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A 'perfect storm' transforms Turkey's economy and enterprise

Interview - November 19, 2013
Robert Yüksel Yıldırım, President and CEO of Yıldırım Holding, discusses Turkey's economy, his company's multi-industrial expansion into African and Latin American markets, and the importance of finding the right local partners to ensure success
Turkey is going through an exciting phase at the moment. In a period of global economic recession, Turkey has been the fastest growing economy in Europe, for two out of the last three years, and is even projected to post a respectable gross domestic product (GDP) growth figure of 4% for 2013. What impact would you say this economic prosperity has had on Yıldırım Holding?
First of all, Turkey is growing, not just because of the Government, but also because the private sector is working hard. It is a combination of the two. The Government supports the free market and entrepreneurial individuals. When Turkey had the biggest crisis in 2001 and when the new Government came in 2002, they said that they would make big changes in Turkish history. They said that they would push for more private sector participation, and all the public companies would be privatised, and the Government would focus more on education, health and justice. I had to choose – either believe the Government, or be conservative and not believe, and wait and see. 
We took the bullish side – we took the risk and we started to participate in the privatisation program of the AK Parti Government. In 2003 and 2004, we started to buy distressed assets from the Government and private companies. That was the turning point of our company’s history. We used to be a big trading house and then suddenly in 2004, we became an industrial producer and miner.

That was totally different in business. If you do not like the market prices, you can sit on your money or make different types of investments by buying and selling, but when you become an industrial player, it is totally different. Things cost you money because you have to pay bills and salaries, and you have high running costs and overheads. So we had to change our culture for this new environment.
We applied my experience in the US to this family business, because I worked with the Japanese, who are more conservative and slow decision-makers. They are very detail-oriented. My life experience and education in the US helped us look at all the business issues and look at all the details. I adapted the management culture and applied it to the Turkish environment, because Turks are different – they are very emotional and not as professional compared to the West, the US and Europe. 
We innovated a lot in the business we bought, and that made us very successful. This reflects the Turkish economy, because when we bought the mining company Eti Krom, it was a company that was $120 million in debt. The Government could not pay the miners’ or factory workers’ salaries. We turned the company around. We knew how to market the products. We put all our know-how in. We did the same thing with fertilisers and the port investment that we bought from private companies. Other companies took the old losing businesses and turned them around and made them profitable. The global economy also helped from 2003 to 2009. 
The Turkish economy was booming, so the Government really supported private companies. They brought Turkish businessmen together with the ministers and prime ministers in foreign countries, and suddenly Turkish businessmen became more and more international. 
I made some crucial decisions to adapt to this bullish market and the opportunities, to turn them into golden opportunities for us. I am proud to be part of this successful period in the Turkish economy. I am one of the fortunate people. The Government made the right decisions together with us at the right time in the global economy, and this made Turkey and Yıldırım Group successful. This was a ‘perfect storm’ for us. 
The Turkish economy was more dependent on European business and 65 to 70% of our exports were going to the EU. But when the crisis happened, Turkey had to find new alternative markets, and that was a challenge for all Turkish businessmen as well as the Turkish Government. So good coordination with our Minister of Economy and our businessmen and business associations was required. They went on a lot of trips to different countries, mainly to Africa, because Africa is just awakening. It is going to grow now.
Can you tell us about your trip with Prime Minister Erdoğan to Africa?
I will come to that. There are great opportunities in Africa, but it is very risky. Turkey started to discover Africa as an alternative to existing markets like Europe, which are shrinking. Turkish exports are growing, so it has to find new markets in Latin America, the Middle East and Asia, for instance. 
Every year, the Government sets a new challenge – higher exports. So we need to work harder. We are also making some money, and we take this money as equity in our new investments, and then we get project finance and loans for these new investments, so we have to work hard to get project or acquisition finance back to our creditors or the banks.

In the past, the Government borrowed money from the World Bank or the IMF and then it kept spending this money on its state enterprises, and they were losing out. Once they had successfully implemented privatisation, owners shifted from the state-owned or public sector to the private sector. We started investing in growth to make it more flexible and more competitive. The Government took money from me when I bought; the Government started paying salaries and I started paying salaries and social security, and they earned money off my profits through corporate tax. So the Government was a winner, and they started paying back all their debts to the IMF. Turkey has zero debt to the IMF today as a result.
However, private companies have a lot of debt now. So, the debt shifted from Government to private companies, and from the IMF to individual banks. The Government’s mentality is different, but I cannot deal with this. If I lose, I know that I will lose everything, so I have to work hard to make sure that it is profitable and competitive. I need to put all my time and money in to make sure that I get a return with profit, so I can pay off my debts, grow and invest more. This is the whole story of Turkey’s success.
I have been in Africa so many times by myself and with our economic ministers, our president and our prime minister. This year the first trip was to Africa with our prime minister. We went to Niger, Senegal and Gabon. Niger was not so interesting – there was pretty much nothing for me there. It is such a poor country, but there are opportunities for infrastructure companies and construction companies or the health industry. But my intention for that trip was to mainly focus on Gabon and Senegal. We have an office in Gabon.

Two and a half years ago when I went with our president to Gabon, I met the president of Gabon, and I promised I would open a regional office for West Africa, so we opened one. We started chasing deals for the whole of West Africa from Gabon for the mining, ports, energy and fertiliser sectors. These are our core sectors in which we want to grow globally. My trip to Gabon was very good. I met all the ministers. I met ministers and people from the Chamber of Commerce, and we developed good relationships. 
After you make good contacts, you start travelling back and meeting them one-on-one. When you go with a whole group, it is not easy to talk about everything, and you have limited time and so many people. So I travelled by myself, and that is how I got all my deals. 
Why do companies select you every time for partnerships and investment?
They see a potential businessman with an image of Turkey, and they know that Mr Yıldırım always has an appetite to go outside of Turkey to invest. The Government now needs to create global players from Turkey. Sabancı and other groups always used to be the face of Turkey in the past, but now the Government is trying to generate new companies. We do not compete ourselves for the same business. Sabancı has two or three companies investing, but the Government wants to get maybe 100 companies. I have this self-confidence because of my life in the US and working with a lot of foreigners outside of Turkey, so I communicate with people easily.

I am not conservative, so I can sit down and fit in with them culturally. When they see my name Robert, doors open automatically. Then I can just go and sit down, drink and socialise. You do not want to create the wrong image outside of Turkey.
Image is important. Turkey is between the East and the West, so we can fit in easily with Europe. For me, half of the Turkish population are like Europeans, and the other half are more eastern in cultural terms. They are more conservative, and people get the wrong image. 
Every time we travel on the plane with Turkish business delegates, the Economic Minister always asks: “How are you Robert?” And I ask him not to use my name Robert in front of Turks, because people question why my name is Robert. They wonder if I am Christian or Jewish. I am Muslim, but I use this name in international business. I am not cheating, but it gives me some sort of power in business. When I say my first name, Yüksel, some people cannot say ü, so 10 minutes later, people ask my name. When you say Robert, there are five different names – Robert, Bert, Rob, Bob etc. The Japanese call me Bobsan.
We have a growth strategy in Africa and a regional office in Gabon. Now we are planning to open an office in the south of Africa; more likely in South Africa, in Johannesburg. Then we will go to the east, either Kenya or Tanzania. We will take sub-Sahara, the west, south and east. In the west, we have a Turkish and French identity, because I am a very big investor in France thanks to CMA CGM, so I can use my partners in the container business. They have a very good network in all the coastal areas, so that improves access. 
In the east, there was more of an Ottoman influence in the past, so you get all the attention with the Turkish identity. 
We provide a one-stop shop kind of deal in Africa, because we are not just a one-industry company – we are multi-industrial. We mainly talk to the ministers and we tell them if we are ready to invest in mining. We say that we will bring equipment, finance and know-how, and the Turkish workers are expensive, so I cannot afford to take them to Africa to work. We are different to the Chinese or Indians. We go there with investment, but hire the local people. The Chinese bring their Chinese workers over, so the Africans do not benefit anything from those investments.

But we make sure that Africa benefits from our investment through employment. We bring in money for indirect investment, and we bring in know-how. We can partner with the state. We do not just want to be ourselves – we want to set up joint ventures with majority shares under our control. We do not want to be the minority.
We go to Africa with this vision. We want to ensure that we can do mining and logistics, and invest in ports, so that ports and shipping benefit from these operations. There is a knock-on effect. Talking with these top-level people is a big plus for Yıldırım – they are very interested in working with us. We want to invest in Africa. Just two weeks ago we signed a big deal with the Cape Verde Government. The minister was here and we signed an MoU (memorandum of understanding) to take over the ports in Cape Verde. We are going to invest in a transhipment port there. We had a meeting with Senegal’s president today, who has invited me to meet. People from Gabon were here just three weeks ago to visit our mines. A lot of Africans come to this office at ministry level, such as those from Benin and Mozambique. 
We are also active in Latin America – we have an office in Colombia. We are making several offers for ports and mining investments in Latin America. It might be too early to say in this interview, but I would suggest English entrepreneurs and businessmen to work together and invest in Africa or Latin America. Our know-how and their know-how can create a synergy and a complete package, so we can work. It is not necessarily about going to the UK or Turkey to do something. It is a golden opportunity, and a win-win situation. 
What advice would you give to potential Turkish companies that want to increase their global presence, like Yıldırım Holding has?
It is not easy. First of all, you need the self-confidence that you can be a global company. Once you decide to go global, you definitely need good human resources. Usually, companies that have money think about going global, but money does not help you. Money only opens doors to opportunities, but you need good staff. You need to be local. If you become an outsider, those investments fail or do not work. So you need a good understanding of the local place you are going to. You need to understand the culture, you need communication and you need to trust your people and the local people. 
You need to combine your investment with finance and human resources, and you need some competitive know-how in order to overcome challenging investment. If a Turkish company has good know-how or good human resources, it does not matter whether it is Europe, the US, Africa or Asia – you have to choose the right place for your business. 
We have a desk for Africa and Latin America. We tried Asia, but we were not successful because it is not so easy. Asia is a very competitive market, and there are a lot of local rich people. They are hardworking people, so when you go there, you are in a challenging environment, you do not bring anything new in. But when you go to Africa, there is not much money there, so it immediately makes a big difference. Everything is working there. 
Latin America and Turkey are almost the same, and Turkey is even a little ahead of some of those countries. So when I look at how successful Turkey has been over the past 20 years, you can take this growth to Latin America and apply almost the same thing. You just need to do the right thing and find the right people, and local partners. It does not work if you want to be alone and greedy. 
We invested so far in Europe during the crisis, because the best opportunities were in Europe, so we put $600 million in France, in the world’s third largest container liner, CMA CGM. The Malta Freeport is a growing business now. In Belgium we invested in a small operational leasing company called Sealease, and the company has grown fivefold in the two years since we invested in it. There was a lack of financing, so we took 75% of the shares like a venture capital style investment. It is going well. The management team has remained in the company and we monitor them. We just provide financing and we make sure that the money goes into the right places. 
In August, we announced that we are going to buy our competitor in Russia and Kazakhstan in mining. It is a big investment comprising $425 million. It is risky going to these countries and it is a challenge for me, but it has made me number two in the world in the high-quality high-carbon ferrochrome business. In terms of global ferrochrome production, we are number four or number five in the world. 
We bought Eti Krom from the Turkish Government at a $120 million loss. All the mines were destroyed and we turned it around. We are now in the top five globally. This is what motivates me – reputation and recognition. That makes me happy. I work hard for this. If you have a cultural fit, the right things and you have enough finance to invest, then you should consider investing. Otherwise, I would recommend staying local and just doing what you do. Otherwise it would be a disaster for future companies that want to go outside of Turkey to get discouraged. We have a lot of successful stories and people look at what Yıldırım does and ask why they cannot do something similar.
We are open. We can set up power companies to go to third-world countries. We chose some specific areas to go international in – ports, energy, mining and metals (mainly mining) and fertilisers. This is a good deal and we believe we can do it.
As President and CEO of one of the premier Turkish conglomerates, which is not only leading the way for global investment, carrying the Turkish flag internationally, but also giving back to investments such as modern ports, do you feel a responsibility to the Turkish economy and the Turkish people?
Of course. As I said from the beginning, I am a Turkish businessman. I carry a Turkish passport and I am responsible for Turkey. People know me as a Turkish businessman, so any mistake I make will give Turkey a bad name. I am like an ambassador for business, so I have to act responsibly, reasonably and fairly. 
For me, identity is very important. I use the name Robert outside of Turkey, but I am Turkish. I have a responsibility to this country, no matter what happens. I hope our people in the Government understand so that they can support what we do. Because of me, I do not know how many thousand people come to Turkey just to discuss business with me and meet me when I am in Istanbul, and visit my facilities. All of these people are staying in hotels and spending money and all these things. I go to so many countries around the world, and when I say Turkey and Turkish, I am advertising Turkey free of charge. This is very important and it should have a value for my Government, country and the next generation. 
I have very young and energetic members of staff and I believe in my company. I support my employees if they want to get a Masters or PhD degree. I give them free time and provide financial aid for tuition. We are building three high schools this year for the Government. All three are technical high schools. 
We believe that this country needs qualified workers with good knowledge. We have one logistics high school and one technical high school as well as an English school. We won the title of “best scientific high school” in my home town of Samsun. We spent almost $7 million and donated it to the local authorities.

For university entry exams, that high school is the number one in my home town. We have four elementary and middle schools, and two kindergartens, so we do a lot of social responsibility projects. We are the only company in the Mediterranean and Black Sea/Middle East region to have a crane simulator in our port, which is like a flight simulator. Our employees and newcomers first train using this simulator. They work and then we put them back on the simulator to pass certain classes to improve their capabilities. So our port productivity is number one in Turkey. We are investing not only in the business, but also in our people, which I enjoy doing.