At the gates of Europe This is how Turkey works to become the "world's factory"

Turkey is seeking to invest in the local currency crisis and the desire of multinational companies to bring their production closer to its main markets, in addition to the importance of its exceptional geographical location in linking the East and the West. Can it be the "factory of the world" at the gates of Europe?

Turkey recorded record exports in 2021 and seeks to be the "factory of the world" at the gates of Europe, by investing in the local currency crisis and the desire of multinational companies to bring their production closer to their main markets.

Last year, the country's exports reached $225.4 billion, and it is seeking to increase this number to $300 billion in 2023.

Turkey's geographical location near Europe is an advantage, given the sharp rise in the cost of shipping, in addition to the disruption of supply chains associated with the epidemic, which is pushing European companies to reduce their dependence on Asia.

For his part, Burak Daglioğlu, head of the Investment Office of the Turkish Presidency, confirmed that "many multinational companies are taking steps to get more supplies from Turkey," according to his statement to Agence France-Presse.

He explained that the country, which has long attracted the giants of cars and textiles, provides a skilled workforce, an "ideal" geographic location and a "developed infrastructure."

The Swedish company "Ikea" announced that it wants to transfer part of its production to Turkey, while the Italian clothing group Benetton confirmed "its desire to increase the volume of its production in countries closer to Europe, including Turkey."

Peter Walters, vice-president of the Netherlands-Turkish Chamber of Commerce, said he is "receiving requests from the household, garden, textile, fashion and yacht building sectors" from company heads looking for new partners in Turkey.

The bright side of the lira's decline

Since February 2020, the cost of shipping between China and northern Europe has increased more than nine times, according to the "Fritos Baltic" index, making shipping prices from Asia very expensive, while Turkey is only three days in a truck from Western Europe.

In November, a study by McKinsey Consulting Group ranked Turkey third among the countries with the best potential to supply textiles by 2025, after Bangladesh and Vietnam, ahead of Indonesia and China.

The group said: "Companies in the clothing sector are seeking to change the group of supplier countries" they deal with and "get closer" to their markets, noting that Turkey offers "lower production costs due to the depreciation of the Turkish lira."

As a result of the decline in the local currency against the dollar (-44% during 2021), the Turkish net minimum wage is currently equivalent to 315 dollars.

For his part, Erdal Yalcin, professor of international economics at the University of Konstanz in Germany, said: "We don't see big investments yet, even if Turkey, from a purely economic point of view, is the ideal country to bring production closer to Europe."