Emerging markets have attracted a great deal of attention from the rest of the world recently. Industry specialists are watching closely to try to predict if these incipient drivers of global economic growth will boom or collapse as a result of macroeconomic pressures in 2013.
Emerging markets became important launching pads for many multinational firms in 2012, with global expansion expected to exponentially increase throughout 2013 as new opportunities present themselves. With cost advantages and the need for local expertise acting as the primary driving forces behind corporate expansion, the U.S., Europe and Japan are beginning to take these emerging economies seriously as capable and competitive entities. The global playing field is more level now than ever before.
But are these expanding corporations really immersing themselves in the culture of these countries? Localizing your brand is imperative in ensuring long term success overseas. No business is capable of changing the beliefs of an entire nation, so we must adapt our offering accordingly.
Turkey – why didn’t we see it coming?
Turkey occupies one of the most strategic locations in the world. It controls access to the Black Sea – home to ports for Russia, Bulgaria, Romania, Ukraine and Georgia. Access out of the Black Sea into the Mediterranean is via the channels of Bosporus and the Dardanelles – both of which lie in Turkish territory. Furthermore as the only member of NATO in direct proximity to Russia, Iran and Iraq, Turkey is of high strategic importance.
Despite being considered an ‘emerging market’ Turkey has actually been economically established for more than 6 centuries. America can only lay claim to 2 in comparison. In 1923, Turkish President Kemal Ataturk initiated a number of reforms; one of which was the secularisation of the state – a major advancement for a Muslim nation. This development helped position Turkey as more accessible and ‘culturally compatible’ to other countries from a business perspective.
Regardless of its standing as a multi-ethnic state combining every extreme of Eastern and Western culture, it is still essential that businesses segment their target market and localize their brand to ensure that they are positioned appropriately and that their message translates – both literally and metaphorically.
How brands are maximising their chances of success
LinkedIn recently announced that Turkey is where they are experiencing their fastest growth. Combined with the economic opportunities presented by the market, LinkedIn has confirmed that product localization continues to be a strong driver of its member growth. The desktop version of LinkedIn is now available in 19 different languages and several improvements have been made to the user interface.
Technology remains crucial to success in both local and international markets. The opportunity to differentiate in emerging markets is greater than in saturated established ones, so businesses should play on their strengths and optimize their online activity to gain market share. With ‘search’ now considered the new barrier to international success on the internet, many organizations are recognizing multilingual SEO as a fundamental element of their market expansion strategy.
Multilingual search engine optimization (SEO) is the process of increasing the volume of good quality international traffic to a website through the use of country specific search engines. Global language translation company, Language Connect, recently opened an office in Istanbul. Both localization and multilingual SEO have played a vital part in their business growth overseas.
Gateway to a new business era
Wall Street Sector Selector recently suggested that Turkey’s success is down to its economic focus on ‘service’ rather than agriculture.
Most emerging markets are heavily reliant on commodities and energy for their growth; however Turkey’s economy is strong based on an abundance of consumer companies and independent financial standing due to its positioning outside of the Eurozone.
The reliance of many emerging markets on commodities and demand from China puts these countries at risk, especially as growth in China slows. Increased reliance on consumer spending (instead of construction and industrial output) means demand for material goods in China is expected to decrease dramatically over the next few years.
As Turkey is not linked with a sustained raw materials demand from China, its Gross Domestic Product (GDP) has continued to expand where other emerging markets have stalled.
The iShares MSCI Turkey Investable Market Index Fund (NYSEArca: TUR) is up 55% this year (ETF trends) and the market has earned investment grade status. In layman’s terms, this means that Turkey’s investment ‘attractiveness’ has increased by 55% based on price and yield performance. Earning investment grade status indicates that corporate bonds have a relatively low risk of defaulting.
Turkey’s growth is aligned to sustained consumption. Many believe Turkey relies too heavily on Foreign Direct Investment (FDI) (Seeking Alpha), which arguably is the catalyst responsible for Turkey’s increasingly powerful positioning. However, FDI has been consistently reduced in recent years due to problems in the Eurozone and additional economic pressures, but Turkey has continued to expand. This suggests relative stability beyond FDI.
Turkey’s steadily declining unemployment rate (down 8.9% in the most recent quarter) puts its unemployment rate lower than the Eurozone (10.8%) and very close to the USA’s (8.2%) (Seeking Alpha). This is essential as Turkey’s economy is driven by consumption. These low unemployment levels support statistics indicating that the Turkish population is becoming wealthier.
Turkey’s economic strength is generally perceived as “moderate to high” in the sovereign rating spectrum (Moody’s) (a necessary rating for countries to fully access international capital), as the country has been able to show sustained resilience to numerous economic and political issues.
The future for Turkey looks particularly strong and we are likely to see an increase in the number of multinational corporations expanding into the financial district; Istanbul, and administrative quarter; Ankara, in 2013.
No longer just a tourist destination renowned for breath-taking natural beauties and unique historical sites, Turkey is on the cusp of becoming a primary player in the professional world.