1 March 2018
Turkish Kids' Sector Sticks with China Suppliers But Considers Options
While well aware of the lower labour costs in Bangladesh and Pakistan, as well as the advantageous import-tax terms, many Turkish businesses in the baby and child products sector are proving loyal to their mainland suppliers.
Turkish manufacturers in the baby-to-early-teens sector are still resisting the temptation to source from Pakistan and Bangladesh rather than from China. How long that will last, though, is another question and one that certainly seemed to preoccupy exhibitors at Istanbul's recent Children Baby Maternity Industry Expo (CBME).
Certainly, China would be keen to maintain its links with the sector. At present, the Turkish baby / children's product sector is estimated to be worth about 650 million lira (US$173 million) a year. While China has longstanding trading ties with the country, a number of factors are making it less attractive to the Turkish business community.
The two most frequently cited issues are rising mainland labour costs and a hefty import tax – typically somewhere between 20% and 50%. Taken together, the two have boosted the allure of Pakistan and Bangladesh, countries where labour cost are substantially lower and where no punitive import levies apply.
Despite this, many Turkish businesses have remained surprisingly loyal to their Chinese partners. Muharrem Dalmizrak, the Marketing Manager of Dalpa, a supplier of baby products and children's furniture, said: "We have built our links with China over 25 years. Over that time, the country has hugely improved its supply chain processes.
"As long as the quality and the price of goods continue to meet our requirements, we will maintain our relationship. Having said that, we do, of course, keep an eye on the labour rates in other countries, while also bearing in mind the possible tax benefits."
At present, Dalpa carries more than 200 product lines, ranging from baby clothes to bikes, which are offered under a number of different brands, including Prego, Sunnybaby, Rollplay and Crystalbaby. While most of its range is imported on an OEM basis, it also has its own manufacturing facility in Southern Turkey.
Expanding upon his experience with overseas manufacturers, Damlizrak said: "We currently work with 30 different Chinese factories and, if we have a problem, they are all quick to fix it.
"Recently, for instance, one of our imported cycles contravened a Turkish safety regulation, obliging us to send a container back. As it was our design, we had to foot the bill, but our Chinese partner made the alterations very efficiently.
"Overall, the salaries of Turkish and Chinese factory workers are about the same. In Turkey, though, they work eight-hour shifts, compared with 11 in China. This is where the difference lies."
Another Turkish business importing bikes from China is Adana-based Arpağ. Broadly satisfied with the service he gets, Director Mehmet Arpağ said: "We have been doing business with China for 12 years and are yet to have had a major problem with any of our 10 suppliers.
"Turnaround time is always pretty quick. Typically, it takes about a month to receive goods once an order has been placed."
Clearly keen to maintain awareness among Turkish manufacturers and distributors, about a dozen Chinese companies exhibited at this year's event. One of the most notable was LeLeBaby, a Ningbo-based stroller manufacturer run by the husband-and-wife team of Peter and Jilin Wu.
Prompted by a number of their mainland business contacts who had moved to Turkey, the two established a sales and distribution hub in Konya, Turkey's seventh-largest city. Today, they sell a range of buggies, baby chairs, feeding chairs and child car seats into the Turkish market, sourcing product parts from China and from local suppliers.
Explaining the company's positioning, Jilin said: "Our stroller is deliberately very high-quality as it is targeted at relatively rich parents. The rest of our range, though, is definitely more middle-market.
"As the Turkish economy is going through something of a rough patch, it's been tough trading conditions all round. In response to that, we are looking to get beyond just selling to wholesalers and are hoping to launch our own e-commerce portal."
Another Chinese company looking to build its customer base was Taoqibaby. Operating out of central China's Zhejiang province, the company has been making baby-feeding products since 2006. Some 200 people are employed at its manufacturing facility, while the company currently makes several hundred products.
Outlining the company's philosophy, Sales Manager Ben Rowe said: "While we are a little bit more expensive than many of our Turkish competitors, we believe we offer better quality. We also see Turkey as a hub for selling into the Middle Eastern markets."
Another Zhejiang business looking to make it big in Turkey is the Hua Li Da Group, a specialist manufacturer of nappies and feeding bottles. Charting his own company's evolution, Director Jiangang Qian said: "While our products tend to be middle- to high-end, I believe we can appeal to a wide range of customers. We signed up with our first Turkish distributor 10 years ago and can now supply up to 100,000 units on request."
Maintaining a more singular high-end approach was Alloves, a Guangdong-based manufacturer of premium nappies. Highlighting the challenges of trading with Turkey, Global Marketing Director Simon Lo said: "Transportation and import taxes are inevitably a problem when you are dealing with Turkey. We believe, though, that the quality of our product will prevail.
"We have invested heavily in research and development and believe our superior design and high performance will impress distributors and consumers alike. In line with this, during blind tests in Hong Kong, 70% of all participants said they preferred our products to any of the more well-known brands."
Speaking from his own experience, Syrian-born Abdo Doğmuş – a Turkish resident of 15 years standing – had a few words of advice for those looking to do business with Chinese companies. A veteran of the buttons, linings and taffeta hat sectors, he said: "I first went to China 15 years ago and bought $125,000 worth of buttons.
"It all went okay because I'd been careful and done my research. I still make sure, however, that all of my contracts are endorsed by the relevant local government office."
Another trader with a long history of working with China was Ayla Müstecaplıoğlu, a partner in Grup Baby. At present, the Istanbul-based business sells a wide range of child and maternity products, including bibs, blanket, breast pumps and sterilisers.
Looking back over her nearly 25 years of dealing with mainland suppliers, she said: "Along the way, we've had a number of problems with red tape. We had to re-patent our products in China, for instance, even though the country is party to the Madrid Agreement on trademarks.
"We've also had a number of visa issues. On one occasion, we booked an exhibition stand in China, but most of our team could not go because we had to have a letter of invitation with a special barcode and no Chinese firm was willing to complete the formalities.
"Overall, though, I'm happy with our Chinese suppliers. They are hardworking and quick-witted. We actually buy a lot of electrical components from them that aren't otherwise available in Turkey."
The Children Baby Maternity Industry Expo 2018 took place from 10-13 January at the Istanbul CNR Expo Center. The event featured 249 exhibitors and attracted more than 17,700 visitors from 123 countries, including Greece, Italy, Spain, Thailand, Jordan, Ukraine, Germany, Morocco, UAE, Russia, Israel, Egypt, China, the Netherlands and France.
George Dearsley, Special Correspondent, Istanbul