The Unbeatable Local Champions

The increase in the inflow of foreign capital in recent years has triggered  a number of discussions. There are different opinions about the level of foreign investment, why it has come and what it has changed. Indeed, in some areas there are fears that foreign capital poses a threat to local companies. However, in some sectors there are companies which have succeeded in outstripping multinational global giants. Most have begun to apply pressure to companies which are giants in the global arena.

The concept of globalization appeared in the 1970s. When customs barriers were lowered and markets opened up to foreign investment, many major companies began to come under pressure in their own markets and try to discover new markets abroad. Over the last 20 years in particular, Turkey has also been affected by this trend. When multinational giants entered developing countries such as Turkey, then the local players were expected to retreat or be squeezed out of the market. However, in some categories, contrary to expectations, “local champions” emerged which refused to relinquish the market leadership to multinational giants. In fact, the number of them is not negligible. Particularly in categories which are non-technological and in which service and distribution networks are important, the local champions have left their international rivals far behind. Indeed, there are even some which have begun to put pressure on their multinational rivals on global markets.

Consistent Leaders
One of the local champions is Turkcell, which began its activities in Turkey 14 years ago and, since the day that the mobile communications market was established has not relinquished the leadership to anyone. In 2007, it increased the number of its subscribers by 11 percent to 35.4 million. Its turnover for 2007 rose by 35 percent to $6.3 billion. After the global giant Vodafone entered the market the company lost 19.9 percent of its subscribers. Nevertheless, it has succeeded in protecting its leadership. Another company which has long maintained its leadership despite the presence of important multinational players in the sector is Petrol Ofisi. In the fuels sector, which includes important international players such as BP, Shell and Total, it has a market share of 35.5 percent and, for the last five years, it has not relinquished its leadership to anyone else. In 2007, Petrol Ofisi sold approximately 8 million tons of fuels for net sales revenue of YTL 13.5 billion.

Vestel is another example of a company which surpassed multinational giants not just in Turkey but in the global TV market. It is a very strong brand which controls 41 percent of the market. On the Turkish domestic market has outperformed global giants such as Philips, Samsung, Sony, LG , Toshiba, Panasonic and Siemens. According to GfK data, Vestel has been the leader in the LCD market for the last three years. According to a brand survey by AC Nielsen in 2007, it ranks sixth amongst the 10 best-known brands in Turkey.

Foodstuff’s Local Giants
Ülker is one of the leading foodstuffs giants not just in Turkey but in the world as a whole. It has a 60 market share of the domestic chocolate and chocolate products market, far ahead of multinational rivals such as Kraft and Nestle. Ülker Group Marketing Assistant General Manager Şebnem Nasi says that providing in a timely fashion products which meet the consumers’ needs and demands and are suitable for the Turkish palate play a major role in this success

Pınar Süt has a turnover of YTL 591 million and a market share of 26.4 percent and has been the leader of the dairy products market since 1975. For many years it has successfully outperformed important market rivals such as Danone. Most analysts attribute Pınar’s success to its distribution network and the brand’s strength on the local market. According to AC Nielsen’s brand survey for 2007, Pınar ranks eighth in the list of brands that come first to people’s minds in Turkey.

Efes Pilsen is a local champion whose success on the beer market is unparalleled by any company in the world. There is no other company in the world which has maintained its leadership with a market share as high as 83 percent for so many years. The company is the largest beer producer in Turkey with five domestic breweries, two malt production plants and one hop processing plant. Efes Pilsen Group Turkey Regional Marketing Director Dilek Başarır says that having the most forward-looking marketing team in Turkey is an important advantage for the company.

The Bric Countries Are Also Defying The Global Giants
According to a study by Arindam K. Bhattacharya and David C. Michael, some companies in developing countries defying the global giants to an extraordinary degree

Brazil
The country’s local PC manufacturer Group Positivo has a greater market share than global giants such as Dell and HP. The software company Totvs is ahead of the global giant SAP.

Russia
Wimm-Bill-Dann Foods is the largest dairy products producer in the country and ranks ahead of Danone and Coca Cola.

India
 In 2007, Bharti Airtel became leader of the mobile telephone market, ahead of Hutchison Telecom which was sold to Vodafone’s Indian affiliate.

China
Baidu is the largest search engine in the country. It really challenges Google, the global giant because it has four times more users each day than Google China. The Tencent instant messaging program QQ is far ahead of MSN Messenger.

Şeyma Öncel Bayıksel
soncel@capital.com.tr