Turkey at forefront for new supply chain hubs, say experts

By Bahattin Gonultas

BERLIN (AA) - Turkey is seen as a good place for new supply chain investments and it is at the forefront of potential hub locations in the post-pandemic period, experts told Anadolu Agency on Thursday.

"My view is that we will see more strategic considerations for where and how supply chains shall be set up," said Mattias Hedwall, partner and head of law firm Baker McKenzie's International Commercial & Trade Group.

"This will include tax and employment implications, relocation costs, entry and visa issues for staff, exit possibilities, as well as [the ability to] adapt quickly to future changes," he said.

Tolga Baloglu, a partner at multinational professional services network PwC, said Turkey is at the forefront of potential hub locations with its production diversity and proximity to growing markets.

"In the past decades, companies focused on the Far East for their global supply, seeking low-cost resources, sales growth, advantageous incentives, and strategic acquisition targets. Soon after the COVID-19 crisis period, companies and governments at a macro scale focused on business continuity and supply chain risk and resilience management. This leads to a shift from globalization to regionalization," he said.

Baloglu emphasized that Turkey can boost its potential by improving its global competitiveness standing.

"Turkey recently demonstrated a decline in macroeconomic environment and product market efficiency whereas advancing in technology adoption, infrastructure and the labor market. The macroeconomic environment and labor market are the areas of the highest potential for improvement," he said.

"Through such improvements and capitalizing on its large market size, Turkey can seize the opportunity to become an even more attractive location for a regional manufacturing and trade and logistics hub," he added.

Hedwall said the pandemic had presented a unique situation in which various systems and processes respond to acute severe stress and change.

"What we see now is an acceleration of structured analysis taking into account developments in technology and sustainability which may present opportunities for further supply chain innovation," he said.

"Many companies are moving production closer to the customers, which may be both more cost-effective, sustainability friendly and lead to a diversification of the supply chain which makes the business less vulnerable. Countries that understand these trends will benefit a lot," he added.

Jens Dallendorfer, Senior Vice President Sales Region Emerging Markets at Germany-based pump provider Wilo Group, stressed that 'decoupling' – a politically intended detachment of global economic developments – is haunting international economies across continents.

"The Wilo Group has been responding to these changes for many years with the 'region-for-region' approach, which is based on the assumption that a new form of globalization will result in greater regionalization of the value chains in the three major economic centers of North America, the EU, and Asia," Dallendorfer noted.

Highlighting that the company strives to serve customer needs with products that have been manufactured either regionally or locally, Dallendorfer said:

"Already since 1992, the Wilo is trusting in the Turkish market. We believe that Turkey, thanks to its highly-skilled labor force and the favorable, strategic geographical location between Europe and Asia, has the potential to become a hub for export to third countries."

* Writing by Ovunc Kutlu in Ankara