Turkey Manufacturing Center
Located at the intersection of Europe, Asia, the Middle East, and Africa, Turkey has long been regarded as an important strategic hub for global trade, logistics, and manufacturing. Turkey has established a customs union with the European Union and has concluded free trade agreements with nearly 30 countries, allowing it to sell goods to approximately 900 million consumers without tariffs or preferential tariffs, and its economic and trade position is more stable.
At the same time, Turkey’s "Middle Corridor Initiative" program is linked to China’s "the Belt and Road" initiative. Also, Turkey provides several generous investment incentives. For Hong Kong companies or other foreign companies interested in trading and investing locally, The attraction is increasing day by day, especially as the current Sino-US trade dispute continues. Many manufacturers are looking for other business opportunities or intending to relocate their factories to reduce the impact.
The Chinese mainland recently lowered import tariffs to transform into a consumer economy, which also brought Hong Kong companies a good opportunity to do business with Turkey. Many Turkish businesses hope to make good use of the opportunity of easing import controls to further expand the Chinese market.
Turkey's "Middle Corridor Initiative" project is in line with China's "the Belt and Road" initiative, and it has achieved initial results. The Caspian International Transport Route is an example. The passage spans Southeast Asia, Central Asia, and the Caspian Sea, and is the shortest land passage connecting China and Europe. It is the core of the Trans-Caspian International Transportation Channel. It was opened in October 2017. It starts from the Caspian Sea in Azerbaijan, runs through Georgia and eastern Turkey, and then connects with the Turkish and European railway systems.
As far as Asian cargo is concerned, if it is to be shipped to Europe, Africa, and the Middle East, the trans-Caspian international transport channel is not only a shorter land channel but also safer and cheaper. This corridor is 1,500 kilometers shorter than the China-Mongolia-Russia Economic Corridor and is less affected by extremely cold weather. At present, freight trains departing from northwestern China can reach the Black Sea coast and Turkey in only 8 to 14 days, but if the cargo is transported by sea, it may take as long as 60 days.
Turkey is also actively improving and developing new shipping logistics infrastructure, especially in İzmir. Known as the Pearl of the Aegean Sea, Izmir is the country's third-largest city in terms of population and the location of North Aegean Çandarlı Port. After the port is completed, it will become one of the ten largest seaports in the world, with an annual cargo handling capacity of up to 12 million 20-foot standard containers (TEU), which is expected to increase Turkey's cargo handling capacity by 70%.
The Turkish government has set an aggressive goal to develop the country into an economy with a gross domestic product (GDP) of US$2 trillion by 2023. Therefore, it has vigorously promoted infrastructure construction to lay a solid foundation and make economic development more dynamic. Surging. Istanbul’s new airport is one of the many infrastructure projects in Turkey. It replaces the existing Ataturk Airport. It is expected to carry 200 million passengers per year, almost twice that of Hartsfield-Jackson Atlanta International Airport, which has the highest passenger traffic in the world. It is expected to become the world’s largest airport. Busy aviation hub.
The Turkish government also plans to complete the construction of a high-speed railway with a total length of 11,700 kilometers by 2023, connecting 41 cities across the country, making the scale of local railway construction second only to China. Turkey currently has 3,500 infrastructure projects in the development or planning stage. Among them, Kanal Istanbul connects the Black Sea with the Marmara Sea and is another waterway outside the Bosphorus; Yavuz Sultan Selim Bridge, with two railway tracks and 8 traffic lanes, is the world's longest, tallest and widest suspension bridge. Other important projects include the Eurasian Continental Tunnel, Istanbul Financial Center, and the connection between Istanbul and Gebze‑Izmir Motorway Project. Besides, many cities in Turkey are also carrying out various construction projects and urban renewal projects with a total value of more than 200 billion US dollars.
The Turkish government hopes to attract US$350 billion in foreign investment through public-private partnerships as capital for infrastructure projects. Turkey has so far completed 225 public-private cooperation projects with a total value of approximately US$135 billion.
The continuous development of the Turkish economy and the rapid improvement of transportation have attracted international manufacturers interested in relocating production activities to the local area for development. To find tight opportunities, the Turkish government actively encourages foreign export-oriented companies to engage in production activities in 19 Free Zones, 322 Organised Industrial Zones, and 56 Technology Development Zones.
Aegean Free Zone (ESBAŞ) is located in Izmir. With its advantageous geographical location, coupled with tax, legal, and tariff preferences, it has attracted more and more international manufacturers to invest in the region to develop business in Turkey and surrounding areas. The Aegean Free Zone has nearly 180 investors and tenants, mainly engaged in food processing and packaging, automobiles, machinery, information technology, medical equipment, textiles, electronics, and electrical, aviation, avionics, and aerospace industries.
Turkey and China cooperate
Turkey is an important part of the ancient Silk Road and a key partner of the Silk Road Economic Belt and the Maritime Silk Road. The cooperation between Turkey and China has been increasing long before the "Belt and Road" initiative emerged. In 2010, Turkey built a high-speed railway to connect the two cities of Edini and Kars, and China provided 28 billion US dollars in loans, which played an important role in project financing and construction. Besides, China and Turkey have joined hands to build the Istanbul-Ankara high-speed railway.
In 2015, a Chinese joint venture acquired a majority stake in Kumport, Turkey's third-largest container terminal. The port is close to Istanbul, which is Turkey’s largest city and main trade center, accounting for more than half of the country’s total trade, and a transshipment hub for goods transported via the Black Sea and the Mediterranean. In recent years, the investment and development of Piraeus, the largest port in Greece, have been vigorously, and the above investment has formed a natural synergy with this.
The increasingly close cooperation between China and Turkey can ensure better coordination between the Trans-Caspian International Transport Channel and the various nodes of the Maritime Silk Road. At the same time, it will further consolidate the advantages of Turkey and its surrounding regions and give full play to the Asian shipping gateway to Central and Eastern Europe. effect.
Turkey will continue to vigorously promote infrastructure construction and upgrading plans, and make full use of improved logistics facilities to strengthen its role as a regional manufacturing powerhouse. Taking advantage of the rising domestic and foreign demand, Turkey will expand its industrial park network and increase local production capacity. Under the influence of the Sino-US trade dispute, many Hong Kong manufacturers are considering relocating their production activities, and the development of Turkey has brought them a good opportunity.
To attract foreign investment, Turkey has launched one of the best investment incentives in emerging economies, including the "Investment Project Preferential Program." According to the plan, investment projects that can ensure sufficient supply of goods and services with insufficient local production, and enhance local technological capabilities, scientific research achievements, competitiveness and value-added capabilities of production activities, etc., and the investment amount is not less than 100 million US dollars, It is eligible to apply for a variety of investment incentives. Investors can customize the preferential portfolio to make investment more practical and rewarding.
There are other types of preferential investment programs in Turkey, in line with investment scale, region, industry, and products, and provide appropriate support measures, including value-added tax exemption, tariff exemption, tax concessions, social security payments (employer contributions) subsidies, and loan interest Funding, land allocation and value-added tax refunds. If the investment is located in the least developed region of Turkey, it can also receive income tax withholding exemption and social security (employee contribution) subsidies. Besides, some large Chinese banks have now settled in Turkey and can assist Hong Kong companies interested in developing there.
The trade between Hong Kong and Turkey has grown rapidly. In the first nine months of 2018, Hong Kong’s exports to Turkey increased by 15% year-on-year to US$775 million, which was higher than the 9% increase in total exports recorded by Hong Kong in the first three quarters. The most popular products in Turkey include telecommunications equipment and parts, computers, electrical appliances for circuits, semiconductors, and electronic tubes, and other electronic and electric products, as well as watches, toys, games and sports goods, jewelry and pearls, as well as precious and semi-precious stones.
In terms of Turkish exports, the country is currently the seventh-largest agricultural producer in the world, and it is increasingly becoming one of the world's major agricultural products suppliers. In 2017, hazelnuts sold in Turkey accounted for more than 75% of the total global market, and locally produced nuts, figs, and olive oil were exported to as many as 140 countries. Other popular food and beverages include premium tea, wine, honey, dairy products, and seafood.
Turkey is also the world's fourth-largest supplier of textiles, famous for towels, home accessories, curtain fabrics, and bedsheets. The country is also Europe's leading producer of televisions and white goods. For example, refrigerators are exported to more than 160 countries.
Online sales potential
Online sales account for only 3.5% of total retail sales in Turkey. In other words, the country's online market has huge development potential, which needs to be explored by global e-commerce players.
Besides, Turkey has a great demand for professional services and innovative business models. Hong Kong companies have performed well in these two areas and can find plenty of business opportunities there. Turkey has a large number of huge infrastructure projects. In addition to requiring a large number of project funds and financing, there is also a great demand for other professional services, such as project evaluation and consulting, engineering, construction, logistics, information and communication technology, and marketing.
Advantages of the Turkish manufacturing market
• Establish a customs union with the European Union and sign free trade agreements with nearly 30 countries
• The workforce is young and can speak multiple languages
• Continuous improvement of onshore and offshore logistics infrastructure
• The domestic market is relatively large, and the number of young middle-class people who use technology is increasing
Disadvantages of the Turkish manufacturing market
• High inflation and currency devaluation
• Regional geopolitical risks and terrorism
Suitable industries in Turkey: electronics and electrical appliances, textiles, garments, auto parts, processed food
• Turkey is located at the intersection of Europe, Asia, the Middle East, and Africa. It has always been a strategic global trade, logistics and manufacturing hub
• Import substitution industries such as machinery, transportation equipment, and chemicals can enjoy government preferential measures, including value-added tax and tariff exemption, social security, and interest rate support, and land allocation
Free trade zone and preferential measures
• There are 19 free trade zones throughout Turkey, and two major investment incentives such as "Investment Incentive Programme" and "Project-Based Incentive Scheme" have been launched to provide enterprises with different incentives
• Free trade zones provide exemptions from value-added tax, customs duties, and stamp duties. Manufacturing companies can be exempt from corporate income tax
• Local and overseas investors can enjoy various support measures under different projects according to investment scale, region, industry, and product.
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