Doing Business in Turkey

Please contact Selin Bulbul for the full 2013 Country Commercial Guide.

Market Overview Challenges Opportunities Market Entry Strategy

Market Overview
Turkeys rapidly expanding economy, political and economic stability, and the possibility of EU membership continues to attract the attention of a variety of American companies. In 2011, U.S. exports to Turkey reached a record $14.7 billion, and while 2012 brought a slight decline in exports ($12.6 billion), total U.S. Turkey trade remained at a near record of more than $19 billion. Turkeys financial sector is stronger than that of many other countries, due in part to a series of reforms in the wake of the 2001 financial crisis which left Turkish banks better leveraged than many of their U.S. and European counterparts. Across many sectors, U.S. exporters have excellent immediate and medium-term prospects in this diverse market. As a growing regional transportation hub, the civilian aerospace market presents some of the greatest opportunities for U.S. exporters. The highlight of these opportunities will be the construction of the new Istanbul Airport. This airport, which will be one of the worlds largest, will present more than $1 billion worth opportunities for U.S. equipment and service providers over the course of the next few years. Additionally, one of the most important sectors for the next decade will be energy. Electricity demand has been growing at more than 6 percent per year, and will continue to grow rapidly. Turkey expects continued economic growth, which will require additional generating capacity to meet growing demand. U.S. suppliers and service companies can benefit from opportunities in electricity and gas distribution, power generation and renewable energies, particularly wind and solar. Opportunities also exist in telecommunications services and equipment, safety and security equipment and services, automotive parts, medical equipment, R&D, transportation, infrastructure and higher education services. Turkey sends the largest number of students among all European countries, around 12,000 each year, to U.S. colleges and universities. Turkish companies are eager to partner with American firms, and are seeking technology and financing, particularly from the U.S. to grow their businesses. In recent years, Turkeys market reforms, strong growth and economic and political stability have attracted a significant amount of Foreign Direct Investment (FDI). Despite a decline in FDI inflows as a result of the global economic crisis, according to the United Nations Conference on Trade and Development (UNCTAD), Turkey recorded the 9th highest growth rate globally in FDI inflows. In 2011 and 2013, new investments by the U.S. companies Cummins, Pratt and Whitney, AES, Dow, GE, 3M, AMGEN, and Pfizer demonstrated increasing American private sector interest in Turkey. In 2005, the EU and Turkey began formal EU accession negotiations. Turkey has adopted many European Union directives, regulations and laws in anticipation of accession. While continued delays have cooled popular interest in EU membership, Turkeys political and business leadership remains committed to joining the EU, and the current government understands that the process itself contributes to Turkeys global competitiveness. The planned US-EU Transatlantic Trade and Investment Partnership (TTIP) negotiations hold great importance for Turkey, given its obligations

under the Customs Union with the EU. In 2013, the U.S. and Turkey agreed to create a High Level Committee, led by the Turkish Ministry of Economy and the U.S. Trade Representative, to study the effects of TTIP on Turkeys economy. Turkey is a long-term ally of the United States and a charter member of NATO with strong links to global institutions and a key role to play in most of the major regional issues such as Syria, Iraq, Afghanistan and Cyprus. However, bilateral relations have been occasionally difficult. Under the Obama administration, continued high-level government contacts have created a constructive atmosphere with a special emphasis on building bilateral commercial relations. The bilateralFramework for Strategic Economic and Commercial Cooperation and the private sectorled U.S.-Turkey Business Council are examples of intensified efforts to increase bilateral trade and investment. Over 1,200 American firms are registered in Turkey, ranging from large multinationals to small and medium size firms. While Turkeys economic growth slowed in 2012, the longer -term prospects for many American firms in Turkey remains excellent. Back to top

Challenges
The Republic of Turkey is a complex and challenging market requiring adaptability and persistence. U.S. exporters face many of the same challenges that exist in other semi-developed countries, such as contradictory policies, regulations and documentation requirements, lack of transparency in tenders and other procurement decisions, and a time consuming, unpredictable judiciary and legal and regulatory framework. Careful planning and patience are the keys to success in Turkey. Back to top

Opportunities
The Republic of Turkeys movement toward membership in the European Union is creating momentum to adopt European business regulations and standards in Turkey, thereby ultimately making it easier to sell and conduct business in this market. Similarly, reforms since 2001 have created a strong and stable economy that attracts foreign investment, which in turn will be followed by needed capital improvements and demand for new products and services. The U.S Commercial Service in Turkey has identified a number of market opportunities, described in the full CCG document, for U.S. firms and continues to work with companies to enter the Turkish market, expand market share, or jointly enter third country markets. Turkey is the commercial hub of the region, and U.S. companies should consider using Turkish partners to access business opportunities throughout Central Asia, the Caucasus, the Middle East and even Africa. Turkish partners know these neighboring markets well. Back to top

Market Entry Strategy

While there are many significant opportunities for U.S. companies in Turkey, there are also obstacles impeding entrance into the market. Any market entry strategy for Turkey should begin with a thorough understanding of the costs and benefits to doing business in Turkey. One of the most successful, proven ways to access the market quickly is to work with an experienced local partner. This partner could be in the form of a local representative, liaison office, agent, or distributor. The local partner can provide knowledge of the local regulatory framework,

language assistance and valuable business contacts. As business develops, companies may open subsidiaries and make further local investments to expand their market share. The U.S. Commercial Service in Turkey has a number of programs and servicesavailable to assist American businesses in establishing a presence in this market and developing appropriate contacts. Staffed with experienced Commercial Specialists with many years of industry and sector expertise, the U.S. Commercial Service team in Turkey can tailor your business approach to the right audience, and provide advice on your business strategy in Turkey. Please refer to our list of services for U.S. companies. To conduct a more thorough search for market research reports on specific industries and sectors for Turkey, please consult the U.S. Commerce DepartmentsMarket Research Library. Back to topN

Turkish Standards and CE Marking

Please refer to our list of CE Mark frequently asked questions for more detailed inquiries.

Background Needing Time to Adjust Delegation of Authority and Market Access CE Mark Enforcement U.S. Embassy Contacts

Background
On April 2004, the Government of Turkeys Undersecretariat for Foreign Tradeannounced the implementation of twenty-three European Union industrial directives, which would affect an estimated 70% of the manufactured products imported into Turkey. The Undersecretariat for Foreign Trade has adopted the EUs Low Voltage Directive, the Simple Pressure Vessels Directive, the Gas Appliances Directive, the Hot Water Boilers Directive, the EMC, the Machinery Directive, the Civil Explosives Directive, the Weighing Instruments Directive, the Equipment and Protective Systems Intended in Explosive Atmospheres Directive, the Lifts Directive (elevators), the Household Refrigerator/Freezer Directive, the Pressure Equipment Directive, the Noise Emission Directive, the Energy Efficiency for Ballast for Fluorescent Lighting Directive, the Active Implantable Medical Device Directive, the Medical Device Directive, the In Vitro Diagnostics Device Directive, the Toy Directive, the Recreational Water Craft Directive, the Construction Equipment Directive, the Personal Protective Equipment Directive, the Radio and Telecommunications Terminal Equipment Directive and the Cableway Directive (ski lifts and gondolas). Equipment meeting the directive definition of products needing to conform to EU technical regulations must have evidence of meeting the requirements either through verified laboratory testing conducted by an EU approved notified body or by manufacturers self-declaration if the directive dictates. Companies selling to the Turkish market must submit evidence of conformity compliance (CE Mark) either by providing a notorized/consularized conformity certificate from a notified body or a manufacturers issued certificate of conformity, which declares compliance of all relevant standards and directive annexes. The CE Mark was established by the European Union to ensure the free circulation of products in Europe. The directives that were entered into effect under a system called the New Approach, were established to ensure, health and safety, consumer and environmental protection. The New Approach identifies level of risk and hazard. Annexes to the various EU directives will specify levels of risk and types of products that would need to be either certified by a notified body or if the product

can be certified by the manufacturer as conforming to the particular directive(s). The EUs laws and regulations made it compulsory to comply with the directives when goods are sold in the territory of the European Union and the European Economic Area (EEA). Companies must show evidence of product compliance by maintaining or presenting a technical file that includes product specifications, technical drawings and standards applied per the appropriate directives and corresponding annexes. However, if there is no applicable directive for a particular product, then Turkey is obliged to allow the import of products manufactured in the United States pursuant to Turkish national regulations. This is known as the Reciprocal Recognition Principle. Back to top

Needing Time to Adjust

Since the adoption of the twenty-three European Union technical regulations, which equate to the CE Mark, significant confusion has resulted in substantial delays in Customs clearance formalities and companies not requiring the CE mark have been often asked for a Certificate of Conformity. Within the European Union Directives, the Commission authorizes member states the right to inspect manufactured goods if there is probable cause that either the manufactured product poses a potential hazard or the member state believes that despite certification of conformity, the product does not meet the European harmonized standard or the certification is suspect. Given this provision in EU product legislation and given the Turkish Customs Service need to adjust to the new regime, a European-only bias has emerged in that all products of European origin that meet the requisite standards conformity have been allowed full access to the Turkish market. Many U.S. companies have complained that despite manufacturers self declaration or notified body certification of conformity, the Government of Turkey has often demanded Turkish Standards Institute (TSE) standards testing using the potential hazard provision of the regulations. In other instances, the Turkish Customs Service has demanded CE marking for products that do not fall under any of the twenty-three industrial standards adopted by the Turkish Republic. U.S. companies showing evidence of conformity and having appropriate documentation should be allowed immediate access to the Turkish market. If companies are having difficulties in clearing Turkish Customs and have the appropriate CE Mark, they should notify the Commercial Section at the U.S. Embassy in Ankara immediately. Back to top

Delegation of Authority and Market Access

Once Turkey is able resolve the current customs clearance and documentary formality growing pains, it would be simpler for U.S. companies to export to Turkey when products conform to EU directives. In the case of the Active Implantable Devices Directive, the Medical Device Directive and the In Vitro Diagnostic Devices Directive, the Ministry of Health and the Turkish Standards Institute would no longer be involved in approving medical devices for sale to the Turkish market. An American company selling its Class II a/II b or Class III medical device would be allowed market access with a Certificate of Conformity issued by an EU accredited notified body. Medical device manufacturers producing Class I devices can self-certify conformity to the relevant EU directives. Likewise, the Ministry of Industry would allow unhindered market access for the sixteen directives that were formerly under its jurisdiction. Many U.S. products have already been CE marked and are sold to the European market. Turkeys adoption and implementation of the EU directives should now afford the same access to the Turkish market.

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CE Mark Enforcement
The Government of Turkey (GOT) has directed the Turkish Customs Service to ensure that all imported products that fall within a particular EU industrial directive show conformity to the standard. The GOT has further announced that its domestic industry would have an additional six months in order to meet the CE Mark requirements. Back to top

U.S. Embassy Contacts

The United States Embassys Commercial Section has been assisting U.S. companies, which meet EU directives conformity, in having products clear Turkish Customs as expeditiously as possible. The Commercial Section is also working to have the Government of Turkey accept CE conformity certification from U.S. corporations or U.S.-based Notifying Bodies, without having U.S. companies face additional bureaucratic delays at customs and additional testing at the Turkish Standards Institute. For additional assistance in managing the new CE Mark regulations in Turkey, please contact our Commercial Specialist Ozge Cirika Eksi. For additional information on the European Union Directives and European standards, please contact Sylvia Mohr, Standards Specialist at the U.S. Mission to the European Union. Back to top

Six Tips for Success in Turkey

1. Identify a strong local partner
It will require time, treasure and talent to ensure your American exporting firms success in Turkey. Finding a local partner with market knowledge, contacts, and a local number for your customers to call is imperative. Our office can help your U.S. firm conduct due diligence on Turkish companies, and much more. See our list of services for more information.

2. Bring financing to the table

Many U.S firms will require 100% pre-payment before shipping to Turkey. This can be a deal killer, as many European firms will offer more competitive terms. Utilize available financing options such as export credit insurance or other mechanisms to mitigate risk and close the deal.

3. Get your CE marking

As a member of the European Union Customs Union, Turkey requires a CE marking (European Union Standards/certification conformity) on all goods imported into this country. Invest now in a CE mark to expand your business throughout the EU, Turkey, and other Customs Union members.

4. Understand the local culture

Dont start meetings by talking business. Do start with small (but important!) talk with your business partner about family, hobbies, travels and mutual interests. Establish a personal relationship. For more information, request a copy of our 2013 Country Commercial Guide.

5. Use Turkey as a platform for business in the CIS, Eastern Europe and the Middle East
Turkeys geographical position and Turks ease of doing business in neighboring countries can extend your brand much further than Turkey. Think long-term about Turkey and surrounding markets and consider a regional approach to business development.

6. Use the resources of the U.S Commercial Service in Turkey

We work closely with small, medium and large Turkish size businesses. Get us involved early to get to market more quickly and cheaply.

Why Turkey? Strong and sustainable economic growth. GDP per capita has more than tripled over the
past decade. Turkey is working hard towards its goal of becoming a Top Ten economy by 2023.

A population ready to do business. Turkeys rising middle class has resulted in an

explosion of consumer demand. The country is also home to a young, educated labor force, with over half its population under the age of thirty.

High demand for U.S. exports. In 2011, U.S. exports to Turkey reached a record $14.7
billion. While 2012 brought a slight decline in exports ($12.6 billion), total U.S.-Turkey trade remained at a near record of more than $19 billion. This trend of increasing total trade has continued into 2013.

Friendly climate for U.S. companies. Over 1,000 small, medium and large U.S. firms have
already opened offices in Turkey. Given its close proximity to markets in Europe, the Middle East, and Central Asia, Turkey serves as a regional hub for many of these firms.

How can we help you?

From our offices in Ankara, Istanbul and Izmir, we provide a variety of services to U.S. firms such as matchmaking and promotion, market research, and a webinar series on doing business in Turkey. Our American and Turkish commercial specialists have identified key industry sectors where market demand is strong for U.S goods and services. Each year we also organize several trade missions to help U.S. companies enter high-opportunity Turkish markets. Were also here to connect Turkish importers with the best U.S. suppliers. Please visit our BuyUSA website (in Turkish) for more information.

Financing U.S. Exports of Goods and Services

Financing Overview The Export-Import Bank of the United States (Ex-Im Bank) Overseas Private Investment Corporation (OPIC) U.S. Trade and Development Agency (USTDA) The U.S. Small Business Administration (SBA)

Financing Overview
Trade and project financing in Turkey can be a deal maker or breaker for American firms. For a number of factors, Turkish banks are sometimes hesitant to lend into projects or offer exacting terms and conditions to local importers, thus creating a sweet spot for American exporters and financial institutions. American exporters should come prepared to speak about payment terms when meeting with new Turkish partners and include a full range of options, from 30/60/90/120-day credit terms to export credit insurance an affordable but often overlooked way to secure payment of receivables while mitigating risk. Open account terms are not recommended until Turkish partners have demonstrated an ability to pay in full, on time, and over an extended period. The U.S. Commercial Service in Turkey maintains strong relationships with local and U.S. banks as well as the Ex-Im Bank, OPIC and USTDA to provide finance to qualified American firms helping them to compete and win in Turkey. Our corporate partners, including PNC Bank, Daruma Finance (an agent of M&T Bank), and UPS Capital have a strong presence in the market. PFS Finance also provides trade and project finance. For more information on these programs, please contact our Commercial Specialist Gorkem Yavilioglu. Back to top

The Export-Import Bank of the United States (Ex-Im Bank)

Ex-Im Bank is the official export credit agency of the United States. Its mission is to assist in financing the export of U.S. goods and services to international markets. Ex-Im Bank enables U.S. companieslarge and smallto turn export opportunities into real sales that helps to maintain and create U.S. jobs and contribute to a stronger national economy. For more information, view this contact list of EXIM Master Guarantors in Turkey. Back to top

Overseas Private Investment Corporation (OPIC)

OPIC is the U.S. Governments development finance institution. It mobilizes private capital to help solve critical world challenges and in doing so, advances U.S. foreign policy. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds. For more information, you can contact Faruk Kahraman at the following address: 113 Barksdale Professional Center Newark, DE 19711, USA Website: www.accordatlantic.com Tel: (302) 309-9176 Fax: (302)309-9177 Cell: [90] (532) 283-8330 Back to top

U.S. Trade and Development Agency (USTDA)

USTDAs mission is to help companies create U.S. jobs through the export of U.S. goods and services for priority development projects in emerging economies. USTDA links U.S. businesses to export opportunities by funding project planning activities, pilot projects, and reverse trade missions while creating sustainable infrastructure and economic growth in partner countries. USTDA provides grant funding to overseas project sponsors for the planning of projects that support the development of modern infrastructure and an open trading system. The hallmark of USTDA development assistance has always involved building partnerships between U.S. companies and overseas project sponsors to bring proven private sector solutions to developmental challenges. Please contact Verinda Fike at USTDA for more information. Back to top

The U.S. Small Business Administration (SBA)

SBA dedicates its energy and resources to providing support to small businesses and small-business owners across the nation. Since its inception nearly sixty years ago, SBA has helped millions of small business owners by providing the financial support, contracts, counseling and other forms of assistance they need to succeed. SBA's programs now include financial and federal contract procurement assistance, management assistance, and specialized outreach to women, minorities and armed forces veterans. SBA also provides loans to victims of natural disasters and specialized advice and assistance in international trade.