Turkey thinks it can finally export a luxury brand, can electric vehicles transform the country?
2022 is officially a rebranding year for Turkey, officially changing its name to Turkiye, and the country is taking many steps to project a new image abroad.
The past few weeks have been important for Turkey, as the security and stability of Europe and Turkey’s role in this picture have come to the fore. Turkey’s strategic geopolitical location ultimately gives the country more relevance as a bridge between East and West.
Major investments in mega-infrastructure are underway, the country opened the largest suspension bridge in the world, over the Bosphorus strait between Europe and Asia in March. Istanbul’s new airport is now the busiest in Europe and has quickly become the best in the world. Many of the world’s largest companies have noticed Turkey’s strategic location.
“The government has created a vision to make Istanbul a global financial center. If you don’t have the right financial architecture, you can’t create a world-class industry or investment,” said Burak Daglioglu, head of foreign direct investment for Turkey in Istanbul, during a meeting with journalists. in March.
Daglioglu says that due to trade wars and countries increasingly looking for diversification, Turkey feels strategically positioned to take advantage.
Recently, a group of Turkish politicians, businessmen and bureaucrats visited the United States to hold talks with State Department and Commerce Department officials to boost bilateral trade, particularly in the renewable energy sector.
According to Hurriyetdailynews, during the visit of the Turkish delegation, Turkish and American officials discussed the prospects of establishing new logistics centers and upgrading existing ones to increase trade between the two countries and facilitate more shipments. fast goods.
Turkey is well known for its logistics capabilities as companies like FEDEX Corporation FDXUnited Parcel Service Inc. UPS and DHL (Deutsche Post AG – ADR DPSGY are already benefiting from the incentives offered when relocating to Turkey, says the Investment Monitor. Amazon.com, Inc. AMZN also announced the construction of a $100 million logistics facility in Istanbul.
“Early-stage companies in Turkey saw $3 billion in foreign direct investment in 2021. The United States plays an important role here, as large American funds invest in Turkish startups, and fund managers have been more active in Turkey in recent years”, Daglioglu mentioned.
Foreign Direct Investment Program
Among the ultra-rich it is becoming popular to buy passports and Turkey has one of the easiest paths to citizenship.
Nuri Katz, founder of Apex Capital Partners Corp., a firm that helps people obtain citizenship through investment (CIP), said his firm is opening an office in Turkey due to demand.
Katz says it’s a relatively easy program. “Turkey is going to take advantage of every opportunity because it competes with every country for FDI, and a lot of Americans want to diversify.”
“Americans have become the next Klondike for citizenship by direct investment because they are very interested in it. Europe is dysfunctional in many ways, it’s incredibly expensive, taxes are incredibly high, and Turkey sees it as an opportunity to promote its investment product. There are a lot of positives and negatives about Turkey, but it’s a pretty moderate Muslim country, and it’s at the crossroads of a lot of different places,” Katz said.
Foreigners who buy real estate in Turkey worth at least $250,000 can obtain Turkish citizenship and a passport in less than 2 months, without ever having to set foot in the country.
According to Invest In Turkey, until 2002 foreign direct investment amounted to 15 billion dollars, but from 2003 to 2020 the country took in 225 billion dollars. In 2021, FDI in Turkey reached $14.2 billion, surpassing pre-pandemic levels.
“Our story of economic growth begins in the 1980s. In 2003, we saw the continuation of liberal free market policies. One of the first things Erdogan did was change the FDI law. Even more recent changes have made Turkey one of the most liberal economies in terms of attracting FDI,” Daglioglu said.
As a member of NATO, Turkey positions itself as a resolutely Western country and aligns its values with those of the West. So why is Turkey a member of NATO but not of the EU? Turkey’s deputy minister said the country wanted to join the EU, but it was stalled due to political instability.
“Between 1971 and 1980 we had 3 military coups in Turkey which really disrupted the process of democratization and created real difficulties for us and our relations with the EU. That is why we launched all these radical reforms. From 1999 to 2006, we almost completely renewed our constitution, legislated over 200 new laws and amended 300 laws. We have tripled our GDP thanks to new reforms which have really helped,” Deputy Trade Minister Riza Tuna Turagay said.
As the country’s GDP grows, Turkey believes it is ready to take another step towards becoming a global player.
“We’re underperforming in the US compared to the global market, so there’s huge potential there and the US wants to diversify its supply chain. In that regard, we have a competitive advantage.” said the Deputy Minister of Commerce.
“Our main message from Turkey to the United States is not to miss this opportunity because Turkey is a very attractive country for direct investors and we try to help foreign direct investors as much as possible, that’s what we try to do.”
Deputy Commerce Minister Riza Tuna Turagay speaks to reporters in Ankara, Turkey, March 24, 2022.
TOGG: The Turkish Tesla
But politics alone cannot trigger the economy. Turkey must do something innovative. Turkey is a textile, manufacturing and tourism hub and has a thriving automotive industry, best known for supplying auto parts.
“There is a trend that started during the pandemic, especially for European automakers, that they are placing Turkish suppliers in their supplier base as an alternative to the Far East or other regions. They have seen that China is making its domestic market a priority, even if they can get the product, they can’t get it competitively,” said Albert Saydam, President of TAYSAD, Automotive Suppliers Association of Turkey. .
As the 13th largest automaker in the world, Turkey has a long history of automobile production despite not having a well-known brand. Turkey believes that its history as an auto parts supplier will help give the country a strategic position to finally export a luxury car.
TOGG, the country’s electric car project, is an ambitious $3.6 billion project to create a global brand, something the country has been trying to do for more than 60 years. Turkey brought together five of its largest manufacturers, all with a 19% stake, to build the first car ever made 100% in Turkey.
TOGG made its global debut at CES in Las Vegas earlier this year and its design received favorable reviews. TOGG says what happened with smartphones will happen to mobility, where developers will be key to the continued evolution of the product.
“We want to create an open and user-centric mobility ecosystem. We can’t do everything ourselves in-house, so we are a development platform, for those who want to join us and produce services and products, similar to the App Store,” said Talin Yildiz, Marketing Director of TOGG.
The government provides the land, incentives and has guaranteed the purchase of 30,000 TOGG vehicles over the next 10 years. The company hopes to become the nation’s pride as the company’s first vehicle is set to launch in 2023.
“This country has wishful thinking, we have great aftermarket businesses, but we still don’t have a brand. With electric technology, this investment will be very important not only for Turkey but also for the region, because otherwise we will depend on China,” the CMO added.
Yildaz says TOGG hopes to be listed on NASDAQ in the future.
Former Deputy Prime Minister Cevdat Yilmaz said he believes Turkey is not behind in the rush to electric vehicles and has aspirations for the impact that a transformational company can have on the economic well-being of the country.
“It’s a public/private partnership that has created great excitement. The government is giving full support to this sector because we believe that Turkey has caught the trend of electric vehicles. Historically, we couldn’t produce (but) we let’s not delay entering this market and we expect a lot. It’s not just about producing a car, it’s a driving force for new software technologies for Turkey,” Yilmaz said.
“We are a middle income country and we are in a middle income trap. This is one of the projects that will help us overcome this trap as a middle-income country into a high-income country. We’ve gone from low tech to medium, and now it’s time to go from medium tech to high tech. In some critical industries, we expect our technologies to take us to the next level,” he said.
“One of the most advanced projects in the world”
Turkish car manufacturer Karsan Otomotiv Sanayii Ve Ticket AS KARSN is another notable brand with a strong focus on electric, hybrid and connected public transport. Shares of the company have already gained 50% since the start of the year.
Karsan competed for a $6 billion USPS project to create electric and hybrid mail delivery vehicles, but the deal was ultimately awarded to U.S. manufacturer Oshkosh Corp. OSK. The company is nevertheless confident that it can enter the US market, as it has partnered with Michigan State University, for its level four autonomous e-atak bus. Karsan calls his self-driving car project one of the most advanced in the world.
“To be present in the United States, we know what to do. The real value we create is with our own brand and the focus is on urban transportation. The primary objective is to maximize our use of contract manufacturing with major brands to create value for our own technologies. For our own brand, we create end-to-end products,” said Karsan CEO Okan Bas.
Whether or not we’ll see a Turkish brand finally hitting the US market in a substantial or even noticeable way remains to be seen, but the country is adamant about the prospects it offers businesses and investors.
“We offer the ideal geographical location to reach Africa, Asia and Europe, these are fundamentals that we will continue for a long time,” Daglioglu said.