ORSIAD (Journal of Forest Industry Businessmen): Could you give us a comparative approach about the general status of Furniture Accessories Industry preceding and following MAKSDER (Furniture Accessories Manufacturers Association) at the point of remaining five years’ experience and your re-election?
There was a status as follows before we formed an association; I will try to explain this in a simple way in order to facilitate the understanding.
First, our friends who are member of MAKSDER today, used to see each other as competitors and, so to speak, did not even greet each other with the concern of losing their customers to one another although they had known each other before the foundation of our association and I believe this problem roughly exists in all other sectors. Therefore they failed to agree and merge with and they could not find solution to the problems of the sector. Primarily we witnessed that these problems were isolated by forming an association. After the foundation of MAKSDER we realized that; sectoral solidarity and cohesion was achieved; and the sectoral cooperation in terms of technique, quality and work experience increased. All of these developments greatly pleased us for sure.
Second, the companies and the individuals tried to solve their problems by discussing mutually with the companies. The best example regarding this situation used to take place in the relations with the fair companies and this would bear no good results for any sectoral organizations. After the foundation of MAKSDER the management of these relations was undertaken by MAKSDER. Thus our members gained the right for; positioning in joint fairgrounds; power to have collective bargaining and; institutional representation against their addressees.
Another development could also be told as follows: The number of handle manufacturers is slightly more than others among the members of our association; we have 14 members exclusively manufacturing handles. These companies were constantly in dispute with each other. We frequently heard about this problem from everyone else before the foundation of the association. Following the foundation of our association we held some meetings on this issue and consequently published a declaration which could be called as a common ‘memorandum of understanding’. The platform for agreement created by this means was quite helpful and the handle manufacturers solved their problems with some exceptions.
Another development was; the companies were trying to solve the problems about the imports from China by themselves before forming an association. The opportunity to handle this problem came out with the foundation of MAKSDER. When we took office, we encountered matters such as launching of Damping Tax in some countries, briefly after the issue of Supervision Tax and subsequently Specialization Customs. Although these matters are yet to be finalized or may not be in a good position our works on these continue uninterrupted. Because after each step we take we encounter other problems, various complications begin to occur. We are trying to solve these problems in order of importance as the occasion comes. We believe that first our member and then the whole sector benefit from positive conclusion of these and similar works.
ORSIAD: Whenever people mention about a problem they start todemand state to do something. Are you one of those who ask government to do something?
What we ask from government is a question that is being on top of frequently asked questions to us.We basically ask nothing from government. Because of the events we suffer from, we should mention about those under the title of two main subjects:
First, we ask from government to prevent goods produced with dumping implementation in foreign countries, especially in People Republic of China get into Turkey without dumping tax. This is our most important demand basically. Because Turkish Republic applies dumping tax on products imported from China, Taiwan (apart from 5 firms), Indonesia and Malaysia. We have importer companies researching about these issues in our country. And we are not uncomfortable with these, on the contrary, as MAKSDER, we express our satisfaction. Also we would like to indicate that reliable trading process can’t achieved in places where non-competitiveness exists. Hence, there are some importer firms acting with the purpose of only seeking short term trading profit without regarding whether how much it is right or wrong to account this only as a short term profit by making profit in this short period among these nearly 25 importer firms. They are in limited numbers. We are excluding other importer firms from this situation but we think these limited firms as being malevolent. Attitudes and behaviors of these ones happen like that: We are talking about they send goods produced by them in China, Taiwan, Indonesia and Malaysia to another European country and there, they take action as if they were produced in that country, lastly they send them to Turkey. In this case, we think these actions of firms spoiling dumping application and trying to destroy the government’s mechanism with another way are not appropriate. Following this, our demand on Specialization Customs implementation after Supervision and Dumping Taxes came into force but this time different problems emerged. So at this point, what we expect from government is concluding actions to cope with these problems immediately.
Secondly we wish to address this: There are various working groups and projects created for the purpose of exporting 500 billion $ within this period i.e. in 2023 in which we talk about exporting more altogether. However, at this pointthe following should be addressed;there are still some countries in which the taxes are brought down gradually according to the trade agreements concluded between Turkey and that country. For instance, while no tax is charged when a product is imported from E.U. states to any country in North Africa, customs duty is applied when it is imported from Turkey. At this point we face unfair competition. In other words, while a European sends goods to regarding country freely, we should pay for our goods additional tax to that country via importer firm there. This situation causes that problem: while a product ex-Europe costing 100 Turkish liras is the same for importer firm there, products imported from us cost 105, 110 or 120 Turkish liras according to tax rates. This necessarily creates unfair competition. At this point, what we ask from government is making deals with countries not made yet or resetting deals depending on gradually, year by year, falling taxed with new deals ,by joining if necessary, immediately. This opportunity which Europeans had years ago and benefited from at will should be provided with us. As a result, there will be one more advantage for us to reach foreseen export targets easier concerning 2023.
In the meantime, we need to mention the importance of the R&D studies regarding our sector. The importance of R&D studies is undeniable in our sector. Great prices are paid for research and development. It is good to know that the wages of the personnel employed in this field are not low. Our government released a special status for our R&D studies. Part of the costs regarding the companies identifies as R&D center are covered by government with different applications. Of course the selection of candidate companies as R&D center is carried out extremely thorough and careful. A company needs to employ more than 50 personnel only in the R&D department to be a R&D center. It is not possible to say that the companies operating in the MAKSDER members’ sector have reached to this level except few of them. As we have said there could be a few companies but that’s all. We could say that imposing obligation for SME companies of employing 15-20 personnel to establish a R&D center may bring out more beneficial results. The establishment of new R&D centers will play an incentive role to develop new products. The general public shouldn’t perceive all of these demands and requests as a company maneuvers in order to increase the profits. On the contrary we are of the opinion that the advantage of the industrialist will reflect on his product and increasing of the employment thanks to these investments will be a positive development. We could say that Turkey struggling with an important problem as employment will easily overcome employment problem thanks to the conveniences provided to SMEs in order to establish R&D centers.
In brief, MAKSDER is always within the research and study of gaining thing to operating in the related sector and its members together with its mission and the corporate structure it created. We could say that there will be new matters to think over and conclude in our new work period. We will endeavor to get successful results by discussing this with our friends in the Board of Directors and to provide a good period.
ORSIAD: We believe that MAKSDER conduced this: Although furniture subsidiary is like a sub-sector or sub-branch of furniture industry MAKSDER has undertaken an important function in the sense of the expression of its power by the sector or strengthening its representation in corporate relations.
To put it right, MAKSDER is a Furniture Subsidiary Industry engaging with production of materials made by the metal and plastic raw materials used in furniture sector at the moment. However this subsidiary industry term was used within an extremely underrated content in the eye of furniture factories. We started to witness that members of the association are accepted or perceived by these factories and their addressees in a different way with the appearance of MAKSDER. We could say that MAKSDER has undertaken a very significant function at this point.
ORSIAD: Innovation or the definition of value added products have been frequently encountered by industrialists as a magical concept. In your opinion what should we understand when mentioned value added products?
All of the developments experienced in the last 20 years and increasing competition conditions explicitly demonstrated this fact: From now on ‘the value-added’ within the product as well as the total cost of the constituent parts of that products or production costs constitutes the a large portion of the costs paid by the customer for products and services. The most important part constituting the value-added is the design, genuineness, information density, technological content and brand value of that product. The companies with the highest competition level in global economy are the ones which could manufacture the highest value added products, differentiate from competitors, design and practice the original and innovative solutions on the other hand the most competitive countries are the ones ‘which could make transition to innovation-driven economy and transform their industries into knowledge-intensive status’.
We, i.e. the companies operating in the sector, were primarily follower just at the beginning of the work before reaching to the point where we are at the moment. You see, we purchased the products of various companies in Europe and put these on the market as a new product by promoting. Thus we tried to attain a place in the market. The earnings we obtained by this means returned to industry as new working conditions and new investments. Accession to cheap product, quality product or obtaining information became easier and available in company with the process that global economy passes through, the progress made in the last 10-15 years and the advances indicated. These communication opportunities produced a different effect on the products and created a pressure regarding the profit margins. You had no chance to keep the product expensive here because there was an opportunity to purchase the product which is expensive here,cheaper from abroad. This process inevitably led to a conclusion such as the transformation of the products with the innovation and the greater adoption of the innovative products. The products put on the market with an innovative perspective found more place for themselves. The innovative product primarily begins with a dream and then it must be transformed to a commercial value. By this means you get the chance of finding more places on the market. Therefore the creation of R&D centers and employing the personnel accordingly appears as an important process. If you implement these phases in a good way and find the products that no one could devise you get the chance of reaching the possibility to sell the product created by making profit more than anyone else. The product sold as a result of all these works also means new employment opportunities and investment areas. The definition of value-added product is briefly obtained by passing through such process. We cannot ignore the benefits and possibilities brought to industry by value-added product. We witness altogether that Apple is the brand managing this in the best way around the world in the recent time…
ORSIAD: When we think together a building trade slowing down a bit in 2012 and after all an ‘urban transformation’ project seemed as if not slowing down in 2013, what can you say about the course of events of furniture and sub-sectors of it in this period? Can you make a prediction about 2013 within this scope?
As we know, all companies demonstrated the success of selling easily all the products they manufactured in 2011. We can also state that the profit margin was reasonable within this period. Notwithstanding, the same companies had to put more effort in order to sell their goods in 2012. The sales made by forcing were the case in 2012 on contrary to the easiness in 2011. In the current stage, I believe that 2013 will be better and more profitable. The main important factor to consider on this matter before urban transformation project is the elections to be held in 2014. We believe that the government will loosen the monetary tapsthanks to elections. Following this we could say that 2013 will be a good year for the sector. On the other hand we could only see the improvements regarding the urban transformation project beginning from 2014. Because time is needed for making and completing the construction first and for the production of other process such as kitchen, bathroom and domestic furniture. We presume that the reflection of this to economy and mainly our sector will merely be seen at the end of 2013 or in 2014. In the mean time we also witness that the property rights are not transferred immediately as required within the scope of ‘urban transformation’ project. Consequently it seems that the overcoming of these and similar problems will definitely take time. We could say that the furniture and furniture subsidiary industry sector will also gain speed along with the acceleration of this transformation and change process. As, the construction industry has an impact concerning more than 160 profession branches. The fact that we are influenced positively is inevitable.
ORSIAD: Businessmen’s problems never come to an end… So you are the players of a dynamic process… But, in general, how do you define the solutions and subheadings that will advance the business?
Branding is a subject that I pay a lot of attention and put emphasis on particularly. Branding is inevitable to become widespread. There was a popularity after 1980’s. Europeans would come to Turkey and have textile, apparel produced. More precisely, they would stencil their own brands to products with contract manufacturing and put on the market in Europe and Turkey in general. Within this period some producers in our country succeeded in creating their own brands. So if we don’t achieve this branding, I’m thinking that we will have lots of difficulties in producing value-added products. Also we can’t ignore both importance of branding and trust you give to customers. Besides, our reference with branding is not related only to our business, rather it is an important subject that concerns all businesses. In other words we shouldn’t become sub-industries of Europeans and others in general. Every firm should create its own original brand. Only with this way both we have rewarding firms and become significant players in the market.
When we consider conditions of international competition, Turkish furniture industry which is in weak condition should create immediately its own brand.
Once producers just followed foreign market or put their products on the market by imitating with small modifications or invariably. We always told that we do not approve this method and continue to tell. If you put emphasis on designing, if you create products then you can achieve important goals.
ORSIAD: I think this is what MAKSDER want to succeed via designation contest. In other words encouraging producers about new designation… By the way is it possible to mention about a designation contest inflation?
Of course, as MAKSDER, we consider design as an important subject. As part of MAKSDER business studies, we organized this designation contest to businessmen as a stimulating project immediately after our foundation year and continue to organize. In addition, we provide a connection between businessmen and designers.
You are right. Even if they are not directly related to, we see also various foundations and institutions organizing this kind of contests. But we still think this process is advantageous for all and keep faith that in time everything will fall into place.
To prevent unfair competition and to be able to establish design awareness, it may be called for disincentive legal steps by making easier design registration mechanism against pattern imitation, building effective control mechanism and providing sufficient flow of funds by developing human potential existing on design with cooperation of businessman-university. It is of vital importance to raise competitiveness on an international scale and for government, furniture industry to give importance to ‘Modern Design and Researching and Development’. In addition to these, it is an inevitable necessity to determine and control quality standards.
We have mentioned about problem of China shortly before… Let’s repeat: China is a country where dumping tax is applied on products officially. Similarly it is applied in Taiwan, Indonesia, and Malaysia. These countries gain unfair advantage by cheaply produced goods, cheap feedstock, electricity, energy, employment and by child workers 16 year-old or under who are deprived of social rights. Even this situation should be seen as quite a lot advantageous. As a result, it is only natural to say ‘stop’ that these products are being sold cheaply in our country and are nasty and poor qualified. On the other hand we should say that the government pays no attention on stopping this kind of importation in accordance with E.U. harmonization process. And, necessarily, it is a matter of time to explain new methods to public and businessmen. For example, a certificate has been created under the name of Credibility Certificate. Firms having this certificate get the right to sell their products in the category ‘safer products’. But however this certificate is not an obligation for both products in Turkey and imported ones. All products, having certificate or not, are sold on the same market. At this point the government may control these products or examine within consumer demand. But we must bear in mind that these examinations are time consuming and laboratory equipment are inadequate. There are innumerable firms on the market. Some get into the market, make short term profit and pull out of the market as a result they could be unavailable because from the beginning they are malevolent. Just as making continuous financial audit, the government also should provide with high quality products on the market by eliminating its deficiencies. In this case, creating a mechanism to distinguish high quality products will be a difficult situation. Only products imported from China are not the case. Because we may import high quality products from other countries. Accordingly, we are facing problems continually for not explaining the decisions clearly taken in accordance with E.U. harmonization process to businessmen and consumers. We can say, in this case, the import will increase. But we will persevere also in saying quality is an important case.
We don’t have a problem about supplying of feedstock but issue of price. Shipping process of some feedstock unavailable in our country and high cost price in other words high unit price increase also our prices. Because of that, we encourage our businessmen to produce that feedstock in Turkey. Also we follow prices around the world carefully.
I comprehend that as non-invoiced sales. This issue used to be common and significant. We can say invoiced working, called as official sale method, is completely or generally valid as a result of controlling unofficially working. At this case, we had better point out that every business should be evaluated in a different category.
I am also thinking rate of exchange is high. This affects negatively our exportation. There is a rate of exchange tried to be managed for years. In addition, export figures are low and it has a heavy hand on encouraging importation. So we think it will be useful regulating exchange rate.
As businessmen of a country consuming energy most expensively, we had better say it will be possible to produce goods capable to compete with the world only if energy inputs are cheaper.
It is possible to remove structural troubles along with paying attention to quality and making a big contribution to development of business with studies of organization in marketing. As MAKSDER, we state preserving our belief to continue leading the sector to the end pertinaciously and trustfully.