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Turkey - Turkish Furniture Industry At A Glance

By Zeki Yucel, Furniturk Magazine

Sultan Ahmed Mosque, Istanbul, Turkey

Turkey’s rapid emergence as one of the fastest growing economies of the world and one of the developing markets in the last few years affected furniture industry positively. In recent years, the Turkish furniture industry has become one of the driving forces behind the Turkish economy. Thanks to globalization, innovative improvements and brand marketing strategies, furniture production in Turkey has improved its international reputation and has expanded into new markets. Even in economic crisis period, the volume of furniture sector in Turkey and its influences in international markets continued to grow by making a successful increase year by year. And now, Turkish furniture industry has expanded into a sector whose exports are around 2 billion USD annually.

In fact, the design and branding concepts are relatively new in Turkey. Turkish furniture producers became aware of the importance of these terms only in last 10 years. But they forged ahead promptly. While they were companies copying from Europe 15 years ago, during this period Turkish companies discovered the role of original design to sell their products especially abroad. They started to work with famous designers and create their own style and brands. Today all aspects of “design” is studied in around 10 different universities and qualified designers graduated from there.

They are now working for famous Turkish brands and some of them became famous in international platforms and they are awarded by worldfamous design contests. As a furniture exporting country, Turkey is investing a lot for improving its production technology, for modern management, marketing, sales, R&D and branding process. Most of Turkish exporters meet strictly international quality standards. Turkish furniture firms have begun to employ more designers to develop new styles and to meet the everchanging tastes of customers. In this respect, Turkey’s strong textile industry, which offers a wide range of colorful fabrics, is a major advantage for Turkish furniture manufacturers and Turkish designers are widely using this advantage to offer a wide range of fabric collections as upholstery.

Turkey has a developed domestic furniture market with around 10 billion USD size. It is estimated that the sector comprises about 35.000 manufacturing companies and 40,000 retailers. In Turkey, approximately 260,000 employees are directly involved in furniture production, while the sector generates roughly 500,000 positions when side industries are taken into account.

As per the data stated in the report issued by Furniture Industrialists Association of Turkey in 2012, while production in Turkey with wholesale prices was 4.8 billion dollars in 2008, it reached 6 billion dollars in 2011 with an increase of 25%. And the consumption with retail prices increased to 10 billion dollar from 7 billion (nearly 50% increase).

There are some main reasons for this: Rapid urbanisation, a significant increase in disposable income, and lifestyle changes. Turkish furniture manufacturers have increased their production capacity during this period in line with the growing demand for Turkish furniture.

Country 2010 2011 Percentage Change Percentage of Total Imports
China 222.3 277.6 +25 35
Italy 62 83.9 +38 10
Germany 68.3 81.1 +19 10
Poland 34.1 46.4 +36 6
France 32.6 39.2 +20 5
Spain 26.6 36.4 +37 5
Romania 12.3 24.6 +100 3
Indonesia 17.7 20.2 +100 3
Vietnam 17.8 20.1 +13 3
United Kingdom 6 19.7 +230 2
Japan 16.2 15.1 -7 2
Furniture Imports By Country (In US$ Million) (Source: TUIK)

As to the imports, we can say that in last 10 years, the value of Turkey’s furniture imports has been growing at a decreasing rate. In 2011, Turkish imports amounted to US$945.2 million – approximately 55 percent of total exports. This value represented a 28 percent increase from 2010. However this figure is still lower than the increase in imports experienced in 2010 from the year before, which was 38 percent.

Turkish furniture industry experienced a trade surplus in 2011, with export volume nearly double of import volume. Net trade last year amounted to a surplus of around US$758.7 million. Since 2009, Turkish exports have increased by around 20 percent annually, and this trend is expected to continue this year.

Looking to the export figures, we can say that China strengthened its position as Turkey’s top provider of furniture imports. In 2011, China’s exports to Turkey reached around 300 million USD, which accounted for 35 percent of all of Turkey’s furniture imports according to 2011 figures. Italy, Germany, Poland and Spain follows China. The other countries that Turkey imports furniture are respectively Romania, Indonesia, Vietnam, UK and Japan. In 2011, Romania and the UK registered the largest percentage increases in Turkey’s furniture imports by 100 percent and 230 percent respectively.

Today, Turkey stands as the 16th largest producer and 21st largest exporter of furniture in the world, with a global market share of nearly 2 percent, according to the data provided by CSIL.

Turkey currently exports to a total of 173 countries across five continents. From 2003 to 2011, Turkey experienced growth in exports of over 292 percent. The growth during this period was strong and stable except in 2009, when the global financial crisis caused exports to contract by 13 percent. Turkish Furniture Industrialists Association is anticipating that Turkey will be among the first 10 exporters of the world in furniture sector within the following 5 years, considering the export growth by 20% in last 2 years and considering that the same growth level will also occur in next 2 years.

Parallel to the development of the market, during last decade Turkish furniture producers are opened sequentially many showrooms in all over the world. Especially in last couple of years there was a boom in outstanding target markets and the number of abroad showrooms is doubled more than twice. According to the data provided by Unified Brands Association BMD, in 91 different countries 2, 600 Turkish brands are sold in their own showrooms. Within these markets, the share of Muslim and oriental countries are significant.

Not only does the country benefit from a unique geographic position serving as a bridge between East and West, but of equal importance, the country’s long history and reputation for producing classic oriental designs, popular with Turkey’s immediate eastern neighbors, suggests that the country will be best placed to extend its sales to neighboring Middle Eastern and Central Asian markets whose “disposable income” is increasing at a much more rapid rate than those of the European markets.

Iraq, Germany and Iran compose the first three of the countries which Turkey performs furniture export. (And than comes respectively Azarbaijan, France, Turkmenistan, Netherland, Russia, Saudi Arabia and Italy within first 10 destinations).

As known, Turkey is one of the European countries (may be the sole) that is not so much affected relatively by the global crisis due to its strong independent banking industry –compared with most of European countries-, flexible economical structure and social organism familiar with crisis. Turkey had also a large trading capacity with regions that are not affected by the banking crises like Middle East, Northern Africa and Iran.

While many economies have been unable to recover from the recent global financial recession, the Turkish economy expanded by 9.2 percent in 2010, and 8.5 percent in 2011, thus standing out as the fastest growing economy in Europe, and one of the fastest growing economies in the world. There are some important factors affecting positively Turkish furniture industry. In summary, these are:

a. A crowded (about 80 million) and young population (25%)
b. Relatively cheap labor force and production costs
c. Modern technological substructure and qualified production standards
d. Developing housing industry affecting furniture sales positively
e. Geopolitical advantages like being on the crossroads of world trade
f. Ability to trade with Middle East and other Muslim countries
g. Government supports for exporters

Country 2011 2012 Percentage Change Percentage of Total Imports
Iraq 181.4 250.7 +38 17
Germany 115.1 147.5 +28 10
Azerbaijan 73.1 97.4 +33 7
Iran 73.5 93.7 +27 6
France 63.2 79.3 +25 5
Turkmenistan 42.1 68.5 +63 5
Holland 40.6 49.6 +22 3
Russia 31.2 43.9 +41 3
Saudi Arabia 25.7 37.9 +48 3
United Kingdom 35.4 35.3 -0.4 2
Italy 27 30 +11 2
Furniture Imports By Country (In US$ Million) (Source: TUIK)

As to the weakness of Turkish furniture industry, we can state some factors concerning raw material, energy and tax burdens peaking time to time. Beside this we may point out the stuctural characteristics of the industry: Most of the furniture production are still realized by small and medium sized companies. Excluding 100 - 150 funiture producers, the rest are confronting some problems including financial strenght, slow modernization, capacity problems, difficulty to find specialized workforce, lack of experience and disadvantages of not Furniture Exports By Country (In US$ Million) (Source: TUIK) being enough institutionalized.