The Leaders Of Outsourcing’s New Generation

It is the outsourcing producers who are today behind Turkey’s record-breaking US$105 billion in exports. According to the data from TURKSTAT, one quarter of all companies in Turkey are producing for others. The “new generation outsourcing” strategy is now the most effective way for companies to grow and develop their product range. Most of the companies which are strong in this field do not just produce for others. Large companies such as Vestel, Hayat Kimya and Ak Gıda also earn significant income from their own brands.

In Turkey, the word “outsourcing” has always had negative connotations. In fact, in the past it was outsourcing production which facilitated the growth of the Japanese economy. Today it is once again outsourcing production which is believed to be what is transforming countries such as China and India into giants. While in Turkey outsourcing is one of the most important production models facilitating export growth.

It was in the 1980s that Turkey first began to adopt the development model of exports based on outsourcing production. At the time, it was the textile and clothing sectors which led the way in outsourcing production. During the 1990s, this model became more widespread in the white goods and foodstuffs sectors. If there is a recent figure which demonstrates the scale of outsourcing production it is that, according to a survey by TURKSTAT, of the 11,311 workplaces active in manufacturing industry, 2,787 are involved in outsourcing. To put it another way, one quarter of all companies in Turkey are involved in outsourcing production. Istanbul Chamber of Commerce Chair Murat Yalcıntaş underlines the importance of outsourcing production in exports and notes: “Even if it is not possible to prove it through figures, there are analyses which suggest that 70 percent of our exports are through outsourcing.”

The Textile Sector Is The Leader
Textiles and clothing lead the way in terms of the companies which are involved in outsourcing production. The textile and clothing sectors are estimated to account for 8 percent of Turkey’s GNP. Based on this figure, they account for US$32 billion in production and US$20 billion in exports. 50 percent of exports of textiles and clothing are believed to be goods which have been produced for foreign brands. This suggests that outsourcing production is worth approximately US$10 billion. In terms of the largest outsourcing manufacturers in the sector, three names come to the fore. One of them is Yeşim Tekstil, which manufactures goods for world famous brands such as Nike, Gap, Banana Republic, Old Navy, Zara and Marks & Spencer. Hey Tekstil has exports of US$120 million, all of which comes from the goods it manufactures for brands such as Esprit, EDC, H&M, Tommy Hilfiger, Miss Selfridge, Levi’s and Calvin Klein.

Vestel The Biggest In Electronics
Vestel is one of the leading examples of how a company can pass from outsourcing production to growth, creating resources and then owning a brand… The success that Vestel has achieved on foreign markets is based on the many years it spent working on the market as an Original Equipment Manufacturer (OEM). In the last five years the company has exported over €10 billion to 103 countries and, in terms of exports, has been the market leader in its sector for seven years in succession. The company has a share of 20 percent of the European TV market. It has a share of 40 percent of the CRT TV market in Europe and is the market leader by a long way. In LCD TVs it ranks fourth with a market share of 11 percent. In digital products, the company has achieved a market share of 50 percent in the UK and 25 percent in Europe as a whole.

Automotive’s Powerful Industrialists
In the automotive sector, outsourcing production occurs in the supply industry. Automobile producers employ large supply industry companies to make nearly all of their spare parts. Here it is powerful producers such as Mako and Teknik Malzeme which come to the force. The automotive supply industry has been transformed since 1997-1998. Previously, it was dominated by entrepreneurs. But companies appeared which could transfer technology from abroad and serve as production bases for Turkish automotive giants such as Renault, Tofaş and Ford Otosan. As a result, many supply industry companies signed license agreements or formed partnerships and adapted to the system.

Foodstuffs Producers Grow Through Chains
Another of the sectors in Turkey in which there is a very high level of outsourcing is foodstuffs. Foodstuff outsourcing production is mostly for supermarkets’ own brands. There are many producers in the sector.  One of these powerful producers is Tekirdağ Un. The company produces for Metro, Real, Kiler, Aymar, Besler, Bizim, Carrefour, Diasa, Gima and Pm and earns 65 percent of its €15 million turnover from private label production for retailers.

The Major Players In Pulses
Pulses are one of the foodstuffs categories in which there is the most outsourcing production. One of the largest suppliers in this field is Sezon Pirinç. The company produces private label brands for nationwide organized retailers such as Tesco Kipa, Carrefoursa, Diasa and Şok. The Bingül Companies Group is one of the most important suppliers in pulses through its Berbak Gıda company and in tea through Hey Gıda. The company acquires 23 percent and 27 percent respectively from outsourcing production.

Özlem Aydın
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