Mayir Saranga, CEO of Turkish distributor Serve and one of OPI’s top 100 resellers, talks to OPI+ about staying ahead of the game in the versatile Turkish market
OPI+: The Turkish OP industry is growing fast at present. Could you give us a quick overview of the market in Turkey right now?
Mayir Saranga (MS): Things are improving. In 2005 for the first time, Turkey recorded low inflation after a long period of high inflation. Then the currency unit was changed and the last six zero digits deleted. The political and economic stability that has finally been established here has brought with it higher growth ratios for the last three years. According to OECD calculations, Turkey will be in the world’s top 12 economies by 2050, which is hopeful.
OPI+: What are the greatest obstacles faced by the Turkish OP sector?
MS: One of the greatest obstacles is the black economy. This situation strains our chance of proper competition. However, due to the strong and reliable brands that we distribute, we are able to keep our superior position in the market. And despite the existence of several cheap rival products, our company’s products represent quality and reputation in the minds of consumers, which fuels demand.
Through the decisions and the policies of the government, the circle of the black economy is narrowing. And following the negotiations with the EU and the activation of Basel 2 criteria in the financial system, it will narrow even more. Turkey is expected to be a full member of the EU by 2010, maybe earlier.
OPI+: Your background lies in manufacturing. How are Turkish OP manufacturers dealing with the influx of competitively-priced products from China?
MS: Due to the burden of increased competition and employment, Turkish manufacturers are finding it tough at the moment. Low quality products from China are filling almost every corner of the market. In fact, the competitive pressure of China is being intensively felt even in comparatively superior industries of the country. This is worrying for the government but through several measures of tax reduction, more domestic demand is being created. However, it seems that while the low currency policy and tax burden on employment continues, Turkish manufacturers without a strong brand do not have a great chance in foreign markets.
OPI+: How has Turkey’s economic and political environment determined Serve’s strategy?
MS: It has certainly determined the previous activity frame of Serve Kirtasiye. As a corporate entity, the company is focused on profit and a strong financial structure is more important than anything. We prefer to increase our equity capital and fund our activities without outsourcing. Furthermore, we withdraw any high-cost products that affect our competitive power in the market. And we have also taken the proper measures in order to make use of our capacity in the most effective way.
OPI+: Serve is one of the few listed companies on the Istanbul Stock Exchange. How was 2005 for the company?
MS: We increased our capital to TRY6.1 million ($4.6 million) in 2005. We have managed this increase by adding our profit to the capital and without collecting from our partners. Due to our company’s profit creation capacity, the effect of a stable economic and political environment and relying on demand, the value of our shares listed in the Istanbul Stock Exchange has increased and keeps increasing.
OPI+: What was new in 2005 for Serve and what does the company have planned for this year?
MS: In 2005, we started distributing the Fellowes brand. We believe in having a significant market share of paper shredders and lamination machinery in a very short time.
We are also very close to signing a new agreement with Tombow of Japan. For the first time in the company’s history, it will grant Turkey with a licence that will improve relations with Tombow in the future. We expect this agreement to make important contributions to our turnover and increase our growth rate.
OPI+: You are a keen advocate of the franchising concept and are active in the Turkish National Franchising Association. What is your view of the franchising system in Turkey?
MS: The franchising system has not really been established yet. The lack of education in the OP sector causes things to proceed slower than we would expect. Serve’s primary aim is to strengthen and train its distributor network, be the main supplier in the sector and then consequently generalise the franchise system as a concept in the whole country. We are progressing strongly step by step towards this aim. And we welcome any partnership that will enable us to reach our ultimate aim.