Turquality program needs overhaul to make it happen
The Turquality program, which was launched by the Turkish government at the end of 2004 with the motto "10 global brands in 10 years," needs to be overhauled if Turkey want to create world-class brands, analysts warn.

"Turkey as a country needs to have a brand strategy in the first place," Muhterem İlgüner, managing director of Brand Finance Turkey, says, adding that he believes hospitality, a quality which is part of the Turkish character, may represent solid ground to work on in Turkey's effort to create a global brand.

Turks are known to be hospitable people, and Turkey has rich cuisine, but it has neither a global brand in the hotel industry nor a world-known restaurant chain. "Yet, hospitality is a concept that would highly reinforce the promotion of a Turkish brand in this sector," he told Sunday's Zaman.

Presently, 95 brands of 83 companies within the framework of the Turquality program, and 37 brands of 34 companies in the Turquality Brand Support Program, get financial support, bringing the total number of brands benefitting from the program to 132. Companies admitted into the program, which is the world's first and most comprehensive state-initiated program that supports companies in generating global brands, get half the money they spend on building a brand as a subsidy from the Economy Ministry. The subsidies, having no upper limit, are offered to Turkish companies to cover all expenses in all phases of building a brand, from design and marketing to after-sales services.

Güven Borça from Markam, a company offering services in marketing management and brand communication, describes the Turquality as a good and successfully applied program, but he also believes some steps need to be taken for the program to produce the desired results "Aside from brands owned by big companies, I don't believe Turkish brands have made much headway in terms of getting established abroad," he told Sunday's Zaman.

According to Borça, companies whose marketing budget is less than $4 million in a foreign market, that is, those which can't allocate $2 million from their own resources, should be dropped from Turquality. His reasoning is clear: Unless a company is ready to spend considerable sums to get a brand established in a foreign market, the efforts are bound to have no lasting effects.

Since most Turkish companies, instead of focusing on a couple of foreign markets and conducting a comprehensive study of those markets, aim usually to export to as many countries as possible, they use their financial resources, after getting a good partner in that country, mainly for attending fairs and printing brochures, activities that make up a limited marketing plan.

"This is in essence no different from a case of being a qualified contract manufacturer," commented Borça, who also believes company expenditures amounting to less than $50,000 should not be accepted so as not to choke the program with paperwork.

A total of 46 brands which successfully completed the first five-year period in Turquality have been allowed, for another five years, to enjoy the benefits of the program. Companies in this program, which must meet certain criteria before being admitted into Turquality, stand out by the comparatively high unit price in kilos of the products they export. Average price of a kilo of the products these companies export is $2.15 per kilo, while Turkey's average figure stands at $1.46.

The fact that Turkey is far from having a global brand is what makes an overhaul a necessity in the program. Noting that Turkey is still far from creating a global brand, although nearly 10 years have gone by since the program began, "If we had a strategy, Turquality would have been in a position to choose certain sectors in which to get particularly focused," İlgüner stated. According to İlgüner, sectors that are offered incentives should be those that make it possible for Turkey to be competitive in the global market with high value-added products.

At the beginning, only brands in the textile and garment industry were allowed into the Turquality program. But shortly after the launch of the program, a wide range of sectors, from home appliances, jewelry, food, electronics and automotives to machinery, were included. The restaurant business joined the club last year, while health is another sector expected to be added to the list soon.

So, a selection process is actually also involved in determining which sectors should be financially supported, but İlgüner is skeptical that all the sectors that are granted subsidies are really the sectors which would offer Turkey the chance of creating global brands. "On what models, criteria, are these industries selected?" he asked

Turkey aims to increase its export figure to $500 billion by the year 2023, the 100th anniversary of the foundation of the Turkish Republic. As the current yearly export figure stands at $135 billion, Turkey urgently needs to modify the composition of its exported goods to include more value-added products. To help Turkish products to get a foothold in foreign markets, the Export Credit Bank of Turkey (Türk Eximbank) has recently launched a "Brand Credit Program."

İlgüner, who otherwise praised Turquality as a well-intentioned program, which he noted is also cited as a good project in the world, simply believes the program has shortcomings as far as achieving the desired end. Noting that the tens of millions of dollars that have been offered to companies in subsidies since the initiation of the project came from public resources, "If it were a bank [offering the money], it would certainly demand the return of the funds it extended," he told Sunday's Zaman, also adding, "A new vision is needed."

The Turquality program was also abused. İzmir-based Graniser Granite and Ceramic Company received TL 1.4 million in incentives from the Turquality program after submitting misleading documents. The Economic Ministry started legal action against the company and the court has ordered the company to return with interest the subsidies it received.

Although Turkey has achieved considerable progress thanks to Turquality in recent years, it still has a long way to go. There are no Turkish companies in the top 500 list of the world's most valuable companies. According to the report, "Turkey's Most Valuable Brands 2012," conducted by Brand Finance Turkey, the total value of the top 100 Turkish companies is $28 billion when an average is taken of the last five years. In sharp contrast, the brand value of Walmart alone is $38.3 billion, and of General Electric, $43 billion. (Cihan/Sundays Zaman) CİHAN
Last Modified: 2012-11-11 18:00:02
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