Doing Business In Turkey

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Best Practice and Managing Risk

World business Guide

Finding a Customer or Partner

Once you have identified where you would like to start and the best market entry option for your company, the next step is to find potential customers or partners for your company.

The following are all equally effective ways of finding potential customers, partners or agents/distributors:

  • Commission a UK Trade & Investment Overseas Market Introduction Service (OMIS) workplan for a tailor-made list of potential customers/partners. A programme of meetings with these potential customers/partners can also be arranged when you visit Turkey.

  • Attend trade shows and exhibitions. Numerous trade shows and exhibitions take place in Turkey throughout the year and these can be an excellent way to meet potential customers face to face.

  • Take part in a UK Trade & Investment-supported trade mission. A number of trade missions to Turkey are organised by trade associations and local chambers of commerce.

In addition, the approaches below are suitable for companies whose objective is exporting:

  • Advertise in professional newspapers, magazines and journals. This can be beneficial for high-tech companies with leading edge solutions, but less effective for companies without a technical background.

  • When in Turkey hold a technical seminar or product introduction meeting to attract potential customers. You will need to involve a local consultancy or public relations firm to recruit an appropriate audience.

Due Diligence

It is essential to thoroughly check out your potential partner before agreeing to anything. However, Turkey is not like the UK - it is not possible to carry out a UK-type fully comprehensive due diligence check on a Turkish company, so building up an accurate picture of them presents something of a challenge.

There are different levels of due diligence that are appropriate for different situations. If your sole interest is in exporting, the best proof of a Turkish company's ability to pay is whether it is able to raise a letter of credit from the bank. If so, you do not need to check the company's financial standing as the bank will have already done so, although the reliability of this may depend on who their bankers are.

If you want to establish a business relationship that goes beyond exporting, you will need to carry out further research.

A thorough evaluation of your potential partner may be time-consuming and expensive, but doing so will greatly reduce the risk of serious problems in the future.

www.ukti.gov.uk has lists of consultancies based in the UK and Turkey, many of which provide due diligence services.


Marketing

Trade shows, exhibitions and advertising have already been mentioned as ways of meeting potential customers, but you still need to persuade them to buy your product. You will need to ensure that your sales literature is effective in English and Turkish and whether advertising is appropriate. We recommend that you involve a specialist consultancy that can develop a marketing strategy appropriate to your product and the areas of Turkey it will be sold in.

You may need to adapt your product to meet Turkish preferences or requirements in order to be able to sell it. Ignoring local regulations, tastes and cultural preferences is a recipe for failure - it's hard to sell a left-hand drive car in a right-hand drive country!

Cultural issues relating to marketing

Turkey is a secular country with a predominantly Muslim population, so care should be taken to ensure that this is considered when approaching the market.

Awareness of Islamic holidays and attitudes to sensitive issues will help you to understand your customer and your business partner.

Many Turkish businesses are owned by more secular Turks, particularly in western Turkey, in Istanbul and around the Aegean region. These often equally devout Muslims keep this aspect of their lives separate from their business lives. They will have a more tolerant view of alcohol and will often be more western in outlook.

In the more conservative east of the country, marketing material should be sensitive to the possibility of giving offence when not intended. It will not be obvious always that your Turkish partner is either a secular or conservative Muslim, so getting to know them will be important.


Language and Branding

Language

English is widely taught as the primary foreign language in most statesponsored secondary schools. While it is not as widely spoken as in the business communities of Western European countries, the importance of English as a language of business is widely recognised, and the influx of English-language teachers is evidence of an increasing demand for the language. Most international and a growing number of domestic businesses will have at least one member of staff who will be able to speak English, and there are a number of English language newspapers published in Turkey.

It is always recommended to attempt to learn a few key phrases when visiting the country. Even the most rudimentary attempts to converse in the local language will be greatly appreciated and may add that much needed distinction to your business dealings.

Branding

Awareness that intellectual property is difficult to protect in Turkey makes the defence of a company's brand more important.

Registering your brand or trademark in the United Kingdom (UK) does not protect it in Turkey.

You can protect your trademark in other countries by using the Madrid Protocol via the World Intellectual Property Organisation (WIPO). To get protection in individual countries you must make a separate application to each country.

A list of Turkish translators and interpreters can be downloaded from www.ukti.gov.uk


Day to day communications

Turkish businesspeople expect regular contact from their business clients and friends. You should devote a proportion of your time to developing and maintaining a good relationship with your Turkish partner. It is important to understand your partner, and time taken getting to know them is time well spent.

Turkey is only two hours ahead of UK time. Modern telecommunications and IT work well there and it is relatively easy and costeffective to visit the market.


Intellectual Property Rights (IPR)

Entering the Turkish market poses some challenges in ensuring that your intellectual property rights are protected. For example, pirated software is a serious problem: almost 64 per cent of the entire software sector is illegal. There are also problems with protection of copyrights and with branding. While the overall framework for intellectual property law is improving,

Turkey is considered one of the most problematic countries in the world as far as enforcement of intellectual property rights legislation is concerned.

Intellectual property rights are territorial, that is they only give protection in the countries where they are granted or registered. If you have only registered in the United Kingdom (UK) this may allow others to use your IP abroad without infringing your rights.

If you are thinking about trading internationally then you should consider registering your IP rights abroad.

The UK is a member of many international agreements where the national law of each country automatically protects copyright work falling within the scope of these agreements.

You should mark your work with the international © symbol, followed by the name of the copyright owner and year of publication.

Applying for a patent in the United Kingdom does not protect your invention elsewhere.

You can protect your invention in many international countries using the Patent Cooperation Treaty (PCT) through the World Intellectual Property Organisation (WIPO).

You can apply through the Intellectual Property Office (IPO), the European Patent Office (EPO) or WIPO.


Certification and Standards

Turkey generally applies European Standards to all products imported into the country. There is also relatively widespread use of ISO standards.

Some imported goods into Turkey require health certification, particularly sanitary equipment, medical equipment and equipment involved in the preparation of food. British companies can obtain the relevant documentation from the Health and Safety Executive (HSE) or in the case of non-healthcare equipment a Certificate of Free Sale may be obtained from BERR (Department for Business, Enterprise & Regulatory Reform).

Most goods exported to Turkey can benefit from the EU free-trade agreement with Turkey. Goods which are accompanied by an A.TR certificate and are of EU origin do not have to pay an import tariff. These may be obtained at a cost from a local Chamber of Commerce or the Turkish British Chamber of Commerce.


Getting Paid

Short-term finance

When exporting to Turkey normal commercial rules should be followed, and you should discuss the arrangements for security of payment with the international department of your UK bank, the UK offices of Turkish banks or UK-based banks that have offices in Turkey.

If you are a first-time exporter to Turkey the standard method of receiving payment for your goods is by documentary letter of credit. The opening of the documentary letter of credit is based on the contract signed between the Turkish buyer and the foreign seller.

There are no problems regarding letters of credit opened by Turkish banks being accepted by foreign banks. The Turkish bank will make payment provided that the requirements of the letter of credit are met.

However, be aware that a letter of credit is a form of contract between two banks. A bank will make payment provided that the documents submitted to it are in strict compliance with the conditions of the letter of credit. This is regardless of the purchase contract. To prevent the possibility of a payment being made if the terms of the purchase contract are not met, the seller should check the letter of credit against the terms of the purchase contract and request amendments from the buyer.

Further information on securing payment and dispute resolution can be obtained from www.ukti.gov.uk

Open Account and Bills for Collection are other payment methods commonly used between UK exporters and Turkish importers when a trustworthy relationship between the two parties has been developed. Major exports and those requiring long-term finance will require specialist payment and financing.

Regulations regarding exchange control and remittance of currency have to be strictly adhered to by the Turkish importer, so the UK exporter will have to ensure that correct documentation is supplied to their customer. There have been a number of reported instances of major problems being encountered due to insufficient or incorrect documentation.

Any agency payments would normally be expected to be paid out of the proceeds of sale.


Pricing and Insurance

Pricing

Turkish companies accept pricing in Turkish liras (YTL) or euros. It is possible to suggest pricing in sterling but that puts the exchange risk onto your Turkish partner. In recent years the Turkish lira has been stable but inflation is rising again and your customer may be interested in exploring other currency options.

Insurance

The private sector provides credit insurance for exports of consumer goods, raw materials and other similar goods. Speak to your banker or insurance broker for more information, or contact the British Insurance Brokers' Association (BIBA) for impartial advice. Its details are as follows:

British Insurance Brokers'
Association
14 Bevis Marks
London EC3A 7NT

Tel: +44 (0)870 950 1790
Fax: +44 (0)20 7626 9676

Email: enquiries@biba.org.uk
Website: www.biba.org.uk

However, private sector insurance has some limitations, particularly for sales of capital goods, major services and construction projects that require longer credit packages or are in riskier markets. The UK Export Finance Department, a separate government department that reports to the Secretary of State for Business, Enterprise & Regulatory Reform, provides a range of products for exporters of such goods and services.

Its details are as follows:

UK Export Finance Department
PO Box 2200
2 Exchange Tower
Harbour Exchange Square
London E14 9GS

Tel: +44 (0)20 7512 7000
Fax: +44 (0)20 7512 7649

Email: help@ecgd.gsi.gov.uk
Website: www.ecgd.gov.uk


Bribery and Corruption

Anyone doing business in Turkey is likely to encounter or hear of corruption in one form or another. Historically, practices such as facilitation payments, bribes and giving and receiving expensive gifts in order to develop relationships were often regarded as a normal part of doing business. This is still the case in some areas, although the level of corruption varies according to sector, type of business and region. However, the general perception is that the situation is improving.

UKTI advice to companies encountering corruption is simple - don't get involved. Not only are there issues of business integrity to bear in mind, but it is also, of course, illegal. The Turkish Government is keen to crack down on corruption and penalties can be severe.

In addition, under the Anti-Terrorism, Crime and Security Act 2001, UK companies and nationals can now be prosecuted in the UK for acts of bribery or other illegal activity committed wholly overseas.

Information on key security and political risks which UK businesses may face when operating in Turkey can be found on UKTI's Overseas Business Risk - Turkey page: http://www.ukti.gov.uk/export/countries/europe/southerneurope/turkey/doingbusiness.html


Relationships

Scams and how to avoid them

Ensure that you carry out basic due diligence
checks before issuing a letter of invitation.

Too good to be true?

If you receive an apparently very attractive
order from Turkey (or indeed, anywhere else),
ask yourself: is this too good to be true? If your
product is a low-tech manufactured component
or other item easily made or provided overseas,
ask yourself why someone in Turkey would want
to import items which could probably be made
locally for a fraction of the price. If you are not
entirely sure, speak to your local International
Trade Adviser or contact the relevant Embassy
or Consulate-General, that will often be aware
of current scams.
Whatever you do, don't get on the plane without
carrying out appropriate due diligence checks.

The one overarching point to consider before doing business in Turkey is that business is personal. The key to any good business venture relies heavily upon a good personal relationship.

Although facts, figures and projected profit margins do go some way towards getting contracts signed and deals done, the relationship is crucial. Your Turkish counterpart will need to have trust in you, both as a person and a professional, and also like you on a personal level. This combination spells a long-term association.

Such relationships are built through spending time together, either over long meals or socialising. Chatting over shared interests helps build rapport and find common ground. Revealing personal information and showing an interest in your counterpart's life and family is also important.

 

 

 

Source - UKTI

 

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