A Guide to Expanding into Turkey

Turkey’s rapidly changing demographics, rising income level, increased consumer spending and an increasingly open business environment have made the country increasingly attractive to international businesses across a variety of industries.

Expanding into the Turkish market could be a difficult task for companies with limited or no experience of doing business in the country. The aim of this blog is to offer practical recommendations that can be integrated into a company’s Turkey market entry strategy and expansion plans.

1. Identify and assess the target market

Turkey is not a single homogeneous market.   Uneven rates of economic growth in different parts of the country have brought about many economic and social differences between different provinces.  There are certain variations between different regions in terms of population levels, average income levels, consumer spending habits, education levels and lifestyles.  Therefore, it is most important to identify the characteristics of the target market prior to entering the country as Turkey’s individual sub-markets are defined by vastly differing demographic, economic and cultural characteristics.

An effective market research conducted in the local language can give an insight into the size and features of the target market. This can also help understand the regulatory environment prior to making any decision to enter the market.

2. Identify and assess the potential competitors

A thorough qualitative and quantitative research conducted by interviewing leading industry experts and decision makers will help learn the competitive landscape of the market. The current competitive environment in the targeted industry will determine the level of differentiation and localisation of your products and services.

3. Develop a comprehensive market entry plan

Setting and refining market entry strategy based on an extensive research will improve the chances of a successful product or service launch in Turkey.  Market entry plan should be a comprehensive guide detailing the optimal mode of entry into the marketplace, it should list major action items and checklists as well as useful contacts, lists of competitors along with a comprehensive business plan detailing sales, marketing, distribution and operation strategies.

Market entry mode often depends on a number of factors, including industry landscape, the size and scope of the market, whether the company plans to manufacture locally or import its products directly.  When choosing most appropriate entry mode, a company should consider each of these factors, along with the overall costs of setting up a local entity and hiring local employees. They can choose to find a direct distributor or a dealer to sell their products in order to test the market initially, and then establish a new entity with a local partner to take advantage of local partner’s knowledge and existence in the country.

Choosing the right business structure is as much important as the choosing market entry mode as wrong choice of business formation can cost time and money. The most preferred business models in Turkey are Limited Liability Company and Joint Stock Company which differ from each other to a great extent in terms of capital requirements and taxation.  Directors, prior to company formation, should conduct an extensive research on different business models in Turkey and decide which form of structure best suits their long term goals in the country.