Old foreign companies thriving in Turkey but no newcomers

Old foreign companies thriving in Turkey but no newcomers

As Denmark’s new envoy was preparing to present his letter of credentials to President Recep Tayyip Erdoğan last October, he wanted to inquire about the possible messages he might hear from Turkey’s top representative. 

Svend Olling was reminded of Erdoğan’s highly critical rhetoric against the European Union and European countries. 

But instead it was bilateral trade ties that Erdoğan was more eager to talk about. He reiterated the aim of the two governments to double trade.

Before Olling recounted his meeting with Erdoğan at a reception in Istanbul last week, Denmark’s consul-general, Jesper Kamp, said Danish trade to Turkey had increased by 26.3 percent.

“We do not yet have the final numbers for service exports for all of 2016, [while] the last quarter of exports of goods is still missing. However, the estimate is that the overall goods and service export from Denmark to Turkey will grow by 24.1 percent in total for 2016,” he wrote to me when I asked him to provide me further data.

Just before the two took the floor to make their speech, I was having a conversation with Oğuzhan Saygı, the managing director of Autorola Turkey. Autorola is a Danish company specializing in online remarketing and automotive IT solutions for professional used car and fleet management. 

Saygı wrote a letter to the headquarters in Copenhagen and suggested that they do business in Turkey. Two months later, he got a letter from the CEO expressing interest. That was in 2013, when the popularity Turkey enjoyed in the late 2000s had started to take a downward trend. Saygı and Autorola conducted their initial talks under the shadow of the Gezi Park protests, were thousands all over Turkey took to the streets to protest the government. 

“The Turkish economy has not been doing that well since then; how is business? How many people are you employing?” I asked. “Turkey has been the only country where the company registered growth. We have 80 employees in Turkey,” he said.

That is some achievement when the company’s website say they have 350 employees and subsidiaries in 19 countries across Europe, North America, Latin America and Asia-Pacific. The company has not witnessed a similar success elsewhere; on the contrary, it has run into some difficulties in some other emerging markets, according to Saygı.

“What happened during the failed coup? What’s their outlook?” I asked him. He said he asked the same question right after the coup and the answer he got from the headquarters was along the lines of “other players will be reluctant to come, so go ahead at full speed.”

This pretty much summarizes the picture. Those foreign companies already settled in Turkey are doing fine, if not thriving. But the problem is with the newcomers.

Another European diplomat told me that their companies already established in Turkey were increasing their market share, but that it was impossible to arrange a meeting to lure potential newcomers as the interest was so low.

A veteran economist was recounting an encounter he had with the representative of a foreign company who spent the first half of the meeting praising how happy they were doing business in Turkey. Praising the level playing field, the person, however, did inquire as to whether this could change and whether they could face discrimination due to President Erdoğan’s anti-Western rhetoric.

The answer of course lies in the Danish envoy’s meeting with Erdoğan, who uses anti-Western rhetoric for domestic consumption but prefers a business-as-usual approach behind closed doors. 

“It is not a good sign that some old established companies in Turkey might start having second doubts,” said the veteran economist.

“Until a few years ago, we were talking solely about economic factors; now we talk about political factors while talking about the economy,” Murat Sağman, another economist, had told me.

Interestingly, three of the four indicators that Olling said would determine the path for Turkey – as well as the indicators that he said he would be looking for in 2017 – are political: apart from the economy, he will be observing any lifting of the state of emergency, the coming constitutional referendum and the security situation.