In this article, we will explore the prevailing trends in the Turkish export sector and examine the approaches that exporters can employ to successfully navigate these challenging times.
The Turkish economy has experienced significant growth and development in the past twenty years. However, currently Türkiye is facing an economic crisis, and experts anticipate a further deterioration of the country's economic situation. The Turkish lira, which has been steadily depreciating in recent years and experienced a drastic decrease in value within a single year, reached a near-historic low in May 2023.
Despite these challenges, Turkish exporting companies are showing resilience and adaptability in the face of economic instability. While they may encounter considerable obstacles, exporters are employing strategies to effectively navigate the crisis.
Export trends and statistics
Despite the ongoing economic crisis, Türkiye's exports experienced significant growth in 2022, reaching a total of $254.2 billion, which represents a nearly 13 percent increase compared to the previous year. However, in 2023, the pace of export growth has somewhat slowed down.
According to the official Foreign Trade Statistics, in March 2023, Turkish exports amounted to $23.6 billion, reflecting a 4.4% year-on-year increase. Germany emerged as the main partner country for exports, with a value of over $2 billion, followed by the United States, Italy, the United Kingdom, and Iraq. Notably, high-technology products accounted for 4% of the total manufacturing industries exports.
Mustafa Gültepe, the president of the Turkish Exporters' Assembly, attributed the weaker export performance in the previous year to sluggish demand from Europe, which traditionally absorbs approximately 50 percent of Türkiye's exports. Gültepe expressed the ambition to position Türkiye among the world's top 10 exporting countries, highlighting that Türkiye's current share in global trade stands at 1 percent.
How can export companies better navigate the crisis?
Turkish export companies are facing significant challenges amid the ongoing economic crisis. However, there are certain strategies and technological solutions that can help them navigate these difficult times.
Improving supply chain management
Streamlining supply chain processes might help increase efficiency and reduce costs. One of the ways to do so is to build strong relationships with reliable logistics providers who can offer efficient and cost-effective transportation solutions. For instance, partnering with a logistics company that specializes in air freight can help expedite time-sensitive shipments.
Another option is to optimize inventory management by utilizing inventory management or ERP software like 1C:Drive that employs demand forecasting algorithms to accurately forecast demand and optimize inventory levels. By avoiding overstocking or stockouts, companies can minimize costs and maintain adequate stock availability.
Furthermore, implementing advanced technologies such as Internet of Things (IoT) devices, RFID tracking, and real-time monitoring systems can help gain better visibility into the supply chain. For example, using IoT sensors to track temperature-sensitive goods during transportation can help ensure product quality and reduce spoilage.
Exploring exhibitions and support programs
It’s also worth doing some research to take advantage of government initiatives and support programs aimed at assisting export companies during challenging economic times.
For instance, Türkiye's Export Credit Bank offers financial support and guarantees to exporters, enabling them to access working capital or secure export transactions. You can also look into government-sponsored export financing programs that offer favorable loan terms or credit insurance to mitigate payment risks in international trade.
Additionally, you can participate in trade missions and exhibitions organized by government entities or industry associations. These events provide opportunities to showcase products, connect with potential buyers, and explore new markets. An example of such an event is Global Trade Review held in Istanbul this autumn.
Fostering strategic partnerships
Another solid way to support export business activities is to collaborate with other export companies, industry associations, and trade organizations. This helps to leverage collective strengths, share resources, and explore new business opportunities.
One way of doing so is to partner with complementary businesses to create joint marketing campaigns. For instance, a textile manufacturer can partner with a fashion retailer to promote their products through co-branded advertisements or social media campaigns.
It can also be rewarding to establish partnerships with companies that have extensive distribution networks in target markets. This collaboration can help expand market reach and reduce distribution costs.
A less evident recommendation is to form strategic alliances with research institutions or technology providers to develop innovative products or improve existing ones. Sharing knowledge and resources can accelerate product development and provide a competitive advantage.
Implementing technological solutions
Adopting a specialized Enterprise Resource Planning (ERP) solution like 1C:Drive for Import and Export industry can significantly benefit Turkish export companies. ERP systems provide integrated and centralized management of various business functions, including finance, inventory, sales, and production.
1C:Drive offers a comprehensive solution that is specifically designed to support the operations of cross-border businesses across various industries. For example, there are advanced features for managing multi-currency invoices and custom exchange rates. This ensures that financial balances are consolidated correctly, even when dealing with different currencies.
What sets 1C:Drive apart is its adaptability to the specific requirements of local markets. The software allows for customization and offers a Turkish localized version that caters to the specific local regulations and practices. This ensures that your ERP system is perfectly tailored to meet the unique needs and compliance standards of your business.
The ongoing economic crisis requires Turkish export companies to adopt proactive strategies and leverage available resources to overcome challenges and seize opportunities. It is important for businesses to continuously assess and refine their strategies, keeping a close eye on market trends, customer demands, and government initiatives. By focusing on improving supply chain management, exploring government support programs, developing strategic partnerships, and utilizing technological solutions like 1C:Drive, companies can enhance their resilience and competitiveness in the global market.