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VIP Interview Yildirim Group Time to Go Global

TBY talks to Senior Executives of Yildirim Group on the group’s rapidgrowth, operations in Turkey, and visions for the future.


How did Yildirim Group grow from a small family company in Samsun to a global Turkish brand?

ALP MALAZGIRT The company started in the 1960s in the trading business in Samsun,buying and selling construction materials. It continued in trading for about 30 years. In the1990s, it then moved into the coal trade. The year 1993 was very significant, because it wasthe first time that the coal trade kicked off regionally. Coincidentally, 1989 is when the BerlinWall fell and Russia started privatizing all its state-owned enterprises. Back then, only about5% of all businesses in Russia were private. By 1994, in five years, this huge country hadprivatized about 90% of all its enterprises. During this time, many minerals, such as coal,became more available for export.

How did the company’s strategy change in 1993 with the inclusion of the coal business?

EVREN ÖZTÜRK The company’s aim from that point was to become the largest coal traderin Turkey. We brought the coal from Russia, and we set up a joint venture with the Russiansin Turkey to distribute it. At the same time, we had our own coal facilities locally. Thatbusiness also grew through vertical integration. In around 2003, Turkey started privatizing, sowe halted the joint venture because the Russians had started doing business in Turkey on theirown. It was at that point that we bought Eti Krom and Gemlik Gübre, making this anindustrial company. From there the acquisitions continued, and that’s how we became such afast-growing enterprise.

MUSTAFA KEMAL ERKANAT Robert Yildirim believed in the importance of two thingsfor the business. The first one was foreign trade. The second one was an inorganic growthstrategy, rather than greenfield investment, which takes much longer. Our strategy was, andis, that inorganic growth can provide a more rapid return on investment. Robert also believedthat, in the long run, base metal companies would become much more profitable than oilcompanies. Now we know that this is the case, with companies like Rio Tinto and Vale doingmuch better than companies like BP.

ALP MALAZGIRT The theme at this time was flexibility. Initially, Robert started doingbusiness in Russia, but as soon as other people started getting into the field and crowding in,he moved to China. He had the flexibility to fold up his tent and go somewhere else to set upshop all over again. He’s very entrepreneurial and hard working, with a lot of perseverance.When he went to China, the focus again was coal. Then, after a few years, we changed focusagain, and now we’re getting the coal from South Africa, through Mozambique.

EVREN ÖZTURK The focus was also on related industries. We moved from coal to bulkcarriers to shipping. Then in 2004, when a lot of chemical tankers were being bought andsold, we got into building tankers. We built the Marmara Shipyard and now we build and sellour own tankers, both externally and to our shipping company. From there, we went into ourfirst maritime port investments.

ROBERT YÜKSEL YILDIRIM When I came back to Turkey from the US in 1993, myfamily business was trading construction products and coal. My background up until thatpoint was in high-tech industries in Silicon Valley, and I wondered how I could contribute myskills to our very low-tech family business. I decided to use my English skills and myinternational business experience to focus on our foreign trading operations. I focused on thecoal business, which was changing at the time because Turkey was changing its coal-usehabits. The first thing I did was travel to Siberia to meet with Russian coal producers andtraders. I saw a lot of opportunities in Russia at that time. I used my experience withinternational business ethics from the Americans and Japanese and, as a result, the Russiansliked my style of conducting business and socializing. This allowed me to present myself asan insider in the Russian coal sector and gave me an advantage over other Turkish companiesthat were entering it. I learned from this experience that I have a talent for foreign trade, andwe took advantage of that to expand into other products.

What advantages does your vertically integrated strategy provide?

MUSTAFA KEMAL ERKANAT One of our main advantages is the synergy between ourbusinesses. Our operational excellence comes from not just operating the port, but knowinghow to deliver the goods with ships and how to get the goods to the port with trucks. All thatsynergy helps us because we know our businesses from the customer side as well. That makesus somewhat unique. We have attracted a very international team, and I think because of ourstrong management we will continue to attract more. When people see a good thing, itspreads.

How has the international perception of Turkish business changed over the timeYildirim has been operating abroad?

ALP MALAZGIRT In Asia, the perception has changed a lot. Turkey is now becoming acountry that a lot of people are looking up to, especially in East Asia. In some Muslimcountries like Indonesia, they look up to Turkey. In Central Asia, there are a lot of Turkishcompanies operating, first in the construction sector and later in the consumer sector. So,clearly, the perception has changed in the East.

SEAN PIERCE From an American perspective, I don’t think I had a perception of Turkeybefore I came here. Now, what I see is a real duality; the difference between the skyscraperswe see around us, and what is down at street level.

EVREN ÖZTÜRK In 2011, when we were seeking finance for the acquisition of MaltaFreeport, we had a lot of issues because we are Turkish. There was a reluctance on the part offinance providers. Even though Fitch has raised Turkey’s rating to investment grade, we arestill two or three notches lower according to S&P.

MUSTAFA KEMAL ERKANAT With Turkish companies abroad, we are like thecrusaders. Europe hasn’t accepted us at first, but as companies like ours become moreintertwined in the EU economy, we will change Europe’s perception from the inside and theywill accept us in the end. If Turkish companies like ours do such a good job internationally,we will attract investors to Turkey. Our policies go along with Turkish government policies.For example, we are expanding our business in Africa at the same time as Turkey isexpanding its influence in Africa. That will bring further investment into Turkey.

ÖZER ÖZ Turkey’s perception is all about duality. If you’re looking at it from the East,Turkey is a Western country. If you’re looking at it from the West, Turkey is still an Easterncountry.

How would you rank Turkey as a base of operations for an international business?

ÖZER ÖZ In some business areas Turkey is very attractive, because it is a hub fortransportation between East and West. It is an energy corridor. We have a young population,which makes it attractive to retail investors. Turkey also has its shortcomings, because energyis very expensive here, and we don’t have much mining. On the other hand, Turkey offers ayoung and educated population, so we have something to export. For health care, Turkey is agreat place and we are attracting healthcare investment. It is a duality and there are a lot ofparameters.

ROBERT YÜKSEL YILDIRIM Turkey is between the East and West, but it is moreWestern. Turkey is in the top 20 economies globally. We are advanced and we are changing,and the new target—to be in the top 10—is extremely difficult, but it is maybe doable in thenext 20 years. Turkey deserves more than what it gets right now. If we had some of theopportunities that are given to European countries, we would be in much better shape. Look atGreece and Portugal and countries in Central and Eastern Europe. But still, we are thankfulthat we don’t have oil because oil can have negative effects. Because Turkey doesn’t have oilit means we are hard working as we have had to build everything ourselves and we have allthe top industries in Turkey. If you looked 20 years ago, the textile sector was very attractivein Turkey. Now the textile sector is behind other industries like automotive, which is now ourlargest export segment. Steel is improving. In cement, we are in the top five in the world.Mining is also developing. This is all about Turkish entrepreneurs. They used to take whatthey earned here and spend it outside of Turkey. Now they are re-investing it in Turkey moreand more, and now investing it in Turkey and legally investing it in Europe, the US, Asia, andAfrica. We now see more Turkish groups expanding abroad. As the Yildirim Group, we are inFrance, Belgium, Sweden, and Malta—we are becoming a part of the EU economy. I thinkthat business in Turkey today has more opportunities than in Europe. In Europe everything isplanned and restricted—in Turkey we still have ups and downs. This diversity is what makesTurkey strong.

What is your vision for Yildirim Group a decade from now?

ROBERT YÜKSEL YILDIRIM Our intention is to be a pure Turkish company in the globalarena. We don’t want our boundaries to be Turkey’s boundaries. Our identity is Turkish, butour business is global. We need to create international Turkish brands in business. Of course,it is not easy to try to become Turkey’s Vale, but we can be a multi-industry group. We canaim to be among the top-20 port operators in the world. And in mining we want to be healthyand making money globally. Our Turkish identity is going to Africa and Latin America andthen making the company international, with a head office in Istanbul, but offices andoperations everywhere. We want to be less family oriented and more corporate oriented—tobe an international company with international partners in major businesses.

This interview will be published in 'The Business Year: Turkey 2013'. To pre-subscribe pleasee-mail us at info@thebusinessyear.com

© The Business Year - February 2013