Turkey: A Good Place for Doing Business?

| By TMA World

The Turkish Context: A Divided Nation

The Republic of Turkey has been in the news a lot lately, most notably for its referendum on April 16, 2017.  The controversial vote was called by the President – Recep Tayyip Erdogan – to increase his constitutional powers.  Turkey now has a presidential system with few checks and balances, and Mr. Erdogan can remain in office until 2029.  He has the authority to pick judges and ministers, appoint the heads of the military and intelligence agencies, university rectors and senior bureaucrats, and issue laws by decree with little oversight.

The referendum vote was surprisingly close (51% for and 49% against).  This was despite voters going to the polls under a state of emergency, the government having a tight grip on the news media, and opponents to the presidential system being branded as terrorists. An attempted coup in July, 2016 saw thousands of dissidents and protesters jailed. The Parliamentary Assembly of the Council of Europe has just approved a fresh monitoring of the human rights situation in Turkey; a monitoring that had been lifted in 2004.

How were the votes distributed?  Voters in major cities tended to oppose the constitutional changes, while those in rural areas – typically more religious and conservative – voted for them. For the most pious people in the overwhelmingly Muslim country, the vote was perceived as a liberation from a dominant secularism.

In a deeply divided nation like Turkey follow this simple guideline: it is probably best to avoid discussions of politics (particularly the EU) and religion.

Given the increased uncertainties in Turkey, is it a good place in which to do business?

The Current Cultural and Political Landscape in Turkey 

  • Depending on the source, Turkey is the 16th or 18th largest economy in the world, and aims to be in the world’s top 10 by 2030. It is the 6th largest economy in Europe.
  • Istanbul’s economy alone is larger than the collective economies of 12 EU countries.
  • Turkey has the youngest and fastest growing population in Europe (700,000 graduates per year).
  • The OECD projects Turkey will be the second fastest growing country in the world by 2018.
  • Terrorist attacks, the failed coup, and the imposition of the state of emergency have slowed economic growth: currently 2.9% down from 6.5% in 2015.

An official ad campaign, set up before Erdogan’s tightening of his constitutional powers to promote Turkey as a business location, is being reconsidered by several multinationals who agreed to participate.

Nestlè has said its participation is currently on hold. Nestlè has had a presence in Turkey for more than a century where it employs over 3,800 people.

Novartis has said its participation is under review.  The company has operated in Turkey for more than 60 years and employs 2,300 in the country.

The main concern for some participating companies is reputational damage.  It should be noted, however, that for many companies the message is simply about business:

Ford: “Our sole intent was and remains to promote economic development and our proud business association in Turkey for more than 90 years.  It was not our intention for this ad to be interpreted as anything else.”

Vodafone: “Our commentary in the advertising campaign is focused on the Turkish economy and our long-term commitment to support our customers, employees and business partners.  We do not express a view on political matters.”

GE: “We are supportive of this campaign.”

Toyota: “We will continue with our business in Turkey aiming for sustainable growth.”

If you still find yourself doing business in Turkey or collaborating with Turkish colleagues, here are a few tips (besides trying to avoid discussions about politics and religion).

Doing Business in Turkey: Top Tips and Advice

  1. Invest time developing in personal relationships. Personal and professional trust in you is critical for success in Turkey.  Spend time socializing with your counterpart(s), often during long meals.
  2. The Turks tend to be indirect communicators. They might tell you what you want to hear rather than be direct and risk the relationship.  To understand the meaning of your Turkish counterpart(s) it is important to not just listen to the words spoken, but to pay attention to pauses, silences, tone of voice, and facial expressions/gestures.
  3. Never cause a Turk to lose face; they are a proud people and may be easily offended. Use diplomacy and tact; never criticize or overly praise someone in public.  Keep such conversations private.
  4. Appreciate that negotiations in Turkey are not just about price and profitability. Financial considerations are important, but Turks also consider the potential for greater status and power, increased influence, making connections, honor, and respect.
  5. Be aware that while an agenda might be provided in Turkey, a conversation may go in different directions. Turks tend to be multitaskers, so expect meetings to be interrupted by phone calls and visitors.  Always be calm and patient.

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