Turkey looking worldwide
June 21, 2004,
For many home textiles manufacturers in Turkey, the United States market is just one piece in a worldwide mosaic whose more important component is Europe.
At the same time, manufacturers that are actively looking to expand business in the United States are grappling with the fallout from fluctuating currency values over the past several quarters.
"The Turkish lira has been overvalued against U.S. dollar and the Euro during last 12 months and resulted in competitive difficulties on exports in general. Meanwhile, the appreciation of Euro against the dollar created additional complications," noted Ali Bulut, managing director of Evteks, Turkey's largest home textiles trade fair and the second largest such show in the world. "However the Turkish Lira is moving to a more realistic position against foreign currencies nowadays. This is expected to resolve current problems."
In the meantime, some manufacturers have shifted the larger part of their attention elsewhere. For towel producer Ozdilek, export business with the United States fell back to 15 percent last year because of the weaker dollar, according to Fatih Guzelsozlu, export manager. But, he said, it could grow to 30 percent this year if the dollar gains more strength. Currently, Germany is commanding more than half of Ozdilek's exports.
For Hateks, which does just 15 percent of its bath and beach towel business direct-to-retail in the United States and the rest of export in Europe, the challenge in dealing with the States is also one of differing priorities.
"It's really not easy to work with the U.S.," said Gokhan Kumbul, marketing manager. "U.S. customers are always for very cheap prices."
It's a sentiment many Turkish suppliers expressed with regard to the U.S. market.
Any Tekstil sold large volumes of ready-made curtains into the U.S. until three or four years ago but now sells a few small accounts more upscale product, according to Bekir Celikten, foreign trade manager.
"At that time, a panel embroidery was $7 or $8 (wholesale). Now the same item in the market is half the price," he said. "The United States nowadays is buying rubbish — huge quantities."
Some manufacturers, however, are looking for ways to lower their costs to boost their competitive profile in a global market.
Bedding and ready-made window producer Zorlu, has grown its U.S. business to nearly 30 percent of exports over the past four years and now operates permanent offices in New York and Atlanta. Opening a plant in Turkemenistan has helped bring down costs on its bedding, which it sells directly to retailers here, said Bedii Berktin, assistant textile group coordinator.
"You have to increase your volumes and quite possibly lower your profit margins. You can't expect to make the margins that you used to," he said.
Nonetheless, he said, Zorlu may eventually move out of basic items and focus on more specialized products to position itself competitively against China.
"That's why we invest heavily in research and development," he said, adding that Zorlu creates 250 new designs every month.
HMS DIS Ticaraet this past spring opened a state-of-the-art weaving mill following a 120 percent boost in capacity in 2002. The company now produces about 3 million meters of jacquard and fancy woven curtains, as well as 5 million meters of embroidered curtains annually, according to Burcin Bagci, export manager.
"We work with the biggest textiles groups in Europe," he said. "We are quite committed to increasing our market share in the American market."
Super Tekstil San will soon open a new facility in Iran to better compete against China and other Turkish suppliers. The fabric producer has been exporting to the United States for about a year and that business now accounts for about five percent of exports, according to Ismail Yasubuga, a member of the company's board.
Other Turkish companies are setting their sites on landing business in top-tier boutiques, department stores and catalogs in the United States.
Curio is hoping to enter the U.S. market under its own brand of fashion duvet sets and towels.
"It's a really tough market, we realize that," said Ahmet Abaliouglu, business unit manager. "But we don't want to be a company that does products for other brands. We're trying to stick to highest level possible."
Atakan Textile, which makes a variety of home textiles products with an upscale, European design sensibility under the Home Line brand, already sells some towels to a mid-tier retailer. It will show during the New York Home Textiles Market this fall and again at Heimtextil in Frankfurt in an effort to move its better branded goods into the U.S.
According to sales representative Sunay Can, the company hopes it can leverage the expertise it has developed on the apparel side by selling pajamas, robes and loungewear to accounts that include The Gap, May Co., JCPenney, Tommy Hilfiger and Wal-Mart.
"We are new (to the U.S.) for home," she said. "Nobody knows what will happen."
Still, adjusting to a future that has more of China in it has grown in importance.
Broderi Narim, which stopped doing business in the United States because it did not want to de-spec product, sent a team to examine the competitive situation in China this past spring.
"We were surprised, really," said Nedim Hadzibegic, product development and marketing manager. "The only reason why China looks like a big threat to all of us is because of the help (textiles manufacturers) get from the government, which will disappear eventually. It may be two or three years, but then everything will come to its place."
However, he acknowledged, "They have such volumes and they can copy anything in a minute."
Window fabric maker Any Textil has even begun selling in China, "mostly in the bigger cities where foreigners and rich Chinese are living," said Celikten. "But the public generally doesn't have the reach to buy the foreign goods. China is going to have the potential in a few years more."
Leno Tekstil Sanayi ve Ticaret, a manufacturer of curtains and table linens that sells about 30 percent of its exports to the U.S., is planning to add dying and printing of wide goods to expand its business after quotas are eliminated in 2005.
General Manager Metin Yahsi said Turkey will have to answer to competition from China with its wide range of capability, high level of investment and improved design and quality. But when it comes to expanding business with U.S. importers, Yahsi added, "It's up to us to worker harder and keep closer contact."