Feb 5, 2023

The Most Important International Companies that are Investing in Turkey

With increasing globalization and the development of means of communication and transportation, international companies in Turkey have begun to play a vital role in advancing the Turkish economy and stimulating economic growth. In addition to providing job opportunities for citizens, international companies in Turkey provide expertise and modern technology that enhance productivity and develop local industries.

International companies in Turkey include various sectors such as heavy industry, technology, financial services, communications, retail, and others. Among these distinguished international companies that have greatly influenced the Turkish economy, we mention, but are not limited to, companies such as “Ford” and “Bosch” in the automotive sector, “Samsung” and “LG” in the technology industry, and “Coca-Cola”. "And McDonald's" in the services and retail sector.

The presence of international companies in Turkey requires a suitable investment environment, including regulating legislation, encouraging economic policies, and strong infrastructure. Given these suitable conditions, international companies in Turkey can take advantage of the great opportunities available in Turkey and achieve sustainable success in the long term.

In this article, we will explore some of the most prominent countries and international companies in Turkey that are active and operating in Turkey, as well as the opportunities and challenges they face in this dynamic market.

Investments of Countries and international companies in Turkey

Turkey's strategic location in the middle of the continents of Asia and Europe is one of the most important drivers and factors that attract major economic countries and international companies in Turkey. The presence of the Bosphorus Strait, through which the largest international convoys and commercial ships pass, has made it an important international port. Turkey has a youth demographic that distinguishes it from Western countries, which makes the availability of manpower and workers in Turkey a very easy topic and enhances investment and the opening of factories and laboratories in abundance in Turkey. We mention among the most important countries that invest or have opened international companies in Turkey:

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Turkey and China

As an example of international companies operating in Turkey, Turkey and China have extensive economic and trade relations, and Turkey's strategic location provides lucrative opportunities for Chinese companies. Today, with the close relations between the two countries, more than 1,000 Chinese companies do business in Turkey, including the Industrial and Commercial Bank of China, Bank of China, China Merchants Group, China Investment Corp, COSCO Shipping Group, and telecom giants Huawei and ZTE.. This is good news for the future.

China is Turkey's largest trading partner in Asia and the third largest in the world, as Turkish imports from China in 2022 amounted to about $41 billion, according to data from the Turkish Statistics Authority. According to the Turkish ambassador in Beijing, China's investments in Turkey amounted to $4.3 billion in the past five years. According to a statement by the Chinese company Alibaba last year, Alibaba invested $1.4 billion in Turkey through its unit with the Turkish company Trendyol.

Turkey and Germany

According to a survey conducted by the German Chamber of Commerce Abroad (AHK) in the fall of 2021, the majority of German companies in Turkey consider the country a suitable investment location. There is a lot of potential for Turkey and Germany to benefit from each other as economic partners, but political developments hamper the realization of this potential.

Turkey is currently struggling with a steadily increasing inflation rate and a constantly devaluing currency. However, Turkey also boasts a high growth rate and high exports. A total of 7,000 German companies operate in Turkey, 327 of which are AHK members. Of these members, 77 German companies participated in the AHK survey.

According to the German Foreign Ministry, Germany is also one of the most important foreign investors in Turkey, with a turnover of 16 billion euros. Germany is Turkey's third largest import partner after Russia and China.

From the perspective of logistics and cultural mix, Turkey is an advantageous location for hosting headquarters for many multinational companies, thanks to its excellent connectivity, unique setup and strong links with its neighbors.

Companies such as Siemens, Nestle and Deutsche Bank have been operating in Turkey for more than 100 years. A growing number of companies from around the world, looking to expand into new markets, consider Turkey's second home for manufacturing, design and engineering for a combined market of 1.6 billion people within a four-hour flight range. It continues for the following years and receives very large facilities.

Investments in Turkey are protected by both domestic and international laws

In addition to the Foreign Direct Investment Law, which enshrines equal treatment for foreign and domestic investors, foreign investments in Turkey are also protected by more than 75 bilateral investment promotion and protection agreements. In addition, Turkey has also signed bilateral tax treaties with about 80 countries to prevent double taxation.

With its economic stability and structural reforms over the past decade and a half, Turkey has become a country that has intrigued global investors. Even so, there is huge untapped potential for international companies looking to invest in Turkey.

Energy investments

Turkey has recorded an average annual growth rate of 5.5% in energy demand since 2002. Increasing energy demand is expected to continue, and Turkey has ambitious energy goals regarding security of supply, increasing shares of renewables and domestic resources, and providing a market More predictable conditions.

In 2023, the Turkish President launched the extraction of natural gas from a Turkish field in the Black Sea, in a step that leads Turkey to achieve self-sufficiency in the field of energy. During the inauguration ceremony, the Turkish President stated that when production reaches the maximum, the gas extracted from the Black Sea will cover about 30% of Turkey's annual need. He also explained that the volume of gas reserves discovered in the Black Sea amounted to 710 billion cubic meters.

Also, in 2018, SOCAR, Azerbaijan's state oil company, commissioned the Star Refinery in Turkey, the largest single investment in the country. More than 1,000 people will be employed in the $6 billion refinery, and the project is expected to meet more than 25 percent of Turkey's refined petroleum needs.

As for renewable energy, renewable energy sources in Turkey accounted for almost the total new energy capacity installed throughout 2023, as part of the country's transitional efforts to address climate change and secure a clean energy future.

The year 2023 is considered the year of renewable energy sources for Turkey. It obtained 99.5% of the 2,858 MW of increased installed capacity from renewable sources that year. This has raised the total installed capacity of renewable energy in Turkey to 59,236 MW.

Over the past years, Turkey has been able to increase total power generation while simultaneously reducing coal generation, thanks to a significant rise in clean energy deployment from wind, solar, geothermal and hydropower facilities. It also injected huge capital to expand and strengthen its infrastructure and energy networks. The country's electricity production reached 326.3 terawatts in 2023, which confirms the significant contribution of renewable energy sources.

In addition, the share of renewable sources in production reached 42%. In contrast, its share in the total installed capacity reached 56%. This rate makes Turkey fifth in Europe and twelfth in the world. In line with the Turkish government's plan, Turkey seeks to increase the share of renewable energy sources in installed capacity to 65% and in production to 55% by 2035.

Car exports

Turkey's geographical proximity to Europe, Asia, the Middle East and North Africa gives the country a strong competitive advantage in logistics and provides lucrative export opportunities for multinational companies in the automotive sector.

According to the Turkish Automobile Manufacturers Association, total car production in Turkey increased by 11.7% in the period from January to September 2023, to record one million 74 thousand and 155 units.

In the first 9 months of 2023, commercial vehicle production decreased by 1% year-on-year, light commercial vehicle production decreased by 4%, while heavy commercial vehicle production increased by 26%.

Supported by the significant boom in electric car sales, total car sales last year (2023) reached one million units. France is the largest market for Turkish passenger car producers. Its purchase of shipments increased by 60.95%, reaching $1.52 billion. The United Kingdom came in second place, purchasing $848.8 million in the first 9 months of 2023 from Turkish companies, an increase of 5.7%. Spain was the third largest export destination, with a 32% share, reaching $839.1 million. According to the data, Italy ranked fourth with an increase of 37% year-on-year between January and September, while Poland ranked fifth with an increase of 32%.

All foreign companies investing in Turkey benefit from the decline in the value of the Turkish lira because they are active in the export sector, which reduces their costs when converting them to euros and dollars, and this is considered one of the most important reasons encouraging investment in Turkey.

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