Second In The World

TURKEY IS ONE OF THE LEADING COUNTRIES IN THE WORLD HOME APPLIANCE INDUSTRY. ITS LARGE AND STILL-GROWING MIDDLE-CLASS, AS WELL AS ITS SIZEABLE HOME APPLIANCE INDUSTRY CONTRIBUTE TO TURKEY’S SIGNIFICANCE BOTH AS A MARKET AND AS A PRODUCTION CENTER.

Production, which started in 1955, has been advancing ever-since with steadily increasing know-how. In addition to the six large firms, 500 medium-sized producers and 500 intermediate goods producers operate in the industry. Providing direct or indirect employment to 500,000 people, the industry is truly indispensable for Turkey.

Besides being second only to China in the world and number one in Europe in terms of production capacity, Turkey is also one of the world’s leading countries in such areas as R&D, patents, international brand management, and supply chain. Trailing right behind Turkey, countries like USA, UK, Germany and Italy still appear to remain competitive in the global home appliance market. In recent years, Poland has also been standing out as a competitor to Turkey in the European market. BSH in 2005, Electrolux in 2007 and Indesit in 2009 moved their plants in Germany and Italy to Poland, while South Korean firms LG and Samsung chose Poland as Europe’s regional production base.

Turkey, whose exports are largely concentrated in Europe and the Asia-Pacific region, is also one of the leading suppliers of intermediate goods for the home appliance industry. Due to the number of jobs it creates domestically and the competitive superiority it enjoys in the global market, the home appliance industry carries great significance for Turkey’s economy. Because of this, the Turkish state provides incentive and support for the home appliance industry. Finally, product variety is another reason behind the success of the home appliance industry.

The industry has been increasingly consolidating in response to the growing regional prevalence of home appliance production, and escalating competition. Especially those producers who wish become more competitive by focusing on R&D are choosing mergers and acquisitions over organic growth in order to improve efficiency.

In Turkey, seven of the home appliance manufacturers are on the Istanbul Chamber of Industry’s ISO-500 list, which comprises Turkey’s biggest 500 industrial enterprises.

Being largely export-oriented, the home appliance industry needs to maintain its competitive edge in the global market in order to sustain its steady growth. The cost structure of the industry is of great importance in this context. Raw materials constitute the major cost category for the industry, with plastic and sheet metal being the highest manufacturing inputs. While being import-dependent for both of these inputs creates exchange rate risks, the downward trend in raw material prices affects the profit margins of companies positively. Other cost categories of the industry are labor, energy and R&D expenditures. Having the logistics advantage, on the other hand, affects the competitive power of the industry positively. Due to its geographical proximity to the EU countries, Turkey has 50% more advantage over China in terms of average logistics costs. Recent data indicating that economic growth in the EU countries, which are of great importance for the export performance of the industry, has weakened again, have fueled concerns about the sustainability of the growth of home appliance exports to the region. On the other hand, removal of trade sanctions against Iran, which currently has a market share of less than 1% in the industry’s exports, is likely to create a new market opportunity for the industry.