewelry retail market-place. The association’s primary purpose is to improve consumer con-fidence in the jewelry industry. JA represents business interests of jew-elry retailers and suppliers in the U.S. and our members mustuphold high social, environmental and ethical business practiceswithin our Code of Professional Practices(http://www.jewelers.org/about/j_whatwestandfor/codeofpractices.php),which they sign when they become a member or renew their member-ship annually. In addition to our leadership role on issues and govern-ment affairs, JA provides access to education, scholarships and certifi-cation and we offer business-enhancing and money-saving perks. Youcan learn more by visiting our website, www.jewelers.org!



In the last five years, Turkey's chemical industryexports have increased by an average annual rate

of 10%. These exports make up 10% of Turkey’s totalexports . The industry exported 13.6 billion in 2008and this decreased by 29% in 2009, reaching 9.6billion dollars. On the other hand, Turkey's chemicalindustry imports totalled $20 billion in 2009, fallingby 21 percent when compared the previous year.

Turkey’s strong chemical industry touts soda ash,chrome chemicals and boron chemicals as some ofits main products. Murat Akyuz, Chairman of the Bo-ard of Management of Istanbul Chemical Substancesand Products Exporters’ Association, talked toTURKOFAMERICA about the industry’s currentsituation and future expectations.

It’s notable that the Turkish Chemical Sector had adecrease of 29% in exports for 2009. What kkind ofexport performance are you expecting for the end of2010? The global crisis has also effected our companies in

a negative way, as it did in many sectors. Positive in-dications have started to be seen as of the secondhalf of 2009 in the chemical sector, which had lostblood rapidly due to the crisis. When our exports arestudied on a month-by-month basis, it stands outthat our exports to countries, which are located clo-se to us geographically, and in Africa, has increased.As for the last month of 2009, almost a chemical exp-losion has taken place. As a result of the activities offinding new markets, the exports of the sector hasincreased by 55.49% in terms of value and by36.22% in terms of volume when compared with thatof December of 2008.

Turkey’s exports to

the USA, Canada and

Mexico in the chemi-

cal sector in the first

5 months has already

exceeded the amount

of 120 million dollars.

ISTANBUL CHEMICALS AND CHEMICAL PRODUCTS EXPORTERS’ ASSOCIATION

How W›ll the UN’s IranSanct›ons Effect TheTurk›sh Chem›cal Industry?

Murat Akyuz, Chairman of the Boardof Directors of Istanbul Chemicalsand Chemical Products Exporters’

Association


months of the year) What are the product groups that have the mostexport potential to the USA markett for the sector, which has its acti-vities in a very wide range of products, from pharmaceuticals tto fer-tilizers, from artificial flowers to rubber? The exports of the chemical sector to the USA is at the level of 105million dollars for the first five-month period of 2010. This means asan increase of 36% when compared to last year. Basic chemicals,that is organic and inorganic chemical groups. constitute 35 milliondollars of this amount. The exports have been 22 million dollars forthe rubber group and 15 million dollars for the plastic group. The pro-duct group, which you have mentioned, is the group that has achie-ved the largest export increment with an increase of 315%. In addi-tion, the export of soaps and cosmetic products has reached a num-

When the exports during 2008 are compared with 2009 numbers, itis seen that there is a decrease of 22.23% in terms of volume and29.12% in terms of value. While chemical exports valuing 13,610 bil-lion dollars were made during 2008, this fell to 9,646 billion dollarsduring 2009.

As for 2010, we are moving forward towards our target of 12 billiondollars by the end of year and with 1 billion dollars for each monthwith firm steps.

When the latest statistics are studied, ggun powder, explosive subs-tances and their derivatives lead the product groups, where the sec-tor exports to the USA the most. (829,000 dollars for the first three

ber that exceeds 5 million dollars during the first five month periodof 2010. Pharmaceutical products, on the other hand, which is anot-her group, has achieved an export value of around 2 million dollarswith a increase of 70%.

Iran is one of the countries that the chemical sector exports to. Howwould the sanctions that thee USA is trying to impose on Iran throughthe United Nations effect your sector? The exports we have achieved in the chemical sector to Iran duringthe first 5 month period of 2010 have already reached the amount of200 million dollars. Obviously, interruption of trade due to politicalreasons would effect our sector and the economy of the country innegative ways. In addition, Iran is one of the leading suppliers forenergy requirements, which is the most basic need for the industry.The situation should be analysed in all aspects in the long term andnot just on the basis of exports. A possible instability in our regionwould create a seriously negative impact on the exports of our co-untry all around of the Middle East.

Is it possible too say that there is an inclination for the exporters toturn their attention towards other countries rather than the countiesof the European Union since the contraction in the European marketdue to tthe crisis? How much of a real alternative can North Americabe in this sense? The economic crisis has effected Europe and North America in ratherserious dimensions as well as other geographical regions of theworld. The chemical industry in the EU countries has slipped back by3 – 4%. The Pacific-Asian countries, headed by China, have survivedthe crisis with a minimum of damage. The share of these countriesfor the chemical exports of our country has risen to 34% from 32%.But that of the EU countries has fallen from 29% to 27%. Up to 30%drops have been seen for the chemical exports of Turkey to EU coun-tries due to the contraction of the demand in the EU countries.

Our exports to the USA, Canada and Mexico in the chemical sector inthe first 5 months has already exceeded the amount of 120 milliondollars. For example, the first 5 monthly exports that have been ma-de to Mexico have shown an increase of 195% as compared to lastyear. We do not look to this issue as an compulsory change of mar-ket during the crisis period. We think of this in the context of thedynamism of the trade and as a factor that alternative markets sho-uld always be held in hand.

Can you extrapollate what kind of strategy the Turkish chemical sec-tor would need to implement in order to grow durring the next 10 ye-ars by looking at its transformation during the last 10 years? The industrialization of the chemical sector in Turkey started duringthe 1950’s. It developed during the 1960’s and 1970’s. We have wit-nessed the setting up of two petrochemical plants that belonged tothe state during the 1970’s and 1980’s as well as the establishmentof a large number of small and middle-sized private companies. Adecrease has been observed for the customs tariffs of the chemicalproducts immediately after changes were made in the Customs Act in1984. Hence, a fast growth has taken place for the production fieldand capacity of the Turkish chemical industry in parallel with the ex-port potential.

Our sector achieved a growth of 2.5% during 2008. Our sector hadaround 50 billion dollars turnover in 2008, with sales from the pro-

duction side of around 15 billion dollars. Exports of the Turkish che-mical sector rose to 13.6 billion dollars in 2008. Around 500,000 pe-ople are employed in the chemical sector, and it continually increa-ses its share of Turkey’s total exports. The employment is mainly ac-hieved in the private sector.

We are getting over the effects of the global economical crisis. Oursectors exports are showing a rather good performance since the be-ginning of the year. The exports of our sector, which has lived thro-ugh a rapid return to the days before the crisis, has shown an increa-se of 47.57% in January and 43.64% in February, based on value. Thebiggest increase during the five monthly periods has been achievedduring the month of March. The chemical sector exportations haveincreased 75.15% during March by breaking an important export re-cord. The rise for the exports for the month of May of this very impor-tant and principal sector of our country, where it closed the month ofApril with an 41.52% export increase, has been 41.61%.

We have determined the 2023 export target of the sector as 50 billi-on dollars. This means that we should keep up the average increaserate of 11% for every year. Our main target for the years ahead of usis to produce the products which create added value and catch thecompetitive advantage with these products in the foreign markets.We are aiming at being able to compete not only in certain regionsbut around the world as the Turkish chemical sector.

The chhemical sector is placed among the top three industries in thedeveloped countries. The positions of the textile and automotive in-dustries, which were the locomotive sectors of Turkey some timeago, are changing year by year. What are your expectations for theparallelism that should be shown betweeen the development level ofthe country and the growth of the chemical sector? The chemical sector is a sector which has strategic importance forevery country, because it is one of the principal sectors and supp-lies raw materials for all branches of industry. The rise of the che-mical sector to first place in parallel with the development levels ofthe countries is the main indicator for this issue. Therefore, I thinkthat this type of progress will also be achieved in our country,which shows fast growth and which does not lose its courage des-pite the economical crisis. Moreover, the first steps of the develop-ment in this direction had been put forward before the crisis andthe chemical sector had risen to third place as the sector that hadachieved the highest export levels by leaving the ready to wearclothing sector. But this positive development was unfortunatelycut back by the global crisis. However, we are able to see that theincrease is at the top level when we look at the exports of thechemical sector together with the easing back of the effects of thecrisis.

Therefore, I believe that our sector will also reach in our country a le-vel comparable to the rest of the world. Our aim is to provide everykind of support and help for our sector in this path.

Points you would like to add ... Our sector will continue to increase its contributions to the economyof our country by gaining more strength every year. I would like torestate my belief at this occasion, that I believe that the sector wouldbe much more effective with the cooperation of the public and priva-te sectors. !

ISTANBUL CHEMICALS AND CHEMICAL PRODUCTS EXPORTERS’ ASSOCIATION



The Turkish petrochemicals market is one of the fas-test-growing in the world, with a twofold GDP multip-

lier over the last decade. Petkim Petrokimya HoldingA.fi., the leading petrochemical company in Turkey, hasbeen exporting different petrochemical products to theUS market for 20 years. Its main export product is C4,used in butadiene extraction for rubber production. Bu-tadiene is the basic raw material of the automotive andtire industry. Petkim’s market share for C4 is around 30-40% of the total C4 imports of the USA. Hayati Öztürk,Petkim’s General Manager, talked to TURKOFAMERICA.

How long has Petkim had business relations with theU.S.? What kind of products does Petkim exporrt to theU.S. and what is the importance of Petkim's products forthe American market? Petkim has been exporting different petrochemical pro-ducts to the US market for 20 years. Export products areC4, benzene, py-gas and orthoxylene. The main exportproduct is C4, used in butadiene extraction for rubberproduction. Butadiene is the basic raw material of theautomotive and tire industry.

How has thhe current global financial crisis affected yourbusiness with the U.S.? What did you learn from the cri-sis and do you think it is over?Because of the global financial crisis and its harmful ef-fects on the automotive industry, our C4 sales to theUSA have been cut drastically between the third quarterof 2008 and the second quarter of 2009. Following a sharp contraction in the past year thatprompted producers to consolidate their assets, realigntheir portfolios and reassess their business strategies,many economies are expected to recover from the re-cession. Consumer demand is recuperating, the globaloutlook is improving, confidence is recovering, yet the-re are problems in certain regions.This year will be a recovery for our industry, yet a returnto the “good old days” of the pre-crisis period will notbe easy. That will be difficult to achieve.Cash & inventory management, i.e. working capital ma-nagement, cost cutting, and the implementation of fle-xible production models were the main priorities duringthe downturn. According to research, Turkey is the third-largest impor-ter of petrochemicals globally. Almost 70% of the de-mand is met through imports. Is high demand in the lo-cal market a disadvantage to seeking new markets? The Turkish petrochemicals market is one of the fastest-growing in the world, with a twofold GDP multiplier overthe last decade. As a result, it has been a challenge forPetkim to maintain its markets share in an ever growingdomestic market.

Although the company focuses mainly on the domesticmarket, it also exports its products to Europe, the US, Af-rica, the Middle East and Asia. Petkim’s capacity exceedsthe domestic demand for some products and there arecertain products that are not being used locally in theTurkish market and hence they are exported. Naturallythe supply/demand and markets conditions will shapethe market and the marketing policies

What is your U.S market share in total export and couldyoou compare your products and services with your com-petitors?Petkim’s market share for C4 product is around 30-40% ofthe total C4 imports of the USA. The quality of the productis considered to be the best in the market by the end-users. Customer loyalty is one of Petkim’s big advantages. Pet-kim has a longstanding relationship with its customers,a reputation of producing high quality products and pla-ces great importance to on improving its customer ser-vice and customer relations. Petkim has been focusingon improving logistics capabilities, which would make itpossible to supply customers’ needs in the most effici-ent and productive way possible. Most of the competi-tors downsized and reduced their capacities during thedownturn and could not supply necessary products totheir customers. However, Petkim, on the contrary, sup-

Petkim’s vision is to

create a regional

force in petrochemi-

cals operating world

class assets by the

year 2018. SOCAR &

Turcas, Petkim’s

shareholder, has

aggressive invest-

ment plans in Petkim

to increase competi-

tiveness in the

coming years.

PETKIM

Petk›m Plans to Create A Reg›onal Force ›n Petrochem›cals

Hayati Öztürk, Petkim’s General Manager.


In your industry, to increase trade volume between Turkey and the U.S.,what should be done? Turkey and America have been allies for a long time. To increase trade vo-lume between the two countries, the authorities of both countries shouldtake necessary measures. American companies should take advantageof Turkey's strong chemical market to increase exports and imports ofproducts and services. The existing bilateral relations between the twocountries would be further expanded and consolidated in both depth anddimension. What is your vision and future plans for next 5 years (invest-ment, exports, sales, etc.)

Petkim’s growth plan has been developed within the framework of our vi-sion for 2015. Petkim’s growth plan covers short term operation and im-provement plans, which include improvements planned for the coming 2-3 years, and mid-to-long term operation and improvement plans, whichcover improvements planned between 2011-2015Petkim’s short term operation and improvement growing plans focus onproduction, energy, logistics, sales and marketing, the ERP Project, hu-man resources policy, and environmental issues. In particular, Petkimhad a plan to increase the capacities of some of the existing plants to ob-tain economy of scale in these plants, considering the production costsand the domestic demand for these products. Petkim’s mid-to-long term operation and improvement plan is to reacheconomic scale of production as well as becoming a regional player inthe petrochemicals sector in order to increase its long-term competitivepower by providing feedstock reliability (upstream investments) and wi-dening its product range (diversification via high value added products,downstream investments).

Wouuld you like to add anything? I want to thank TurkofAmerica for giving me the opportunity of this inter-view.!

ported its customers by providing flexible payment terms, by meeting alltheir product needs, and increasing its after-sales services. Our motto is“customer satisfaction is above everything.”

Can you tell us briefly about the completion of a refinery projecct at Pet-kim's Aliaga Complex ? Pektim’s vision is to create a regional force in petrochemicals operatingworld class assets by the year 2018. Our shareholder SOCAR & Turcashas aggressive investment plans in Petkim to increase competitivenessin the coming years. The Turkish Energy Regulator approved our shareholder SOCAR & Tur-cas’s operating license in order to build a refinery on Petkim’s premises,just next to Petkim’s petrochemical facilities, in June 2010.

Petkim allocated an area of 130 ha to SOCAR-Turcas Refinery (STAR) forthe construction of the refinery. The capacity of this plant will be around10 million tons of crude oil per year (214.000 barrels per day), and theconstruction will be started in 2011. STAR will be operational in early 2015.It is a milestone for Petkim, integration with the new refinery will allowPetkim to secure all of its feedstock needs and increase efficiency bycreating synergies between its petrochemical and refining assets. Pet-kim will also generate rental income from the allocated land in its Aliagacomplex and some other revenues from the services and utilities provi-ded to the refinery.

The remaining part of the refinery’s products will be sold in Turkey andEurope. Construction of the refinery on Petkim’s premises is expected toproduce a cost advantage of 30% compared to greenfield investmentsdue to existing infrastructure and logistics.In addition to reduction of transport and warehousing expenses, expensesfor security, laboratories, R&D, the number of staff, fire prevention, etc. willalso be reduced. It will step up the competitiveness of our products.


As the sector is not only that of a unique industry ha-ving a market share of 2,7 trillion USD, and holding

the rank of being the highest employer sector for the21st century, but also has become the basic sector im-proving all the other sectors. The Electrical-Electronicsand Machinery Industry is considered to be one of themajor sectors of Turkey, as it is the source of informati-on technology used by the developed nations to ensurecompetitive advantage. Electrical-Electronics and Mac-hinery Industry is the main target sector that will ensu-re Turkey’s competitive advantage in export markets.

Fatih Kemal Ebiclioglu, Chairman of the Board of Direc-tors of Istanbul Electrical - Electronics, Machinery and In-formation Technology Exporters’ Association talked toTURKOFAMERICA.

Turkish electronic firms are particularly recognizedbrands in European markets. What should bee done toable to repeat the same success in North America? The North American consumer market is a highly com-petitive and mature market with most consumer nic-hes already addressed by a plethora of very strong glo-bal and local manufacturers and retailers. Furthermore, the North American consumers’ needsand wants are different from their counterparts in ot-

her parts of the world, given that they tend to live inlarger houses, drive longer distances and exhibit diffe-rent social behaviors which impact the types of consu-mer products they choose to use. For example, top lo-ad and large capacity washers are still preferred in USvs. front load and small capacity washers in Europe.

Hence, any new entrant needs to create value for theconsumer either through lower prices and/or better fe-atures and accomplish this by capturing share fromexisting players who are already pretty good at ad-dressing the needs of different consumer segment.For companies which are based out of Europe and/orhave strong European based manufacturing capabiliti-es, they have to overcome four very big hurdles thatthey may not face when competing in Europe. The firstis developing the products that the North Americanconsumer would want in quantity; the second is mana-ging the logistics around transporting bulky productsand/or finding a way to have the products sourced inNorth America cost effectively; the third is finding re-tailer partners who are willing to create space for yourproducts and the fourth is generating awareness andconsideration for the brand in a very competitive medi-a environment.

Given these hurdles, you typically see strategies thatare on the extreme ends of the spectrum. Certain pla-yers will overinvest on all fronts; for example Hyundaiin building assembly facilities, pricing products lower,providing longer warranty periods, overinvesting inmarketing and finally developing products that cater tothe unique needs of the North American consumer.Certain players will stay niche and pick areas wherethey have less competition. For example, some Euro-pean companies with European style high end pro-ducts are working with niche retailers. Alternatively,certain players will try reinventing the business modelby securing low cost supply chains, developing goodproducts, figuring out how to communicate their brand

“New entrants will

have to heavily weigh

the costs and bene-

fits of each strategy

and pick what suits

them best. One other

factor that is also

very critical for new

entrants is the risk

profile of the North

American market

being different from

other geographies.”

ISTANBUL ELECTRICAL-ELECTRONICS, MACHINERY AND INFORMATION TECHNOLOGY EXPORTERS’ ASSOCIATION

Is Turk›sh Electron›cs Ready to U.S. Market?Is Turk›sh Electron›cs Ready to U.S. Market?


tor to look like 10 years from now?On one end, more environmentally responsible products (lower electri-city, lower water consumption) coupled with improved features (e.g.,better hygiene, larger capacity) and better design (e.g., inox) will conti-nue to take a larger share of the existing replacement markets. For theenvironmentally conscious products, the speed of penetration will de-pend on the amount and type of governmental subsidies and/or envi-ronmental policies put in place.

On the other end, there will be hundreds of millions of new householdsthat will move into the middle class in countries like Brazil, China andIndia who will still seek basic products for their first purchases. There-fore, companies which will be successful in the future will have to caterto both trends.

In 21st century technology, the electric-electronics and the machineryindustry's importance are more critical than ever before. To keep pacewith the rapid channge in this era of the sector, what are the biggest di-sadvantages?To drive new technology into households, the price/feature tradeoff ne-eds to be right. Sometimes the better technology is more expensiveand the consumers are unwilling to make the tradeoff en masse. So re-gulations and subsidies play a prominent role in driving technology tothe next level. For example, for a smart grid to work, the standards mustbe developed before manufacturers could start investing to drive thepenetration. Similar issues exist with energy and water consumptionlevels. Given that it is very hard to develop worldwide standards in thesector, our manufacturers have to have the scale to be able to addressneeds of multiple markets from product innovation to registration.

What are the industry’s advanttages to get a bigger share of Turkey’sexports? The main advantages of our electrical, electronics, machinery and infor-mation technology sectors are; availability of skilled and low cost laborand engineering talent and a network of scalable feeding industries andsupplier bases. Furthermore, logistical advantages in many marketsincluding Europe, the Middle East, and Africa set Turkish exportersapart from their counterparts in East Asia, for example. Finally, Turkishproducers have largely achieved scale economies given advantages inthe export market as well as a large and growing domestic base.!

message with design and packaging and working with the club channelthat has most to gain from a relationship with a low cost new entrant.

New entrants will have to heavily weigh the costs and benefits of eachstrategy and pick what suits them best. One other factor that is alsovery critical for new entrants is the risk profile of the North Americanmarket being different from other geographies. The consumer protec-tion laws and the legal environment also create some additional risksfor any player, including established players, let alone new entrants.For example, recently very large scale recalls have hit some prominentplayers in the industry.

What could be some disadvantages for industrries entering the NorthAmerican market? Geographical location of manufacturing facilities, differences in consu-mer and business culture and legal know-how are areas of key disad-vantages for Turkish electrical, electronics, machinery and informationtechnology sectors. Overcoming these hurdles typically requires big in-vestments and given the risk associated with winning in North America,not many Turkish companies have been able to get to scale in NorthAmerica yet in these sectors.

When the figures for 2010 were examined, one of the produucts with thehighest sales to the U.S. were freezers. When you consider industry ca-pacity and prooduction of power, what product groups could be profi-tably sold to the U.S. market? Freezers have been potential growth areas for Turkish manufacturers todate. While energy efficiency and higher end features such as frost-fre-e may help create additional demand for our manufacturers, the freezermarket is still very much a price driven market. Most of the demand forfreezers come from consumers who tend to use these products in gara-ges or small business owners who use these as add-on freezer capacityout of sight. Hence for any player, bringing these products to market atlow cost is key to continued success.

The U.S. is the world’s number one consumer of electronic goods. Canthe U.S. market be a new target after the European market to increaseproduct sales for items such as refrigerators and televisions? Fridges are bulky products compared to TV’s. So logistic and supplychain issues must be analyzed before moving forward. Typically anyproduct sourced from Europe will not have such a great chance to com-pete unless it is a high-end unit above a certain retail price. Innovativeand energy efficient products could be targeted given Europe may beahead of the curve in certain product segments like front load washers.

In the coming years, is it possible for Turkish companies to establish re-search and development offices iin the United States and to developstrategic partnerships with American companies? While the US is still the driver for innovation in many sectors, there aretwo main hurdles to considering R&D investment in US. The first is thatthe cost of skilled engineering talent is very high and the second is thatwhite goods products are very much unique to the NA consumer. The-refore in considering alliances around technology with American firmsand/or establishing R&D centers in US, all cost/benefit tradeoffs willhave to be evaluated. We observe that many American firms move so-me of their R&D capabilities overseas to countries like India and China.

When you examiine the development of the sector in recent years, whatimprovements you expect in next 10 years? Howw do you expect the sec-

Fatih Kemal Ebiclioglu,Chairman of the Board of

Directors of IstanbulElectrical-Electronics,

Machinery and InformationTechnology Exporters’

Association


As Ferrous and Non-Ferrous Metals Exporters' Asso-ciation prepared their strategy in 2009, the in-

dustry’s share of Turkey’s total exports was 4.2%. Theyare aiming to reach a level of 5.6% in 2023. To achievethis target, Istanbul Ferrous and Non-Ferrous MetalsExporters' Association's board have established sub-sector committees in such areas as aluminum, copper,and kitchenware. Hayrettin Cayci, Chairman of the Boardof Directors of Istanbul Ferrous and Non-Ferrous MetalsExporters’ Association, talked to TURKOFAMERICA.

When Istanbul Ferrous and Non-Ferrous Metals Expor-ters' Association's figures were examined, thhe UnitedStates did not rank among the first 10 countries. Whatare the main reasons for this? What should be done inorder to sell more goods to North America?When we look at the export numbers of the ferrous andnonferrous metal products group to the U.S., it is notamong the top-ranking, but the U.S. is located in thetop 10 countries to which we export copper knittedcords, copper wire, sheet aluminum, metal hand toolsand metal gift items. The U.S. market in one in which gi-ants compete with each other, only designing productsthat can stand out, and large-scale firms which have theproduction capacity to meet demands. They have achance to compete.

Especially after the global crisis, each country has ta-ken various measures in order to protect producers.Protectionism in the U.S. is much more effective. In ad-dition, the U.S. government discusses each calendaryear whether to remove tariffs, which would be a bigadvantage to emerging countries such as Turkey. This

approach has created an uncertainty in terms of exportsas well.

Another reason is the U.S. market is very far away fromTurkey and the already high freight rates, especially inrecent times, experienced significant increases. Theshipping time is too long for such a volatile market. Sowhen a product is exported to Europe, the price is rela-tively the same, but the profit margin in higher, while inthe U.S. the profit margin is very slim. In this regard, notthat of loss of market share, freight and energy costshave to be supported during the coming years. Thiswould be very helpful.

To enter the U.S. market, different marketing strategiesshould be developed. For example, when the industry-based trade missions examine the U.S. market, one-on-one meetings with industry organizations and compani-es would increase the chances of Turkish products be-coming competitive in the U.S. market.

When the industry’s 2009 U.S.. exports are examined,copper stands out as the product that is exported themost. Keeping in mind oof the potential of the industry,which products is it possible to sell to the U.S.?In the year of 2009 and January-June period of 2010, onthe basis of product groups exported to the U.S., cop-per wire make up the majority of our export products,with $28.8 million and $17.3 million in exports to theU.S. In many other product groups, we produce world-class products and export them, for example, steel andaluminum kitchenware, in recent years the importanceof design has increased and this has helped to increaseour exports. Turkey is right now a design pioneer incompetition with other countries. I believe the UnitedStates is a high potential consumer market for kitchen-ware, aluminium sheets/plates/profiles and aluminumconstruction materials.

Production andd sale of copper wire made by Turkishfirms operating in the United States is known. In orderto enteer the marker, what should companies with simi-lar products do? The various supports mentioned above that have hel-ped the sale of copper wire and have provided marketaccess will no doubt also be helpful to companies ente-ring the market. Apart from this, the country's geograp-hical size and the high cost of customer visits to theUnited States bring a unique set of drawbacks. Theycan be resolved with the provision of travel incentives.

Chinese firms are at the top of tthe market for the ferro-us and nonferrous metals industries in the US. Are Tur-kish firms able to compete with the Chinese firms on anon-price base? How can a company make a differencein this resppect?Yes, as in other sectors, China also bears the distincti-on of being a major competitor in the ferrous and non-ferrous metals industry. To compete with China, value-

Turkey’s total export

target is 500 billion

dollars in 2023 and

our industry’s share

is 25 billion dollars.

Can their strategies,

plan and vision make

that happen?

ISTANBUL FERROUS AND NON FERROUS METALS EXPORTERS’ ASSOCIATION

Turk›sh Metal ExportersGet Ready for 2023

added products with reasonable prices can be produced. Moreover, thequality of the products we export, delivery terms to ensure continuity,and timely fulfillment of our commitments in this market will be of thegreatest importance. On the other hand, knowledge of U.S. market con-ditions and opportunities and making deals with large retailers will ha-ve the effect of increasing our exports.

The distance to the North American market and lack of information abo-ut the market significantlyy affects the sale of goods. What should be do-ne to overcome these problems in order to reach a sattisfactory exportvolume?As mentioned before, an incentive to support freight costs would be use-ful. Apart from that, some countries began initiatives in Europe, and si-milar systems can be applied in the U.S. market. In this way, the pro-ducts which are exported to the market by Turkish companies can be in-sured by Eximbank. In this way, the companies can benefit from quaran-tine insurance program.

By the end of 2009 the industry’s exports totaled 4.3 billion dollars. Hoowit is possible to get back to the good old days?The ferrous and nonferrous metals industry was affected by the world'sfinancial crisis such the same as the rest of the world. It suffered a dec-line in exports, which was normal. On the other hand, when we look atthe export figures in 2010, the 2009 crisis and the effects begin to les-sen. When the industry compares the January-June period of 2009 withthe current year, we can see a 40% increase. However, this increase usnot enough. Therefore, while finding new markets with high import po-

tential, we need to increase our share in current markets.

Turkey’s total export target is 500 billion dollars in 2023 and our in-dustry’s share is 25 billion dollars. To reach this target, we, Istanbul Fer-rous and Non-Ferrous Metals Exporters' Association's board, have es-tablished sub-sector committees in such areas as aluminum, copper,and kitchenware. We have also begun to form strategies for each sub-sector. Together, each representative of major sectors and major compa-nies will create strategies to overcome barriers to the next stages, I be-lieve we will reach our goal.

What sort of strategy do you predict that thhe industry will develop in thenext 10 years? What are the biggest obstacles and advantages you see? As we prepare our strategy, in 2009, Istanbul Ferrous and Non-FerrousMetals Exporters’ Associaton share of exports was 4.2%. We are aimingto reach a level of 5.6% in 2023. By creating original designs and manu-facturing high value-added products, we want to succeed in the bran-ding process. By increasing the number of high-technology products cer-tified to international standards, we want to produce patented product.In addition, the sectors aims at increasing brand awareness by intensivepromotional activities.In this process, to encourage the use of new technologies, we want tosupport small and mid-sized companies’ R&D activities. We want towork to increase the employment of qualified technical staff from voca-tional schools. Thus we are planning to make small businesses major ex-porters. In this context, together with the Ministry of Education within‹MM‹B, we are building the Industrial Design School. !



Sark Wire Corp., a subsidiary of the SarkuysanGroup of Companies in Istanbul, Turkey's largest

wire manufacturing company, opened its first U.S.operation in a former printing plant in Albany's westend in December 2009. The company, which makeselectrical copper products, is opening a $10 millionprocessing plant in Albany, N.Y.

Sarkuysan has been exporting products to the U.S.and other countries for more than 30 years. SevgürArslanpay, Sarkuysan’s Assistant GeneralManager, talked to TURKOFAMERICA’s about hisAmerican experiences.

How long has Sarkuysan exported its products tothe U.S.? What is the importance of these produuctsfor the American market?Sarkuysan has exported its products since 1980.Our products are used in high tech sectors such asaerospace, automotive, computers, data transmis-sion, and electronics.

Sarkuysan has opened a plant in Albany in theUnited States. This iss one of the biggest invest-ments a Turkish company has made in recent

years. As the global economicc crisis has had aneffect on every business, how did you make thisinvestment decision?This strategic decision was made after muchresearch and evaluation. In particular, transportand logistic issues and the ability to ensure deliv-ery on time were dominant factors.

Being an iinvestor after experiencing many years asan exporter to the U.S. market, could you comparemanaging a plant in Turkey and in the UnitedStates? What are the differences and similarities?The US plant has the latest technology in ourprocess and completely brand new machinery,just as we have in our Turkish plant. The productmix is pretty much the same with the same hightech products.

How did govvernment and local officials approachyour investment decision? What can you say aboutopening a busiiness in the U.S. (easy, hard, compli-cated, etc) Local officials showed a lot of interest and helpedus in all aspects during the beginning stage of ourinvestment.

The first year

performance of

Sark USA U.S.’s

plant went as

expected, and the

plant is running as

originally planned.

Currently the

company has 20

employees with an

annual sale of $30

million based on

current metal prices.

SARKUYSAN

Sarkuysan W›res Turkey to Albany


Could you tell us about your plant’s performance in its first year?How many employees work for the pplant, production capacity,sales, etc?The first year’s performance went as expected and the plant isrunning as originally planned. Currently we have 20 employeeswith an annual sale of $30 million based on current metal prices.

What were your plans and expectations for the American markketand how are they being realized? Our main goal and expectation was to be a long term player in themarketplace and we are gradually getting to the level where weneed to be.

If a Turkish company wants to invest in the US, what would beeyour advice? Any Turkish company which would like to make an investment inthe US should have a strong and reliable background in the mar-ket. Otherwise, it is not so easy to enter the market by merelyestablishing a facility.

What is your estimate for world copper output by the end of 2010?What will be the global demand and the Turkish demand? To boostexports to compensate for weak sales in the domestic market, areyou considering expanding your interest into different markets? We estimate the world refined copper production and demand for2010 to be 19,200,000 tons and 19,60,000 tons respectively.Turkish demand for refined copper is forecast to be approximate-ly 380,000 tons. We are already involved in intensive export mar-keting activities in several countries to boost export sales.!

“Fast and rel iable accounting,tax and audit”

Dr. NEVZAT YILMAZ, YMM

OZAN BACAK, CPA

3 Hudson St. (Corner of 565 Clifton Ave.)

Clifton, NJ 07011

Tel : (973) 777 7723

Fax : (973) 777 7783

Cell : (201) 918 0207

Our office in Turkey is available.

All kinds of corporate establishment, business consulting and tax returnBook keeping – payroll

I N C O M E T A X I N C O M E T A X P r e p a r a t i o n P r e p a r a t i o n


Since the creation of the first trade free zone was per-mitted in the year 1987 up until 2009, the total trade

amount reached $216 billion. As a result of the convien-ces provided for foreign investments, a total of 598 firmswith foreign capital have began doing business in thesedesignated zones.

The volume of trade in the 19 free zones, due to the im-pact of the 2009 global crisis, has shown a shrinkage of27% in comparison to last year and decreased to $17.7billion.

It could be seen that the trade volume in the free zoneswas rebounding from the impact of the crisis betweenthe months of January and June in 2010, with trade acti-vity increasing by 5,5%. During the first six months ofthe year, the total amount of trade activity in the free zo-nes reached $8.5 billion. As of May 2010, there were43,714 people employed in the free zones.

The highest turnover per meter square among all of thefree zones was attained by the Ataturk Airport Free Tra-de Zone with its $2.9 billion trade volume. The founderand the General Director of the Istanbul Ataturk AirportFree Trade Zone, Selcuk Tur, told us about the crisis pe-riod and their practices:What sort of cautions, initiatives, and innovative steps

did ISBI take during the last two years during this peri-od of global crisis?ISBI is one of the most dynamic corporate firms. And pa-rallel with its reputation of being ‘dynamic,’ it still main-tains such processes. In addition to the stimulus and ad-vantages we give in the free trade zones, we are also pro-viding services to our customers that would be helpful ina world trade field where competition is greatly felt.

The point where world trade has come to in our days iscommerce-oriented, and it indeed makes commercemandatory. The concept of ‘One Stop Shop’ has enteredour lives in every aspect. For this reason, firms considerthose areas where they can purchase all services withthe highest quality and under one roof as the ‘Right In-vestment Area.’ISBI provides those firms under its roof with the neces-sary infrastructure to create trade, and the superstructu-re, storage services, value added services for storge andlogistical services.Also, it is possible to fly to Europe, Russia, the CIS coun-tries, the Near East, the Middle East and Northern Africafrom here. In that sense the Ataturk Airport Free Zone isa very strategic spot for those trading firms in this vastgeographic region.We combine this strategic advantage with our variousservice opportunities and provide our customers a tra-

The highest turnover

per square meter

among all of the free

zones was attained

by the Ataturk

Airport Free Trade

Zone with its

$2.9 billion trade

volume.

FREE ZONE AT ISTANBUL ATATURK AIRPORT

How Were The Free TradeZones Impacted by The Cr›s›s?


DYNAMIC ZONE The Free Zone at Istanbul Atatürk Airport is situated in the center ofIstanbul and has a strategic position in the worlds of industry withconnections to Europe, Russia, the Turkic republics, the Middle East,the Far East, and North Africa; it is located on the European sidewhere the industrial and financial sectors are concentrated. Its geo-graphical location, which is at a point where international traderoutes intersect, increases the importance of the region with regardto the foreign trade in Turkey and the world.

Turkey’s main gateways are located in Istanbul, such as as AtaturkAirport for air transportation, Halkali Customs for highway trans-portation, Halkali Station for railway transportation; the latter areboth 15 km from ISBI. Ambarli Port, for sea transportation, is 25 kmfrom ISBI and Haydarpasha Port is only 30 km from the Free Zone.

In addition, the Free Zone has access to the E-5 and Trans EuropeanMotorway, which connect Istanbul to Europe. Within the region ofthe Free Zone all the technical infrastructure support can be found.The AHL Free Zone exceeded a total trade volume of 30 billion dol-lars within the last decade; in 2009, the trade volume reached as2.95 billion dollars. This figure constitutes 14% of the total trade vol-ume reached in 20 free zones in Turkey. The rate of occupationtoday in the region is 90%.ISBI presents services to many foreign trade companies belong toaround 20 different sectors with office, warehouse and office + ware-house alternatives of different sizes situated in a closed area of57,870 square meters with a $50 million investment. Free zones carry out intensive trade as "one stop shops" in the arenaof international trade. ISBI will be the first free zone to fulfill this con-cept. The products subject to international trade should be supported withvalue-added services which ISBI provides, such as: The warehousepalletizing systems which are controlled by using the latest technol-ogy and robots, Garments on Hangers Stocking, Labeling,Separation, Collation, Customer based product collection, Box con-

ding field in which they would be impacted by economic fluctuations theleast. Creating a working environment where all trade and logistics op-portunities are in coordination has been our advantage during the crisis.

What kind of gains did the firms receive during this period?During the crisis, we gave support to our firms in following the official pro-cedures, obtaining licenses and making sure to keep their applicationprocess on the right track. Also, we provided conveniences to our custo-mers by easing down the payment plans.

How has the trade volume of IISBI changed within the last two years, incomparison to the other 20 free zones? What levels did yoour activities re-ach during the crisis?Ataturk Airport Free Zone produces the highest turnover per square me-ter, trade volume and profit of all the free zones in Turkey. Although the-re have been fluctuations during the crisis, our trade volume reached ne-arly $3 billion, one of the best turnovers among all the free zones. Our ac-tivity ratio as of the end of 2009 was 90%. As the effects of the crises les-sen, we are expecting this ratio to reach 95% again.

Especially during the crisis, what kind of investment oppportunities did yo-u provide to the firms, both in Turkey and abroad, in order to capture the-ir atttention?During the crisis, to make export and import easier for companies, weprovide value-added logistics and storage services solutions. In additionobtaining business permits for the firms founded in the zone, we alwaysprovide financial counseling, customs procedures, support for trans-portation in Turkey and abroad, and market research.

The economy is in recovery. What kind of projects does the ISBI have forthis period?We are planning on increasing the quality of our logistical services andadvancing our variety in order to create new storage opportunities. In ad-dition to giving our customers an advantage in cost through the usage ofhigh tech robots and storage systems in these new buildings, we will al-so present them with quality data and reports. We are also planning toincrease the speed of merchandise handling and delivery to the eventualconsumers.

CCan you tell us about the activities at the port you opened in Cyprus? Forthe upcoming period, do yyou have any plans for new investments and ser-vices abroad?We have established and started running our Port ISBI firm at the CyprusFamagusta Free Harbor region; the firm provides its services in an area of103.000 square meters. We provide our customers all kinds of storageservices, including those with added value; renting of open areas; andcarrier services. The building of our first storage facility has been comp-leted and it has started functioning. We are planining to begin the buil-ding of two more storage facilities in 2010. Northern Cyprus is a very im-portant port as it is located in the eastern Mediterrenean and is close toTurkish, Balkan, Middle Eastern, and Northern African ports. In order tobetter take advantage of this very strategic spot, we are continuing the re-novation of an old copper mine area to build the Gemikonagi in Lefke.Once the renovation is completed, we will begin the construction of apick-up/distribution port for container ships. With the strategic site ofCyprus, which is located right in the middle of shipping routes, a greatdynamism will be brought to the region.In addition to these investments of ours, we are also providing ‘know-how services’ about establishing and running a free zone.!

Selcuk Tur, General Manager ofIstanbul Ataturk Airport FreeTrade Zone.

FREE ZONE AT ISTANBUL ATATURK AIRPORT

tent control, Boxing, Palletizing, Stock control, Order taking, Voicepicking, Address based warehousing, and RFID (Radio FrequencyIdentification) Palleting.

INVESTING IN NORTHERN CYPRUSIn addition to the Ataturk Airport Free Zone, ISBI is investing in twodifferent locations in Northern Cyprus. The first free zone invesmentin Northern Cyprus is located in Famagusta and covers an area of103,000 square meters. Northern Cyprus offers broader tax incen-tives and less bureaucracy to users with very advantageous prices.The region is a major attraction in this regard.

The second important location is Karavostasi Port in northernCyprus. This area was previously being used as a copper mine.2.2 million square meters of land currently in the copper mineare now being cleaned up and environmental rehabilitation workis being carried out. Following this work, the largest ports bycapacity in the Eastern Mediterrarean basin are planned to bebuilt here.

As Gemikona¤› Port comes to life, ISBI is working on a project toestablish a direct link between Cyrups and Istanbul by which cus-tomers receive orders to provide products from the port.


K›br›s- Famagusta Free Zone


Turkon handles 40% of the marine shipping bet-ween Turkey and the US. Turkon started the

first-ever marine shipping service between Turkeyand the US in 1997 and initially had seven contai-ners; it now takes on a great role in shipping of tra-ded goods between the two countries through itssix ships. Turkon operates with containers of32,000 tons in exports and 32,000 tons in imports.

Turkon’s 18% market share is followed by the 16%shares of Maersk and Med. According to the dateobtained from the customs house, Turkon shipped5300 containers of goods from Turkey to the US inMarch and 8200 containers from the US to Turkey.In 2006, the number of imported containers was6215, while there were 8200 containers of exportedgoods. The firm not only provides services from

port to port but also handles transportation fromand to factories and warehouses. Although thekinds of transported goods vary, the estimated to-tal cost of shipping a container to the US is $2500.For example, one container of cable picked up fromMersin Port in Kayseri and delivered to Chicagocosts about $2377.

Among the various goods carried by the ships ofTurkon are pizzas to F-16 planes, luxurious yachtsto explosive materials. The ships sail on the USroute by stopping at New York, NY, Norfolk, VA, andSavannah, GA ports. In addition to the ports in Tur-key, Turkon also provides shipping services to theports of the countries in the region, such as in Ale-xandria, Haifa and Beirut. There are thirty-six pe-ople working in the firm’s headquarters in Secau-

Turkon started the

first-ever marine

shipping service

between Turkey and

the US in 1997 and

initially had seven

containers. Turkon

operates with

containers of 32,000

tons in exports and

32,000 tons in

imports.

TURKON LINE

Turkon Sh›pp›ng 40% ofthe Goods Traded Between Turkey

and the US


versity Economics Department. He started his career as an inspec-tor in a public firm called Deniz Forwarding and he was promotedto the position of deputy general director. During the years that hewas an inspector, he received an education in marine studies in theUS and when he returned to Turkey he started working in the tradedepartment of Deniz Forwarding. He also held the position of di-rector general of a firm that was established in 1994 under DenizForwarding, which had seventy one ships running. Transferring tothe private sector later on, Merc started the operation of TurkonHolding’s American branch.Turkon Holding

The founder of the Kasif Kalkavan Group was Kasif Kalkavan; hepassed away last January. The Group, which established TurkonHolding in 2003 and invested in different sectors, had also boughtSedef Dock from STFA, one of Turkey’s well known constructionfirms, and increased its ship building capacity. This group alsoowns the brand name for the water Sandras and it has shares inTurkon Railroad and the Kartal Hotel. It has been operating the Go-cek Port since 2005.

The presidency of Turkon Holding is held by Nevzat Kalkavan, theson of Kasif Kalkavan; Mehmet and Metin Kalkavan are on the exe-cutive board; and while three sons of Nevzat Kalkavan work underTurkon, one other son who carries the same name as his grandfat-her, Kasif Kalkavan, is advancing his experiences in the New Jerseyoffice. Kasif Kalkavan states; “It is forbidden for us to do somet-hing different than navigation.”!

cus, New Jersey. Turkon also has offices in Savannah, Norfolk, andGreensboro. The increase and decrease recorded in the trade le-vels between the two countries impact Turkon’s business closely.

Turkon Director General Mustafa Merç emphasizes that they usedto carry more goods from Turkey during 1990’s; however, since theentrance to the Customs Union and the lifting of quotas in the USdecreased the number of competing products, trade shipping hasbeen affected negatively. As Turkon started to operate in the mar-ket, it was observed that the number of Turkish forwarding firmsusing the service also increased. While there are nearly twentyTurkish forwarding agencies functioning in the US market, Turkonhas a total of fifty forwarding units that it works with in the US andTurkey.

TURKON’S CUSTOMERSAmong Turkon’s customers are International Paper and Weyerha-euse, the world’s leading paper manufacturers and the largest ex-porters; Staple Cotton Cooperative Association, headquartered inMississippi, the largest and oldest cotton cooperative manufactu-rer in the US; Cotton Producers of the Carolinas; AK Steel; and Ray-nolds.

Turkon plans to increase the number of its ships as its portfolio ofcustomers increase. Two more large ships, which have been builtby Turkon’s partner firm Sedef Dock, will start on running as well.The Director General of Turkon, Merc, who has been in the positionsince the opening of the firm in 1997, is a graduate of Istanbul Uni-

Mustafa Merc, General Manager of Turkon Line.


Sefa Stone, based in Florida, is one of many Tur-kish natural stone companies which run busines-

ses in the United States market. Sister company ofthe Cevik Group in Kayseri, Sefa Stone has grown 35percent each year since its establishment in 2006.The financial turmoil has helped the company to ma-ke more profit, since many of its competitors havegone out of business. For the first time since thecompany has operated in the U.S., it now faces a cri-sis. Selcuk Cevik, young general manager of thecompany, talked to TURKOFAMERICA about his ex-periences under the current economy.

What are your expectations for the end of 2010?2009 was a difficult year. This comment is very com-mon and it is not made in vain. This crisis first beganin the banking industry then covered all businesses.In such a critical time, everybody does their ownanalysis. Since first quarter of 2010, we see that theimpact of the crisis is reduced. We hope that the eco-nomy recovers from the full impact of the global crisiswhich has surrounded the world by the end of 2010.

Can you say that the crisis is over? Can you make acomparison with the pre-crisis period?

“Since we were

established in 2006,

we have been

growing 35%

annually. In 2011, we

want to open a

warehouse in

California and then

open a store in a

strategic state every

year. So we hope

to double our

growth rate.”

THE EXPERIENCES OF A NATURAL STONE COMPANY DURING THE CRISIS

The F›nanc›al Turmo›lHelps Sefa Stone toMake More Prof›t

Selcuk Cevik, General Manager of Sefa Stone.


Other than natural stone, we are in mining, tourism, and the oil in-dustry. We are entering the energy industry as well. Of course, wehave had benefits due to operating in different industries. The cri-sis has directly affected the natural stone industry, but I can’t saythe same thing for the other industries. As we think of Cevik Gro-up Companies as a whole, we were not affected by the crisis at all.

I think this was the first serious crisis in the U.S. that you have ex-perienced. If you have simmilar experiences in future, what will younot do? It was our first crisis in the U.S. Not to be affected by the crisis inthe next phase, the company needs to apply a culture of living.The companies which have adopted this culture, big or small do-esn’t matter, as always are less affected. Turkish companies havekept buying materials which they can’t sell to the U.S. from Tur-key. They do not consider what they will do if they don’t sell. Atthe same time, Turkish producers are sending material here witho-ut asking for money. When the products are not sold in the mar-ket, the problem starts. We do market research for each materialbefore bringing it to market. Whenever the economy is bad, wewill avoid being caught with inventory.

In the next five year period, what do you expecct the annual growthrate of the company’s sales and its revenue to be? Since we were established in 2006, we have been growing 35%annually. We want to grow more. In 2011, we want to open a ware-house in California and then open a store in a strategic state everyyear. So we hope to double our growth rate.!

This question has divided economists in the world. Some of theeconomists say that the crisis is over or say that it is about to end.They praise government actions which help the recovery. Somesay that the crisis will re-start. According to them, this one is onlyforeshocks. Of course, this doesn’t apply to the effect on a speci-fic industry such us natural stone. Ending the crisis in the bankingsector may not have finished it in the real sector. But I can say theeconomy is getting better.

What was your strategy in times of crisis? What experience do yo-u have from this crisis? In crisis periods, while some companies appear to settle in, someother companies continued growth. As an example, our marblecompany’s sales were very slow in Turkey while sales in the U.S.increased 50%. This example shows us that the marble compani-es in the U.S. prefer to acquire materials from the U.S. market ins-tead of importing marble from Turkey to stock. We always strive togive the best to our customers with materials and services. Thiswas very useful to us in times of crisis. In times of crisis, manymarble companies have gone out of business, which caused cus-tomers to change suppliers. With quality service and materials,unlike other companies, we did not lose our customers. We gottheir customers as well.

You have a sister company in Turkey. What were the similar effectsof the crisis in both countries? Do you see any advantageous aas-pects of the crisis? Our marble company in Turkey, as I mentioned earlier, has beenaffected by the crisis, but our U.S. company has not been affec-ted. But rather than companies, when we examine the economies,the U.S. was affected by the crisis more than Turkey was. In theU.S. everything is about loans, such as home mortgages, cars,school fees, consumer loans, home goods, etc. In Turkey, our pe-ople are not used to relying on bank credit. People’s savings areusually under pillows. If they have money, they like to spend it, soTurkish people do not use loans as Americans do. In a crisis peri-od, there are not many payment problems for consumers. Thebank would not knock on people’s doors to get their cars, homes,etc. This is a very important issue in the U.S., everything boughton credit and bank loans.. When people have lost their jobs, theyhave lost everything.

The advantage of the crisis for us is the closure of other firms. Itwas a great opportunity for us because we are one of the most po-werful Turkish natural stone companies in the U.S. and our newstore in Florida is currently the largest Turkish marble and traver-tine stone property.

Did the crisis cause any changes in your range of products, custo-mer relationships, and marketing strategy?Of course, our product range in the U.S. has developed, changedand grown. In addition to material from Turkey, we have begun toimport materials from Spain and China. This crisis gave us oppor-tunities to sell not only our own material to make a profit, but al-so sell all kinds of natural stone.

You have different investments in different industries in TTurkey,such as mining and tourism. Do you gain any advantages by ha-ving businesses in different inndustries?


The jewelry sector is one of the sectors with the great-est ambition to make its mark as a global brand.

Representatives of the industry have declared their goalof becoming the global leader by reaching exports of$10 billion in 10 years. Turkish companies are known fortheir traditional way of doing business (store based) inthe U.S., but one of them decided to set up a web basedcompany. (http://www.mygoldgram.com) Çi¤demBostan, Vice President & COO of Halach Gold Inc., a NewYork based gold buying and selling company, talked toTURKOFAMERICA.

Turkish companies are known by their traditional way ofdoing business (store based). Why did youu decide to setup a web based company? We wanted to set up a business model which is appropri-ate for this market. When the company started its oper-ations in early 2009, gold was trading at an all time high.And to reach out to the maximum audience, opening aweb based company was most appropriate.

Can you give us some informationregarding your progress ssince thelaunch of the website? Our business has been growing inleaps and bounds. When westarted, we were trading goldfrom individuals. But we realizedthat there was a huge potentialin selling gold to institutions andbuying scrap from gold dealers.Hence we capitalized on thatopportunity which gave us animmense surge in our volume.

Can you give us some information that isrelated to the American Market- specifically

trading gold online?There are so many web-sites that sell gold bullionand/or ask you to mail your scrap and broken jewelry.Just like in any transaction. people have to be more care-ful who they are conducting business with. When pur-chasing gold bullion you have to make sure that you arepaying the least premium on top of the gold price and ifyou decide to recycle/sell your broken jewelry you haveto make sure that you are getting paid fairly. Through ourblogs, websites and online live chat services we answerour customers’ questions. Just a little hint; Check forthose website that show their price per gold karat bygram or pennyweight.

How can people trust such websites? What are the pre-caautions that are taken in order to provide secure/trust-worthy online service? One way to check if the website is trustworthy or not isto check whether the business is registered with indus-try welfare organizations like JBT, BBB, ICTA and D&B,etc. Checking out the company with the Better BusinessBureau and the city or state department of consumeraffairs will only get you so far. A good indicator of alegitimate company is the quality of their customerservice. Did they contact you right away? Did they giveyou price information over the phone? Test the compa-ny, send one item or purchase a small quantity, and ifyou are satisfied with the price and service, then whynot do more business transactions? Also customer tes-timonials are so important.

How is American culture based on spending?Since the earliest indications of stock market trouble, thevalue of gold has risen dramatically. This has changed the

approach of the general public toward gold. Goldhas hit the mainstream and more and

more people are considering includ-ing gold in their portfolios. This

current economic crisis hasgiven a reverse spin on the

American culture of con-sumerism. We believe, asthey do, that the price ofgold will continue toclimb. It has the poten-tial to protect your

finances against infla-tion, deflation, stock mar-

ket slumps, and currencydevaluation. The price of gold

fluctuates with the world mar-kets, but gold will always retain its

inherent value.!

Turkish companies

are known for their

traditional way of

doing business

(store based) in the

U.S., but one of them

decided to set up a

web based company.

HALACH GOLD

A New Approach from Halach Goldto the Jewelry Market

There are over 7,600 national trade associations in theUnited States, with a large number (approximately

2,000) headquartered in the Washington, DC area.There are also many trade associations at the state andlocal levels. One of the oldest trade associations in theUnited States is the American Seed Trade Association,founded in 1883. Major trade associations in chemical,steel, mining, jewelry, metals and electric-electronicsindustries are the following.

AMERICAN CHEMICAL SOCIETY 1155 Sixteenth Street, NW Washington, DC 20036 Phone: (202) 872-4600 www.acs.org

THE NATIONAL MINING ASSOCIATION 101 Constitution Ave. NWSuite 500 EastWashington, D.C. 20001Phone: (202) 463-2600 Fax: (202) 463-2666Email: [email protected] www.nma.org

AMERICAN COAL COUNCIL 1101 Pennsylvania Ave. N.W., Ste. 600, Washington, DC 20004Phone: (202) 756-4540 Fax: (202) 756-7323 Email: [email protected]

AMERICAN INSTITUTE OF STEEL CONSTRUCTIION One East Wacker Drive Suite 700Chicago, IL 60601-1802Phone: (312) 670-2400Fax: (312) 670-5403www.aisc.org

AMERICAN IRON AND STEEL INSTITUTE (AISI)1140 Connecticut Ave., NW Suite 705Washington, D.C. 20036Phone: (202) 452-7100www.steel.org

JEWELERS OF AMERICA 52 Vanderbilt Ave, 19th Floor New York, NY 10017 Phone: (646) 658-0246Email: [email protected]

JEWELERS VIGILANCE COMMITTEE (JVC) 25 West 45th StreetSuite 1406 New York, NY 10036 Tel: (212) 997-2002www.jvclegal.com

MANUFACTURING JEWELERS & SUPPLIERS OF AMERICA, INC. (MJSA)57 John L. Dietsch Square Attleboro Falls, MA 02763 Phone: (401) 274-3840www.mjsa.org

FEDERAL TRADE COMMISSIONGuides for the Jewelry, Precious Metals, and Pewter Industrieswww.ftc.gov/bcp/guides/jewel-gd.shtm

AMERICAN SOCIETY FOR METALS 9639 Kinsman RoadMaterials Park, OH 44073Phone: (440) 338-5151Web: www.asminternational.org

THE MINERALS, METALS & MATERIALS SOCIETY 184 Thorn Hill Road, Warrendale, PA 15086Phone: (724)776-9000Web: www.tms.org

INSTITUTE OF ELECTRICAL AND ELECCTRONICS ENGINEERS 3 Park Avenue, 17th FloorNew York, NY 10016Phone: (212) 419-7900Fax: +1 212 752-4929

There are over

7,600 national trade

associations in the

United States,

with a large number

headquartered in the

Washington,

DC area.

GUIDE

Nat›onal Trade Assoc›at›ons


The title of ‘European Capital of Culture’ is an honor assig-ned to a chosen city or cities every year by the European

Union. From 1985 until 2010, a total of 38 different cities,including Paris, Florence, Berlin, Madrid, Stockholm, Liver-pool, Brussels, Prague, Athens, Dublin, Lisbon, Amsterdam,and Helsinki have been awarded this title.

As the decision to award the title of European Capital of Cul-ture also to cities that were not in EU member states wasmade in 1999, Istanbul’s journey toward becoming a Euro-pean Capital of Culture has started. The Enterprise Group,which was formed by representatives of certain NGOs in2000 in order to work on Istanbul’s candidacy as a Europe-an Capital of Culture, launched its efforts by working withother NGOs, universities, culture and art organizations, andthe creative individuals of the city after obtaining the sup-port of local and central government officials; their work al-so included the establishment of the Agency for IstanbulEuropean Capital of Culture 2010. The Agency for IstanbulEuropean Capital of Culture 2010 was officially formed inNovember of 2007 in order to organize the projects and ac-tivities for Istanbul’s candidacy.Meanwhile, the European Commission selection committeedeclared on April 11, 2006 that Istanbul, along with Hungary’sPecs and Germany’s Essen, were chosen as the 2010 Europe-an Capitals of Culture. On November, 2006, with the appro-val of the European Parliament and European Union Commis-sion of Culture Ministers, the awarding of the title of 2010 Eu-ropean Capital of Culture to Istanbul was announced.

The President of the Agency for Istanbul European Capitalof Culture 2010, Sekib Avdagic, answered TURKOFAMERI-CA’s questions:Since the year 1985, nearly forty countries have been a Eu-ropean Capital of Culture. What are the characteristics of Is-tanbul that make it different from these other cities?This title is assigned to those cities which reflect Europeanculture and contribute valuably to this culture. As a citywith a 8500-year-old history, Istanbul has been the capital

of three empires, as well as a peaceful home to various cul-tures and civilizations, and is the tolerance capital of theworld; so because of these factors and also because of thecontributions it has provided to European culture, it is alre-ady among the important culture capitals of the Europecontinent. This title, assigned by the European Commissi-on, is only a symbolic title for Istanbul and it stands as anopportunity to introduce the already present historical andcultural legend, as well as its modern side, to the world.

On the other hand, with its population of nearly 15 million,there is no doubt that Istanbul has a very different place thanEssen and Pecs. Istanbul is the last non-EU city that is recei-ving the title of ‘European Capital of Culture.’ Aside from ourhistorical differences among other culture capitals, just thisfact alone shows that Istanbul has the value of being a uniqu-e city. When we look at it from this perspective, I think it sho-uld be remembered that Istanbul is among the greatest met-ropolises of Europe and its activities carried out as a ‘CultureCapital of Europe’ should not be compared, either in qualityor in quality, with the other culture capitals.

ISTANBULL IS BECOMING AN APPEALING CULTURE ANDART CITYIf you were an ordinary citizen of any European counttry whovalues art and culture, instead of of an official leading the or-ganization, how would you hhave convinced people aroundyou to participate in the activities in Istanbul?If I were an individual living in any European country and ha-ving an interest in art, I would have called Istanbul the ‘mostinspiring city of the world.’ I don’t think either I or thosearound me could resist the appealing power of Istanbul.Our Agency had come up with a slogan for our 2009 adver-tising campain abroad for Istanbul: ‘Istanbul...The most ins-piring city of the world!’ The concept of ‘inspiring’ here is ofcourse not a random adjective. Also, this inspiration is notassigned only to those who live here or visit here; it is alsoendowed, in a imaginary way, in those who hear its nameand desire and long to see it but are not able to.

Istanbul with its great

importance in world

history and unmatch-

able cultural heritage

is already one of the

world’s metropols. I

would like to repeat

what we say to the

European society to

our American friends

as well: “Make

Istanbul your next

stop!”

ISTANBUL EUROPEAN CAPITAL OF CULTURE 2010

Sek›b Avdag›c, head of the Istanbul


Of course, Istanbul does not only give people inspiration. It gives Europe andthe world clues about diversities coexisting. Istanbul provides Europe with atouchstone by which Europe can see and recognize its own identity; and it ac-tually gives the inspiration for tolerance, which is essential for its very identity.Istanbul portrays the possibility of being Eastern and Western at the same ti-me, and gives people the chance to experience different and unique culturalmovements and artistic options. Especially lately, Istanbul has been, more fre-quently than ever, the meeting point for the international community for gat-hering, debating and producing.Istanbul, in short, is saying to Europe and the world, ‘Come and see this eter-nal inspiration and use this eternal richness.’ However, we should not be con-tent with what we have done in terms of presentation so far and we shouldproduce new charms. So, in fact, our task is just starting. Istanbul has a bigand influential name. Our difficutl and challenging job is still present. We ha-ve to continue explaining Istanbul’s mesmerizing beauty and displaying itwith cultural, artistic and aesthetic details. This should be our, the lovers ofIstanbul, precious duty.

SELECTED 610 PROJECTS You have had thousands of project proposals. And you have made efforts tossift through these projects and introduce them to the people of Istanbul. Ona personal level, whichh project or projects have been the ones you enjoyedsharing and participating in the most?Our Agency, since it started accepting project proposals in 2008, received ne-arly three thousand proposals. Above all, our arts and culture socities, univer-sities, local governments, public offices, companies and individuals showingeffort and proposing projects is something deserving appreciation. With suchgreat interest in place, our Board went through a busy evaluation phase andas a result selected 610 projects as part of our agency’s program. Of course,it would not be possible to separate and categorize these over 600 projectsas the more important and less important ones.

If you were to describe the Istanbul European Capital of Culture project to anAmerican who does not have much knowledge about Turkey and Istanbul inone sentence, what would you say?Through the works that are to be carried out under the Istanbul European Ca-pital of Culture 2010 project we are aiming to make Istanbul a meeting point inthe world for arts and culture. In this process, while we display our arts and

European Cap›tal of Culture Project: “Make Your Next Dest›nat›on Istanbul!”

The President of the Agency for IstanbulEuropean Capital of Culture 2010 Sekib Avdagic.



culture projects through art’s universal language, we are also trying to con-tribute to the development and renovation of the city and pave the way forthe aftermath of 2010 so such activities will continue to take place. In thatway, Istanbul, as an accredited city, will be a great venue for those whowant to enjoy arts and culture, see beautiful samples of great architectureand city culture, and experience the liveliness and cultural richness of aworld’s metropolis.And above all, Istanbul with its great importance in world history and unmatc-hable cultural heritage is already one of the world’s metropolises. I would li-ke to repeat what we say to the European society to our American friends aswell: “Make Istanbul your next stop!”We will continue to try adding new inspirational resources and perspectivesto Istanbul and make Istanbul an attraction for those living here and abroad.And we invite you to be part of this inspiration as well: ‘Istanbul, your nextstop!’

When you think about telling about this great project, which is significant notonly for Istanbul but also for Turkey as a whole, to your grandchildren or thethird generation, which aspect of it arre you most proud?Until now, Istanbul has not been in the place it deserves in the internationalarena so with this project at hand I believe it will receive the power it deser-ves, and this city of ours which is ‘inspirational in all of its aspects’ will be feltby a much larger crowd. We believe this!When we finish this process and look back, I will always carry with me the pri-de of making such a step and paving the way for better things to come.At the end, culture is not a port to be reached, it’s a journey. It’s an ongoingbecoming and process. We are aware of this and we are taking action withsuch consciousness. We are preparing Istanbul, which is a city that housedvarious civilizations and cultures throughout centuries, for a brand new futu-

culture projects through art’s universal language, we are also trying to con-tribute to the development and renovation of the city and pave the way forthe aftermath of 2010 so such activities will continue to take place. In thatway, Istanbul, as an accredited city, will be a great venue for those whowant to enjoy arts and culture, see beautiful samples of great architectureand city culture, and experience the liveliness and cultural richness of aworld’s metropolis.And above all, Istanbul with its great importance in world history and unmatc-hable cultural heritage is already one of the world’s metropolises. I would li-ke to repeat what we say to the European society to our American friends aswell: “Make Istanbul your next stop!”We will continue to try adding new inspirational resources and perspectivesto Istanbul and make Istanbul an attraction for those living here and abroad.And we invite you to be part of this inspiration as well: ‘Istanbul, your nextstop!’

When you think about telling about this great project, which is significant notonly for Istanbul bbut also for Turkey as a whole, to your grandchildren or thethird generation, which aspect of it aree you most proud?Until now, Istanbul has not been in the place it deserves in the internationalarena so with this project at hand I believe it will receive the power it deser-ves, and this city of ours which is ‘inspirational in all of its aspects’ will be feltby a much larger crowd. We believe this!When we finish this process and look back, I will always carry with me the pri-de of making such a step and paving the way for better things to come.At the end, culture is not a port to be reached, it’s a journey. It’s an ongoingbecoming and process. We are aware of this and we are taking action withsuch consciousness. We are preparing Istanbul, which is a city that housedvarious civilizations and cultures throughout centuries, for a brand new futu-

One of Agency'soutdoor advertisingcampaign inEurope.

The Agency supportedartists by displaying theirpieces and performances tothe public.

The openning ceremony of Istanbul European Capitalof Culture 2010 project President Abdullah Gul andPrime Minister Recep Tayyip Erdogan together.


re. Actually Istanbul has all the necessary infrastructure for that because Is-tanbul does not only rhetorically bridge Asia to Europe but at the same timetruly connects the east with the west; the old with the new; the traditionalwith the modern; mysticism with science; magnificence with modesty; dogmawith pragmatism; and the universal with the local.

Since the Istanbul European Capital of Culture 2010 project is limited to lastuntil this year, dooes this mean that the promoting of Istanbul by your Agencywill stop at the end of 2010? Is it posssible for your Agency to continue func-tioning in some way?The Agency for the Istanbul European Capital of Culture 2010 project was es-tablished in order to prepare Istanbul as the European Capital of Culture andto plan and manage the activities that are set to take place throughout 2010.The Agency is not a private entity and it has been legally formed by the GrandNational Assembly as a result of the collective work of experts from public andcivic organizations, local governments, and the private sector.This managing method of the Agency for the Istanbul European Capital of Cul-ture 2010 is a method that has not been used so far in other European Capi-tals of Culture. This method is receiving appreciation in Europe not only be-cause it’s a first but also due to its structure and it is being monitored with gre-at interest. The goal of the Agency for the Istanbul European Capital of Cultu-re is to create permanent values in Istanbul through sustainable projects andto maintain the mission of being a cultural capital.Aside from the question of whether the Agency might continue to function af-ter 2010, what we pay attention to the most when selecting our projects iswhether they’re sustainable or not. Our new arts and culture projects; resto-ration and preservation projects; and our communication and promotion pro-jects abroad which aim to categorize Istanbul as a cultural venue in the inter-national arena are still continuing to be implemented.!

re. Actually Istanbul has all the necessary infrastructure for that because Is-tanbul does not only rhetorically bridge Asia to Europe but at the same timetruly connects the east with the west; the old with the new; the traditionalwith the modern; mysticism with science; magnificence with modesty; dogmawith pragmatism; and the universal with the local.

Since the Istanbul European Capital of Culture 2010 project is limited to lastuntil this year, dooes this mean that the promoting of Istanbul by your Agencywill stop at the end of 2010? Is it posssible for your Agency to continue func-tioning in some way?The Agency for the Istanbul European Capital of Culture 2010 project was es-tablished in order to prepare Istanbul as the European Capital of Culture andto plan and manage the activities that are set to take place throughout 2010.The Agency is not a private entity and it has been legally formed by the GrandNational Assembly as a result of the collective work of experts from public andcivic organizations, local governments, and the private sector.This managing method of the Agency for the Istanbul European Capital of Cul-ture 2010 is a method that has not been used so far in other European Capi-tals of Culture. This method is receiving appreciation in Europe not only be-cause it’s a first but also due to its structure and it is being monitored with gre-at interest. The goal of the Agency for the Istanbul European Capital of Cultu-re is to create permanent values in Istanbul through sustainable projects andto maintain the mission of being a cultural capital.Aside from the question of whether the Agency might continue to function af-ter 2010, what we pay attention to the most when selecting our projects iswhether they’re sustainable or not. Our new arts and culture projects; resto-ration and preservation projects; and our communication and promotion pro-jects abroad which aim to categorize Istanbul as a cultural venue in the inter-national arena are still continuing to be implemented.!

The ‘Tall and Noble Sails Festival’ wasorganized with the helpof the TurkishChamber of Shipping on May 27-30.

This year between July 5-7, The Agency heldthe second bi-annual Istanbul InternationalBallet Competition.



ABOUT THE AGENCY FOR ISTANBUL EUROPEAN CAPITAL OF CULTURE 2010ability being the primary one and 605 of these projects have beenselected for the year 2010. The Agency aims for all of the projects tobe sustainable after 2010.

About 214 of the projects that were carried out under the UrbanPractices, Preservation of Cultural Heritage, and Arts, Culture, andTourism programs have been started; 224 additional ones are inprocess; and 172 more projects will take place during the followingphases. The allocated budget for the year 2010 was 60% for the UrbanPractices and Preservation of Cultural Heritage and 40% for the Artsand Culture Projects.

The Agency for Istanbul European Captial of Culture 2010 Project wasformed over the past three years with the collective efforts of civilsociety organizations, central and local governments, and the privatesector in order to preserve and promote the cultural legacy thatIstanbul already has and to advance its potential in the fields of artsand culture.

The Agency is creating, shaping, and implementing projects, step bystep, through its 13 different Boards. The 3000 project proposalswhich we have received since the launching of the Agency has beenevaluated in accordance with several different criteria, with sustain-

One of the world’s most successful pianists, David Helfgott, introdu-ced Rahmaminov to the music lovers of Istanbul through the con-certs that took place on April 6 and 8. And the ‘Istanbul Chopin Pia-no Weeks 2010,’ which was arranged from April 11 to May 9, was anot-her significant musical activity.

The ‘Tall and Noble Sails Festival’ was organized with the help of theTurkish Chamber of Shipping on May 27-30.

Another sports activity that we supported was the World Rally Cham-pionship Turkey round, which was held between April 15 and 18 andwas internationally accredited.

The ‘Living and Working in Istanbul’ project, which was organized inorder to gather seven modern artists together in order for them toproduce a piece dedicated to Istanbul and meet with the young ar-tists living in Istanbul, took place in February under the leadership ofAustrian artist Peter Kogler.

The Spanish artist Antoni Muntadas, who completed his work task in2009, exhibited his work, which was previously displayed in three ci-ties including Istanbul, at the Tophane-i Amire Culture Center.

The Agency’s Visual Arts Board established the Kadirga Art Pro-duction Center and enabling young artists to work with the interna-tional modern artistic community at this center, also brought to li-fe the ‘Art Port’, a venue that contributed greatly to the culture ofIstanbul. The 3600 square meter area of the Art Port, which theAgency operate in order to advance the increasing public exhibiti-on site capacity of Istanbul, will host various exhibitions and activi-ties until the end of 2010 for the residents of Istanbul.

This year between July 5-7, we held the second bi-annual Istanbul In-ternational Ballet Competition, which it is first started in cooperationwith the State Opera and Ballet General Directorate in 2008.

With the help of the State Opera and Ballet General Directorate, theAgency organized the first ever Opera Festival in Istanbul, on July 5-7.

University-wide Theater Festival, which has been taking place since2008, continued annually in Istanbul universities, as well as in othersin Turkey and Europe.

The Agency published many publications and documents related tothe fields of arts and culture. They supported artists by displayingtheir pieces and performances to the public.

PROMINENT PROJECTS OF THE AGENCY The main comprehensive restoration projects in the Hagia Sophia Mu-seum and in the Topkapi Palace.

The restoration of the Yeni Kapi Theodosius Port ruins, which reflectsthe 8500-year-old history of Istanbul, in a manner that is complemen-tary to the environment.

Accelerating the restoration process of some of other cultural herita-ge sites, such as the Galata Temple and the Gazanferaga Madrasa.

Through the exhibitions that were displayed in the Topkapi Palace, theAgency was able to present selected pieces from the Persian Civiliza-tion and the Moscow Kremlin Palace.

The opening of another exhibition, called ‘Treasures of the OttomanSultans from the Topkapi Palace,’ in Kremlin Palace on May 25th ma-de it possible to present the historical pieces that are preserved in twoimportant palaces, where the decisions that shaped world history we-re made.

The exhibition, called ‘Legendary Istanbul from Byzantine to Istanbul:The 8000 Year Long Journey of a Capital City’, was organized in Junein cooperation with the Sabanci University’s Sakip Sabanci Museum.

As part of the Agency’s projects under the Stage Performance Arts Di-rectorate, the ‘Dance Platform Istanbul’ program was carried out. Aspart of this program, the English choreographer Akram Khan and livinglegend of ballet Sylvie Guillem performed between April 21st and 23rd.

The European University’s Theater Festival, which took place on May2-16, and the 13th International Istanbul Puppet Festival, which was sta-ged on May 5-16.

The place that captured attention during the ‘Spring at Haydarpasa,’which took place on June 3-6, was the Haydarpasa station.

The dance which Pina Bausch, one of the leaders of the German Dan-ce Theater movement and the infamous modern dancer, had initiallyprepared by being inspired by Istanbul and named ‘Breath,’ was per-formed at the Muhsin Ertugrul Theater on the anniversary of Bausch’spassing on the dates June 21, 22, and 23.

The great contemporary Estonian composer Arvo Part’s most recentplay, called ‘Adam’s Outcry’ was performed at the world’s widely re-nowned Aya Irini Museum with the organizational help of the Agencyand the city offices of Tallinn, which will have the title of European Ca-pital of culture next year.

''Music Stops'' street festival took place in June21, at the World Music Days.

With the help of theState Opera and BalletGeneral Directorate, theAgency organized thefirst ever Opera Festivalin Istanbul, on July 5-7.

The Ali Ufki Year Concerts in Dolmabahçe PalaceMedhal Hall. Ali Ufki (1610–1675) was a Polish

musician and dragoman in the Ottoman Empire.

'2010 World Chopin Year' celebrations startedwith world famous Turkish pianist Gulsin Onayin April 11.

Renown arp artist fiirin Pancaro¤lu will be per-forming at Cemal Reflit Rey Concert Hall in

December, 10.

The main comprehensive restoration projectswere completed in the Hagia Sophia Museumand in the Topkapi Palace.


Hundreds of people visited the “The Morning LineContemporary Music Sonic Festival” on 22 to 25 May.

The place that captured attention during the‘Spring at Haydarpasa,’ which took place on

June 3-6, was the Haydarpasa station.

Opera Festival in Istanbul

The Agency is creating, shaping, and implementing projects, step by step,

through its 13 different Boards.


volume 8 issue 36 - immib special issue

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