Turkish design and quality-oriented and furniture manufacturer Koleksiyon is a step ahead in originality and environmental sustainability. Doruk Malhan, Board Member of Koleksiyon, explains how R&D and international partnerships give the company a global edge in incorporating innovation and technology into its products.
What steps would you like the government to take to increase momentum in Turkey?
It is all about having a goal. If you do not aim to be the first, you will not become even second. We predict some high growth for 2023, moving up the ranks from 17th to 15th.
Great things can be achieved from moving away from one’s comfort zone. That is what we are trying to do. A prime example of that is the current administration’s move towards e-Government. You can now use an online platform to process IDs, visas, and the like. This web interface increases government efficiency, and cuts waiting time significantly.
Secondly, we have the communication incentive for the Prime Minister.
There is a move to remove red tape, unnecessary bureaucracies, and other causes of administrative bottlenecks. Initiatives to make government more open to the public have been rolled out. This includes opening channels of communication between the public and the government officials. This gives the government an ear to the ground in terms of what needs to be changed.
It is important to note that Turkey is not competing with its neighboring countries. It is competing with the logistically important countries of different continents. That is one of the reasons for earmarking Brazil, Turkey and India for Hinterland Logistics and Infrastructure Development (HLID). These are the countries with momentum for change in HLID.
Turkey has been through some rough times. There was the earthquake, and Greece was one of the first countries to come to our aid.
When you talk about Greece, you talk about shipping, tourism, and such like. When you talk about our other neighbor, Iraq, they have energy, pipelines, and so on. Turkey, on the other hand, is known for manufacturing, as well as its textile, tourism, and food industry. Turkey is a big logistical hub for various large companies, which is one of the reasons Istanbul Grand Airport (IGA) is very important to the whole hinterland.
Turkey should be competitive in banking and financing, not just Islamic Financing (IF). When you talk about the centers of finance like London, New York, Frankfurt, and Hong Kong, they account for the major share in international banking. Even the Turkish lira (TL) is quoted in London. The Middle East has about 45 different currencies. Turkey could position itself as a financial centre in the region.
Clearly, we have a large agenda to fulfill. When we talk about 2023, a date picked in alignment to the establishment of the Turkish Republic in 1923, there is so much to do, from the high-tech industry to the furniture industry.
There is a goal to reach $500 billion exports by 2023, $6 billion of which should come from the furniture industry. How feasible is this target for the furniture industry, and Koleksiyon?
To maintain a strong business position, I believe in first solving your existing issues locally (which is exactly what Turkey did for the furniture industry). The country is a relatively small importer of furniture, and a huge manufacturer and exporter of furniture. More than 90% of domestic demand is supplied by Turkey. It makes sense after all. If you cannot do it domestically, you will not be able to do it internationally.
After getting all our local issues in place, the next step is to open our gates to markets outside the country. Technology has helped bolster our position in this regard. The financial incentives are helpful, but not as significant as the support we have had from the government. Qualified companies like ours that have passed the stringent assessment get to take advantage of this lifeline in terms of the business plan, and automatically qualify for international business. It is truly a commendable government initiative.
As for Koleksiyon, we restructured our export department six years ago. It is now international sales. This is to better streamline our overseas operations, and create a clear division between this side of the business and domestic sales.
Every year, I travel more than 200,000 miles. The greatest challenge and distance lie with the people and our communications. If I had exerted four NTs of force outside, I would spend 12 NTs of force inside the company to change their approach and keep them abreast with the times.
Other players in the industry have successfully accomplished that. They have changed their way of doing business. Koleksiyon and the other market players continually strive to reach the industry targets.
As you know, I am also the VP of Ofis Mobilyaları Sanayi ve İş Adamları Derneği (OMSİAD), the Turkish Association for Office Furniture Manufacturers. It caters to the corporate market, while Türkiye Mobilya Sanayicileri Derneği (MOSDER) is the Turkish Association for Home Furniture Manufacturers. Both groups are represented in our company, and we understand that we have to look at them as a whole that we have to take care of in the process of running a world-class business. This requires long-term and medium-term planning – where we see the business five to 10 years from now. We see Koleksiyon continuing, if not exceeding, this positive trajectory. We had two to three players leading the industry.
Six years ago, I was in charge of international sales, and we had two key markets (including Egypt) through a small firm that was very much connected to Turkey. Now, we are active in 23 countries, from the Middle East to Australia, to the United States.
When we talked with big international companies from different industries (e.g. banking, pharmaceutical, food and beverage, etc.), we found that despite their size, they were faced with the same issues. We were inspired by what they did to overcome these challenges. It made us think that we could do the same thing, too.
You mentioned the country’s need to expand its high-tech value-added products. What is your company doing to that end?
I used to watch The Tudors, which basically touches on the reign and marriages of King Henry VIII, and gives a general view of the United Kingdom’s history. It always starts with, “You think you know a story, but you only know how it ends. To get to the heart of the story, you have to go back to the beginning.”
It is the same with countries. You need to know a country’s history to truly know it.
If you look at Turkey’s history, the country had a self-sustaining system for more than 1,000 years. It had land, trade, food, and sea – all the things it needed. Other G8 countries, on the other hand, needed to deal with world trade. They went around the globe through their naval fleets, and were in constant competition with other nations that traded in the same manner. Unlike Turkey, which had everything it needed, and was therefore comfortable, other countries were constantly on their toes. As such, they have developed a culture of innovation and finding ways to remain competitive. That has been one of the reasons like Turkey did not get to fully expand its high-tech value-added products.
Koleksiyon is quite different in this regard. My father had an inherently curious mind. The roots of our family could be found in Damascus. My grandfather was from Greece. We have ancestors from the Balkan countries. My grandmother was from Qatar.
Everyday, my father sought ways to improve what he did. He looked at what he had accomplished, and asked himself what he could have done differently.
The name of the company comes from French origins, which has been translated to Turkish. It refers to an assortment of selected items that have been grouped together.
From the very beginning, the company sought to be design-oriented and original. We never tried to benchmark in the sense that we hailed ideas from other designs. We focused on our original work, and looked for ways that we can do them better.
For example, if you look at the tea set that my father designed, it is ergonomic in that the cup remains at the center of the saucer even when you are in motion (like when you are riding a boat). How he came up with the idea, I do not know; however, it is a good idea (albeit, small). The goal is to improve the customer’s way of living. We gather information from daily life, and find ways to translate that into furniture.
In coffee shops, the most popular seats are the ones closest to the electrical outlets. People have their laptops, mobile units, and other PDAs. They like to stay connected. We take that knowledge and apply it to furniture. For this, we worked with various designers – Swiss, Scandinavian, Italian, Turkish, British, what have you. We have to look at the substance of the design, and consider the aesthetic appeal and function at a global range. This is an example where R&D comes in.
Turkey’s 2023 export goal for wood and wood products is $16 billion (1.6% of the global market). Does Koleksiyon use a lot of wood in producing high quality products?
We like to evenly distribute our strengths and weaknesses. As such, Koleksiyon is not necessarily a wood-oriented manufacturer; although, we do have a wood component. We have wood and we have upholstery. Furniture encompasses a number of things, from storage to lounge, and so on. It is not just limited to things you can sit on. Our production facility has several components, including woodwork, upholstery, leather, and many others. They are all at the top of their respective areas. Even in distribution, we want that equal balance.
As for wood, we are not importers. We derive our materials from local sources. This brings me to concerns about agriculture and forestry. We should have more trees that are 50 to 100 years old. This should put us in a position to engage in more long-term planning. This is a crucial challenge that we need to address in trying to meet our targets for 2023.
Worldwide certification is imperative for us. It may take some time to acquire, but it is worth the wait.
What is your main market focus for 2023?
We have been traveling all over the world. When we started, we created a nice mathematical model. There are almost 200 countries in the world (the World Atlas estimates it to be 196 as of August this year). However, we do business with about 120, including territories we technically cannot do business with (e.g., the southern part of Greece, etc.). When you talk about normal economies and businesses, you are talking about 80 to 90 countries. Out of the 80, we determined the GDP per capita to determine each population’s purchasing power. Based on research, two countries had a GDP per capita of $25,000 (however, one is two hours away by flight, while the other is 10 hours away). Anyway, applying the necessary factors, we got 12 countries from the list to start with for the first four to five years. By 2025, we hope to be in all 80 countries.
We experienced a lot three years after the 2008 crisis. We noticed how the issues transferred from big countries to the smaller countries. In the last three years, we have lost really important markets such as Egypt (which used to be one of Turkey’s best trade partners), Syria (which suffered a devaluation of 30%), and Iraq. This made us question our strategies. When we talk about the emerging markets, we have to consider volatility and its implications on long-term planning.
However, if you establish your business in places like the UK, you should enjoy stability for up to 10 years (unless, you make a huge mistake). That is what led us to G8. If we do good business in Germany, Russia, Japan, Canada, Italy, France, the US and the UK, we should be okay. In terms of market visibility, if we are present in those eight countries, it would be very nice. As an international company, we can reach 10 million in eight countries or 300 million in five countries – market visibility vs. substance. Today, our main focus is Germany, Japan, Russia, the US and the UK.
Launched by the Turkish government, Turquality is the first state-supported branding project. How does this apply to Koleksiyon? Was it integral to your global reputation?
Turquality is a sort of stimulus program that seeks to support qualified local businesses as they branch into overseas markets to strengthen the Turkish brand.
In the case of Koleksiyon, we started out on our own. We accomplished what we set out to do, and Turquality commended us for it, much like a teacher would when a student does something well. After which, we got the incentives and other forms of support.
It is crucial for one to do one’s homework. That is the only way you can reap the benefits of Turquality. You must qualify and prove your mettle as an enterprise. Turquality guides you and informs you about where you stand as a business. It motivates you to stay on track.
How important are international business partnerships for you?
For us, there are two kinds of partnerships: real business partnerships (e.g., financiers and such) and intellectual partnerships where we have zero competition and conflict of interest, but have several items that overlap. We have been talking with tech companies to that end. For instance, today we talk about wireless energy transfer that would help you charge your device by simply resting it on a tablet. Koleksiyon is looking into merging such wireless technology with innovative furniture designs. It is well positioned in various key markets to roll out such products.
We are open to these two kinds of partnerships. For big markets, we are looking into acquisitions. We may establish manufacturing facilities there.
Going to the US to make a greenfield investment is difficult to initiate. It requires more than mechanical know-how. We need to have an existing supply chain in the area. That is why we are going to accomplish this by way of acquisition. In the partnership, we can either be the buyer or the seller.
All the same, we are still in the lead when it comes to R&D, thanks to these partnerships.
Kindly comment on your company’s environmental sustainability.
As a family and as a company, Koleksiyon values environmental sustainability, and understands its importance in terms of what we leave to future generations. Our company enjoys the kind of size that affords its employees the chance to pursue what makes them happy.
Koleksiyon has a 50-year global outlook that necessitates its operations’ environmental sustainability.
We believe that whatever we take today is borrowed from tomorrow, so we have to invest in the future. That is our mandate. This means that everything we do should be grounded on the principle of sustainability – from manufacturing to design, and so on. It is something we have formulated and assimilated into our daily lives.
Even before the environmental restrictions that have been imposed on our industry, we had incorporated environmentally sound processes for manufacturing, including the use of water-based lacquer. Koleksiyon is a step ahead in environmental sustainability.
Koleksiyon started as a family business, which evolved into an SME then a global powerhouse. What key values drive the business?
Design, originality and quality are part of the company’s DNA. This requires hard work and thinking out of the box. People tend to lose sight of the relationship between cause and effect. Koleksiyon is different because it looks into the causes.
My father started the business. Eventually, my brother, sister and I started managing the company. We are aware of the business’ dependence on each of our 750 employees. We also like to thank the families of our colleagues for their continued support.
From a human-centered issue, we try to maintain focus on how and what we do. I have been in the business since I was 15 so there was no difficult transition period. My gran used to ask me why I was working even though I did not get paid for it. I worked for the love of it and not the pay.
Every 10 years, we see some huge changes in the trend. Koleksiyon goes beyond today, and looks into the future. We keep abreast of the times.
What advice would you give to young entrepreneurs who are trying to make it big in the industry?
Stay humble. Our mortality is a great equalizer. Remember that at the end of the day, everyone you deal with, even your competitors, are just people like you, who feel, love, and end.
There is no one recipe for success. Think about your capabilities, and what you can do with them in the future. Do not lose sight of the things that truly matter.