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Arçelik, a top Turkish global brand

Interview - December 4, 2013
World Report meets with Levent Çakıroğlu, CEO of Arçelik Group, one of Turkey’s most representative brands and leader in white goods
LEVENT ÇAKıROğLU, CEO OF ARÇELIK GROUP
LEVENT ÇAKıROğLU | CEO OF ARÇELIK GROUP
At a time of global economic recession, Turkey has been the fastest growing economy in Europe for the last two years, and is forecasted to boast a respectable growth rate of 4% in 2013. What effect has this economic prosperity had on the Turkish white goods sector and Arçelik in particular?

The Turkish domestic market has grown substantially over the past few years, driven in part by Turkey’s economic success. In the 1990’s, sales of white goods stood at about 2 million units per annum (PA). Over the past five years this number increased to 5-6 million PA, in parallel with Turkey’s economic growth. Despite slower growth in 2012, the size of the domestic market reached 6.5 million by the end of last year.
 
Production capacity has also grown significantly and currently stands at 25 million units PA, with a current production rate of 21 million units PA. In the first seven months of 2013, according to data from the White Goods Manufacturers’ Association of Turkey, there has been a 6.5 percent growth in white goods production (at wholesale level, Jan-Jul 2013). 
The Turkish white goods sector has become the largest white goods production centre in Europe and, subsequently, an important Turkish industry and exporter. Exports for the sector currently stand at 14 million units (which are 70 percent of production) and go to over 100 countries, with a particular focus on Europe and Africa.  
 
Arçelik has benefited from both the growth in domestic demand and also from a rise in export demand. While we expect domestic demand to continue to grow, it is likely to be slightly slower. That said, we are positive on the future prospects for the growth of the Turkish white goods industry. 
 
Arçelik/Beko is one of the original members of Turquality, which aims to bring international recognition and prestige to top Turkish brands. How important is Turquality to increasing the knowledge?
 
With the vision of creating 10 global brands in 10 years, Turquality aims to promote the value of Turkish companies to a global audience, as well as helping them by offering strategic, operational, organisational and technological consultancy services. For those organisations that require it, Turquality also creates a brand road map by setting definite and quantifiable objectives.
 
In the five years since we joined the Turquality programme, the Beko brand has become the third largest white goods brand in Europe, the brand with the greatest increase in market share in the European market during the period 2008-2012, the top selling refrigerator brand in Western Europe, the second in the Western European white goods market by the end of July 2013, and has had a steady increase in its price index in the last four years in Western Europe.
 
The work that Turquality has undertaken has been instrumental in demonstrating the high quality and value of our business globally, and we look forward to continuing to work with them to communicate this.
 
What are your top priorities or growth strategies for 2013 and beyond?
 
Arçelik Group is one of the leading players in the home appliances industry. Our company has approximately 25,000 employees and operates 14 production facilities worldwide: in Turkey, Romania, Russia, China and South Africa. We provide products and services in over 100 countries with sales and marketing offices located in 23 countries and under 10 different brands (Arçelik, Beko, Grundig, Defy, Arctic, Blomberg, Elektrabregenz, Leisure, Flavel and Altus). We generate nearly 60 percent of our revenues from international operations.  
 
For us, the secret to sustainable growth in the global marketplace is to continue to invest in innovation and in our brands. This enables us to design and sell products tailored to the specific demands of the individual markets. 
 
Through that lens, Arçelik will be focusing on maintaining its leadership domestically and continuing to increase its market share in Europe while also building its presence in the Middle-East and Africa regions, as well as Asia-Pacific. Specifically, we will be focused on exploring opportunities in emerging markets, both through organic expansion and acquisitions. The solid financial structure of the company makes it possible to evaluate appropriate growth opportunities. 
 
Beko is already a brand synonymous with excellence and quality, but how are you working to strengthen the brand even further?
 
It is worth being clear that our core focus remains on the products that we deliver. Beko is synonymous with developing value-added products that offer smart technology, stylish, functional design and environmental responsibility making consumers’ life easier. It is critical for us to maintain our focus on continuing to consistently deliver products that meet and exceed expectations, as it will be the most important influencer of consumers’ perception of the company. This is our primary goal and focus. And above and beyond of all these factors, we owe our outstanding performance to our people which we consider to be our most important asset.
 
The strength of the Beko brand can be seen in the continuous growth of our market share across Europe. As of the first half of 2013, Beko became market leader in the UK, Polish and Lithuanian white goods markets. During the same period, taking Western Europe as a whole, Beko ranked first in the refrigeration, second in the freezer and third in the washing machine, dishwasher and cooker segments.
 
As part of a range of activities, we have been working to raise and maintain the brand’s profile through relationships with a number of sports. We have become sponsors of a number of the strongest basketball leagues of Europe, as well as the biggest basketball organisations in the world, which bring millions of basketball fans together. Beko has also supported several international championships. Most recently, Beko became the Presenting Sponsor of 2013 FIBA EuroBasket, which has taken place in Slovenia and 2014 FIBA Basketball World Cup, which will take place in Spain.
 
Besides basketball, Beko supports football via worldwide sponsorships. Beko is the official supporter of The FA Cup in the UK. The FA Cup is the most watched and most important tournament in English football. 
 
What advice would you give to other Turkish brands that aspire to build the same level of high quality brand recognition that Beko enjoys?
 
One of the most fundamental components for building a successful brand is ensuring that your product or service is of a high quality level and meets the specific needs of your customers. 
 
We have been able to achieve this over a number of years by our willingness to listen to and adapt to the local needs of our consumers. 
 
In this respect, we attach significant importance to the development of our brands and are continuously investing in cutting-edge eco-friendly technologies, R&D, innovation, superior design and people, which help strengthen their position in the market. Arçelik Group holds more than a third of all international patent applications to the World Intellectual Property Organization which originate from Turkey and is the only Turkish company among the top 500 Patent Cooperation Treaty filing companies listed by the World Intellectual Property Organization.

As a result of this innovation, Arçelik Group is able to design and manufacture pioneering and environmentally-friendly products which are the best in their class in terms of energy and water efficiency.
 
So my advice would be to be uncompromisingly focused on developing products and services anticipating your consumers’ needs proactively and delivering them pioneering solutions consistently, brand recognition will come naturally as a result. 
 
How has Beko been able to build such a large presence in the very competitive UK market?
 
Over the past two decades Beko has grown significantly in the UK market. Launched in 1991, the brand has grown from strength to strength as a result of a wide product offering, strong relationships with retailers, and a dedication to customer service. Most importantly though, Beko has worked extremely hard to listen to British consumers, in order to develop and launch products which meet their needs. Central to this has been our focus on people – attracting the right talent and investing in its development.
 
We believe that Beko is now poised to continue grow its market share even further in its third decade in the UK. 
 
How do you gauge the importance of the British market for Beko?
 
Beko has been the fastest growing white goods brand in the UK over the past couple of years and is now the UK’s leading home appliances brand. Therefore it is significant market in terms of both size and prestige and, as such, is an essential market for Beko. 
 
We are committed to continuing to build our presence in the UK, built on delivering high quality, innovative products that meet our consumers’ needs. 
 
What would you say to UK investors looking to invest in Turkey or those thinking about setting up operations here?
 
Turkey’s economy has been growing steadily despite the volatility in the global economy. With its young and growing population who are open to accept new products and services, Turkey presents an attractive market for almost all industries. Turkey has also become a production base for many industries including durables, automotive and machinery which also created their supporting industries and businesses. I can also confidently say that availability of skilled and very efficient workforce is another attractive factor to consider investing in Turkey.  
 
Turkey introduced a very attractive investment incentive program two years ago and I believe this has made Turkey highly competitive for foreign investors. It is also worthwhile to mention the R&D incentives which coupling with the talented researchers present another attractive factor for investors looking to invest in innovation.
 
Moreover Turkey’s geo-political position sitting at the hub between Europe, the Middle East, Central Asia and North Africa provides unique advantage to have an access to those markets at competitive logistic costs. In addition as companies in Turkey have had long business relationship in that region, it would be a good idea to team up with companies in Turkey to develop joint businesses in the region. 
 
Turkey and Britain have a long history of constructive diplomatic, economic, commercial and cultural relations. The ties between the two nations have been growing intensely at a multi-dimensional level over the last few years. One part of this has been the continued strengthening of Anglo-Turkish trade links over the past few years. Turkey’s exports consist for the most part of manufactured goods, textiles, clothing, automotive products, white goods and chemicals and Britain is among our leading purchasers.
 
However, the trade links can and should be developed further. One of the key barriers for companies and investors is to understand the opportunities and nuances of the Turkish market. We have been working with the UKTI for a number of years to help provide education and support for companies looking to enter the market. As a first step, we would recommend speaking with the UKTI or the Turkish Business Chambers of Commerce and Industry which can help companies begin to navigate the local market.

The opportunities exist; it is up to British investors and companies to take advantage. Arçelik and Beko have been working closely with UKTI to foster much closer links between ourselves and Britain and taking advantages of relationships like this is a key recommendation for British companies looking to invest in Turkey.
 
As CEO of one of the most widely recognisable Turkish brand that is synonymous with quality and excellence, do you feel a responsibility to the Turkish people, to the Turkish economy?
 
Yes of course I feel the responsibility to Turkey as well as all the countries we operate in.
 
Arçelik is one of the largest employment generating industrial enterprises. Also, it is leader in innovation and in internationalisation through its own brands. Thus, Arçelik indeed became an inspiring role model for other Turkish companies. So, it is our responsibility to strengthen Arçelik’s global position further.
 
And lastly, what would your final message be to all of our readers about Beko, or maybe even about Turkey as a whole?
 
As a global company, I’m relentlessly focused on ensuring that our company continues to deliver high-quality, innovative products that meet the specific needs of our consumers wherever they are.
 
More importantly, we feel a strong sense of responsibility to the globe. We have stated our vision as “Respects the Globe, Respected Globally” which emphasises our sustainable development approach. While we increase our global presence and prevalence through our strategic objectives that would realise our vision, we are also aware of our responsibility regarding the sustainability of resources.
 
I strongly believe that as long as we successfully execute our strategies to realise our vision which gives the utmost priority to our customers, this will reflect in the company performance anyway. I believe that our success in the UK market and globally is testament that our approach is the right one.

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