While visiting the Merinos factory in Gaziantep, I asked İbrahim Erdemoğlu about China. IKEA and Walmart came up. The fact that these giants, capable of sourcing from all over the world, buy carpets from Gaziantep is a significant example of the Turkish industry's competitiveness against China.

While touring the Merinos factory with İbrahim Erdemoğlu and Mehmet Erdemoğlu in Gaziantep, I asked them about competition with China.

Because today, no matter which industrialist you talk to in Türkiye, China is sitting on the unseen side of the table.

In textiles…

In automotive…

In chemicals…

In electronics…

In machinery…

China is always there.

Moreover, we are no longer just talking about a China that comes with cheap labor.

We are facing a China that has become one of the world's largest production centers in terms of technology, scale, supply chain, and financial power.

Therefore, as I walked through the carpet factory in Gaziantep, the question I was wondering about was: How will a Turkish industrialist compete with China?

While discussing the answer, two familiar names came up: IKEA and Walmart.

IKEA'S SUPPLIER IS IN GAZIANTEP

Among the global companies that Merinos works with are IKEA and Walmart.

I think the significance of these two names is more important than the size of the companies.

Especially IKEA…

We are talking about a company that can purchase goods from very different production centers around the world.

It can buy from China.

From another country in the Far East.

From Eastern Europe.

From Türkiye.

And Merinos in Gaziantep is also in this global supply race.

This is where the China issue ceases to be theoretical.

On one side, China, one of the world's largest production hubs…

On the other side, Gaziantep.

They are competing for the same customer.

WHY DOES IKEA BUY CARPETS FROM GAZIANTEP?

If you try to compete with China's production costs solely on price, you'll enter an endless struggle.

Merinos' competitive strategy, however, is not based solely on "producing cheaper."

Because global buyers look at other criteria as well.

Can you fulfill an order at the desired scale?

Can you maintain the same quality standard in the next order?

Can you speed up your production when needed?

Can you solve problems that arise in logistics?

And perhaps most importantly:

Do you deliver on your promise?

That's why the IKEA and Walmart example is important.

Instead of describing the advantage of Turkish industry against China solely in terms of wages or exchange rates, it's also necessary to understand it in terms of being a reliable link in the global supply chain.

Perhaps the fundamental question of competition with China is no longer:

Bot "Who is cheaper?" but "Who is more reliable?"

FROM CARPETS TO PETROCHEMICALS

Another important topic in our conversation with İbrahim and Mehmet Erdemoğlu was petrochemicals.

This time, İbrahim Erdemoğlu presented us with a much larger figure:

23 billion dollars.

According to Erdemoğlu's figure, Türkiye's imports of petrochemical products amount to approximately 23 billion dollars.

More important than the magnitude of the figure is what it means.

Türkiye produces in its factories.

It exports.

It tries to create added value.

However, when you purchase a significant portion of the raw materials and intermediate goods needed for production from abroad, you send a portion of the value you create abroad even before production begins.

This is where the second phase of Erdemoğlu's industrial strategy begins.

TARGET: TO PRODUCE 20 BILLION DOLLARS WORTH OF IMPORTS IN TÜRKİYE

The target İbrahim Erdemoğlu described is extremely ambitious.

Over the next 10-15 years, with SASA and related investments, we aim to make it possible to produce domestically approximately 20 billion dollars worth of petrochemical products that Türkiye currently imports.

If this goal is achieved, it will not only result in a larger company.

It will also bring about a structural change in one of the most significant items on Türkiye's import bill.

This is where the connection between IKEA's carpets from Gaziantep and petrochemicals, which is not immediately apparent, becomes clear.

On one hand, there is the final product we sell to the world.

On the other hand, there are the raw materials we buy from abroad to produce that product and hundreds of other industrial products.

Erdemoğlu's industrial philosophy can be summarized in a single sentence:

Look not only at the product you sell, but also at the raw materials you buy.

HOW DID WE GET FROM CARPETS TO PETROCHEMICALS?

I looked around for a moment.

I was still at the Merinos carpet factory.

What we were discussing with İbrahim Erdemoğlu was now petrochemicals.

It seems strange at first glance.

What does a carpet have to do with petrochemicals?

Actually, it has a lot to do with them in the industrial model that Erdemoğlu describes.

You make a product.

Then you ask yourself:

Who produces its inputs?

You start producing them.

Then you ask the same question again:

And who produces its inputs?

You go one step further back.

If you continue like this, the path that starts in the carpet factory takes you to yarn, polyester, and petrochemicals.
Perhaps the shortest description of the Erdemoğlu model is this:

Walking from the final product to the raw material.

AN ANSWER TO THE CHINA QUESTION FROM GAZIANTEP

As I left the factory, I reconsidered the question I had initially asked about China.

On one side, there is a Turkish company selling carpets from Gaziantep to global giants like IKEA and Walmart, who can source products from all over the world.

On the other side, there is Türkiye's goal of producing domestically 20 billion dollars worth of petrochemical products, which it currently imports from abroad for approximately 23 billion dollars.

At first glance, these seem like two separate issues.

I don't think so.

Behind both lies the same question:

Where will Türkiye stand in the global production chain?

Will it be merely a country that produces the final product?

A country that imports its raw materials?

Or will it be an industrial country that brings as much of the production chain as possible within its own borders?

Being able to compete with Chinese manufacturers at IKEA's purchasing table is one aspect of this.

The other side is being able to produce in Türkiye tomorrow the petrochemical products we import from abroad today.

In one case, you sell more to the world.

In the other, you buy less from the world.

The result of both is the same: leaving more added value in Türkiye.

As I entered the Merinos factory, there were carpets in front of me.

As I left, the question I first asked was still in my mind: How will Türkiye compete with China?

The answer I saw in Gaziantep is this: Sell what you sell to the world. If possible, produce what you buy yourself.

Source: Patronlar Dünyası