Red tape restricts imports from China

Red tape restricts imports from China

Turkey’s trade gap with China has obviously widened in recent years. Turkey’s total imports from China are around $26 billion annually, whereas the volume of Turkish exports to China is less than $2 billion.

However, it is not fair to blame China for the imbalance. The Chinese economy, often dubbed the manufacturer of the world, has been racing to the top of the world economy with its technology and design power, which has replaced its imitation product industry.

In order to reduce the trade gap with China, Turkey has raised tariffs on several goods imported from that country since 2011. But those tariffs could not help much to decrease the volume of imports from China. In 2017, the share of China in Turkey’s total import volume was 10.2 percent and 9.9 percent in the first two months of 2018.

Manufacturers still find the most reasonable intermediate and manufactured goods in China. Garment producers and shoemakers have to complete their collections by buying from the Chinese market if they want to gain success in exports.

The Turkish Economy Ministry has informed exporters’ associations that more than 15 extra documents should be filed for imports from China starting from July 18.

Brand owners and producers have said it is another way of limiting imports on top of tariffs.

“They [Economy Ministry authorities] need to listen to us. Otherwise, we will suffer a huge blow,” they warn, pointing that the date July 18 is too early and agreements have already been made for plenty of orders.

Because of the increased red tape, the average time spent for customs clearance is expected to extend up to 25 days from three days, thus the pressure of cost on producers and retailers grows.

Obviously, the Turkish economy needs to grow and increase its exports. The annual volume of Turkish exports has reached $161 billion and the monthly increase in May touched 12.2 percent.

On the other hand, imports increase almost three times faster than the exports. That is the main reason behind the tariffs and other restrictions.

However, we need a serious strategy to deal with that problem instead, do we not?

Retailers take action

Meanwhile, the targets and calculations of businesses have to be revised due to the extreme upsurge in the exchange rates.

The Turkish Lira was at 4.65 against the United States dollar and at 5.41 against euro as of July 1. Keep in mind the rates have not fallen back significantly after the Central Bank raised interest rates 300 base points to 16.5 percent on May 23.

The depreciation of the lira, about 20 percent year to date, has stirred arguments between the retailers and the shopping mall owners again.

Retailers had demanded pegging the lira at 1.7 against the dollar and 2.2 against euro in 2013, when its value was around 2.0 against the dollar and 2.7 against the euro.

Bargains between local shopping mall owners and retailers have usually resulted in reconciliation. However, it was not the case with the foreign investor owners of the malls. No agreements had been reached between 130 of the 400 shopping mall owners and retailers.

The demands of retailers include capping rents, paying rents in local currency, and revoking charges in case of contract termination.

Restaurant owners in shopping malls have been planning action, such as taking down the shutters and turning the lights off.

Retailers have been considering some action too.

“We want correction in the deteriorated turnover-rent ratios and the right to early termination. Forcing a brand into a five-year contract diminishes its capital sharply,” United Brands Association (BMD) chair Sinan Öncel has said.

Actually, most of shopping mall owners are well aware of the situation. However, they argue that shopping mall investment agreements with banks have been made in foreign currencies and the time for return on investment is becoming longer.

China, Turkey, trade gap