Footwear, Leather & Components Industry in

Turkey

A Market Study for Italian Investors

Final Report

Prepared for

Italian Trade Agency, Istanbul

Istanbul

December 7, 2018

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Copyright & legal status

1. The Purpose of This Report

This Report has been prepared by IBS Beynelmilel İş Hizmetleri AŞ, trading as IBS Research & Consultancy (“IBS”) for the Italian Trade Agency in Istanbul (“ITA-Istanbul”) as a general outline of certain aspects of the business environment in Turkey as of the date of this Report.

Notwithstanding anything contained herein, this Report is not intended to provide the basis of any investment, credit, legal, regulatory, accounting, taxation or other evaluation or decision and should not be considered as (i) a recommendation by IBS that any person enter into any relationship or transaction with IBS or any other person or (ii) advice by IBS with respect to any matter whatsoever.

2. Status of Information

Nothing outlined in this Report is, or should be relied upon as, a promise or forecast of the future.

3. Disclaimer

Notwithstanding anything contained in this Report, IBS is not nor holds itself out to be, an advisor as to legal, taxation, accounting, regulatory, investment or credit matters. IBS further recommend that each recipient of this Report takes its own independent advice with respect to all of the matters referred to in this Report. Accordingly, neither IBS nor any of its directors, officers, employees or representatives shall incur any responsibility or liability with respect to any action, omission, statement, recommendation or comment made in this Report or made by any of them in connection with any matter referred to in this Report.

4. Other Relationships

IBS may have business relationships with one or more persons or companies referred to in this Report and it may that by reason IBS may have information bearing on this Report and the facts and transaction(s) described herein which IBS is unable to disclose.

5. Reproduction and Reprinting

Any reproduction and printing rights of this report is owned by the Italian Trade Agency in Istanbul, Turkey and Italian Trade Agency in Rome, Italy. Any other use or disclosure in whole or in part of this information without the express written permission of the owner is prohibited.

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Table of Contents

Copyright & legal status ............................................................................................. i

Executive summary .................................................................................................. 7

1 Leather & leather products manufacturing industry .............................. 17

1.1 Market landscape .........................................................................................17

1.1.1 Introduction ............................................................................................... 17

1.1.2 General and leather sector trade between Italy & Turkey ....................... 18

1.2 Market size and growth ................................................................................19

1.2.1 Market balance in leather sector .............................................................. 19

1.2.2 Local production ........................................................................................ 20

1.2.3 Raw hides and skins................................................................................... 21

1.2.4 Tanning and dressing ................................................................................. 24

1.2.5 Leather accessories: saddlery, bags and luggage and leather goods ....... 25

1.2.6 Leather garments ...................................................................................... 27

1.2.7 Footwear ................................................................................................... 28

1.3 Industry structure and infrastructure ...........................................................29

1.4 Foreign trade in leather sector .....................................................................32

1.4.1 Foreign trade in leather sector .................................................................. 32

1.4.2 Foreign trade in leather sector by countries ............................................. 34

1.4.3 Foreign trade in leather sector by segments ............................................ 39

1.4.4 Italy -Turkey foreign trade in leather sector ............................................. 42

1.5 Leather industry distribution system and trade practices ...........................45

1.6 Competition in leather sector .......................................................................46

1.6.1 Key Companies in processed leather ........................................................ 46

1.6.2 Key Companies in bags, luggage, leather goods and saddlery ................. 48

1.6.3 Key Companies in leather garments ......................................................... 51

1.7 Major M&A activities and investments ........................................................55

1.7.1 M&A .......................................................................................................... 55

1.7.2 Incentives .................................................................................................. 55

2 Footwear .............................................................................................. 56

2.1 Market size in Footwear ...............................................................................56

2.2 Footwear industry structure .........................................................................58

2.3 Foreign trade in footwear industry sector ...................................................59

2.4 Footwear retail: distribution structure & trade practices ............................66

2.5 Key manufacturing companies in footwear .................................................69

3 Components & accessories for footwear industry .................................. 77

3.1 Components & accessories production ........................................................77

3.2 Industry structure & infrastructure ..............................................................79

3.2.1 Footwear material distributors ................................................................. 79

3.2.2 Sole/insole manufacturers and distributors ............................................. 80

3.3 Components & accessories industry distribution system ............................82

3.4 Foreign trade in components & accessories ................................................85

3.5 Competition in components & accessories ..................................................89

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4 Opportunities & challenges ................................................................... 91

5 Future projections & evaluation ............................................................ 94

5.1 Growth drivers ..............................................................................................94

5.2 Market forecasts and projections – 2017-2023 ...........................................97

5.3 Challenges .....................................................................................................98

6 Regulatory environment ..................................................................... 102

6.1 Customs duties, tariffs and taxes .............................................................. 102

6.1.1 HS 41 – Raw, semi-processed and finished leather products ................. 102

6.1.2 HS 42 – Saddlery, bags and luggage, and leather garments ................... 103

6.1.3 HS 43– Raw and processed fur and fur garments and goods ................. 105

6.1.4 HS 64– Footwear ..................................................................................... 106

ANNEXES 108

Annex I Top 100 tanneries in Turkey ...................................................................... 109

Annex II Top 100 footwear manufacturers.............................................................. 117

Annex III Top Turkish footwear distributors ............................................................. 125

Annex IV Top Turkish footwear components/materials producers & distributors .. 130

Annex V Top 10 company profiles ........................................................................... 131

Company profile 1: ISKEFE TANNERY ....................................................................... 132

Company profile 2: SEPİCİ TANNERY ....................................................................... 134

Company profile 3: CEVAHİR TANNERY ................................................................... 136

Company profile 4: DERİ 2000 TANNERY ................................................................. 137

Company profile 5: TAMER TANCA .......................................................................... 138

Company profile 6: BOYNER GROUP ....................................................................... 139

Company profile 7: MARKAPARK (DERİDEN) ........................................................... 144

Company profile 8: DUYAR SHOE MATERIALS ......................................................... 145

Company profile 9: ERDOGDU GROUP .................................................................... 147

Company profile 10: PALAMUT GROUP .................................................................. 149

Annex VI Country Groups in import regime tables ................................................... 151

Annex VII Trade fairs and events (11/2018-2019) ..................................................... 152

Annex VIII List of investment incentives granted to the leather industry companies 154

Annex IX Stakeholders in the leather industry ......................................................... 159

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List of charts

Chart 1: Trade volume (total) between Italy and Turkey, $ Billion, 2007-2017 ......................................... 18 Chart 2: Turkey's footwear, leather and components imports by countries 2017, $ Million .................... 18 Chart 3: Leather sector production by segments, value share, 2017 ......................................................... 20 Chart 4: Breakdown of leather sector companies by size, 2017 ................................................................ 31 Chart 5: Leather sector foreign trade, 2007-2018e, $ Million .................................................................... 32 Chart 6: Average unit price in leather sector foreign trade in Turkey, 2007-2018e, $/kg ......................... 34 Chart 7: Average unit import price of leather sector products Turkey from Italy, 2007-2018e ................ 38 Chart 8: Import of leather sector by segments, 2017, $ Million ................................................................ 40 Chart 9: Export of leather sector by segments, 2017, $ Million ................................................................. 40 Chart 10: Exports of leather garments including direct sales to tourists, 2012-2017, $ Million ............... 41 Chart 11: Italy’s leather sector export to Turkey by segments, 2017, $ Million ......................................... 43 Chart 12: Turkey’s leather sector exports to Italy by segments, 2017, $ Million ....................................... 44 Chart 13: Footwear industry market balance in Turkey, 2007-2017, Million pairs .................................... 56 Chart 14: Footwear foreign trade in Turkey, 2007-2018e, Million US$ ..................................................... 60 Chart 15: Genuine leather footwear imports of Turkey, 2007-2017, Mn US$ & Thousand pairs, $/pair .. 64 Chart 16: Genuine leather footwear export of Italy to Turkey, 2007-2017, Mn US$ & ‘000 pairs, $/pair . 65 Chart 17: Turkey footwear components import, by sub-segments, 2012/2017, $ million ........................ 86

List of figures

Figure 1: Geographic concentration of leather sector in Turkey, 2017 ...................................................... 29 Figure 2: Map of specialized leather industry zones, 2017 ........................................................................ 31 Figure 3: Leather sector market structure, 2017 ........................................................................................ 45 Figure 4: Footwear sector value-chain, 2018 ............................................................................................. 58 Figure 5: Components & accessories industry distribution system ............................................................ 82 Figure 6: Supply chain from components/materials (chemicals) to footwear ........................................... 83 Figure 7: Supply chain from components/materials (artificial leather) to footwear and leather .............. 84 Figure 8: Growth drivers of and challenges for leather industry development ......................................... 94

List of tables

Table 1: Leather industry market balance in Turkey, 2007-2017, $ Million ............................................... 19 Table 2: Leather sector market size in Turkey, 2007-2017, $ Mn .............................................................. 20 Table 3: Number of enterprises in leather sector, 2007-2017 ................................................................... 21 Table 4: Number of animals by kinds, 2007-2017, Million heads............................................................... 22 Table 5: Number of slaughtered animals by kinds, 2007-2017, Million units ............................................ 22 Table 6: Raw hides and skins market balance in Turkey, 2007-2017, Million units ................................... 23 Table 7: Processed leather market balance, 2007-2017, Million m2 .......................................................... 24 Table 8: Saddlery, bags & luggage, leather goods market balance, 2007-2017, Tonnes ........................... 25 Table 9: Saddlery, bags & luggage, leather goods market balance, 2007-2017, $ Million ......................... 26 Table 10: Leather garments market balance, 2007-2017, Tons ................................................................. 27 Table 11: Leather garments market balance in value, 2007-2017, $ Million ............................................. 28 Table 12: Specialized leather industry zones in Turkey, end 2017 ............................................................. 30 Table 13: Leather sector foreign trade, 2007-2018 3rd Quarter, Mn $ ....................................................... 32 Table 14: Leather sector foreign trade, 2007-2018 3rd Quarter, '000 Tonnes ............................................ 33 Table 15: Leather sector import by countries, 2007-2018 3rd Quarter, $ Million ...................................... 34 Table 16: Leather sector exports by countries, 2007 -2018 3rd Quarter, $ Million .................................... 36 Table 17: Leather sector imports by countries, 2007-2018 3rd Quarter, '000 Tonnes ............................... 38 Table 18: Foreign trade of leather sector by segments, 2007-2018 3rd Quarter, $ Million ........................ 39

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Table 19: Leading leather sector exporters in Turkey, 2017, $ Million ...................................................... 41 Table 20: Imports from Italy in the leather sector by segments, 2007-2018 Q3, $ Million ....................... 42 Table 21: Exports of Turkey to Italy in the leather sector by segments, 2007-18 Q3, $ Million ................ 44 Table 22: Leading companies in processed leather and fur, 2018 ............................................................. 46 Table 23: Breakdown of bags, luggage, leather goods and saddlery producers by size, 2018 ................... 48 Table 24: Leading companies in bags, luggage, leather goods and saddlery, 2018 ................................... 49 Table 25: Breakdown of bags, luggage, leather goods and saddlery producers by size, 2018 ................... 51 Table 26: Leading companies in leather and fur garments, 2018 .............................................................. 52 Table 27: Investment incentives certificates granted to the leather industry, Units and TL Mn, 2015-18 55 Table 28: Footwear industry market balance in Turkey, 2007-2017, Million pairs .................................... 56 Table 29: Footwear industry (excl. footwear component) market balance in Turkey, 2007-17,$ Mn ....... 57 Table 30: Footwear imports of Turkey by countries, 2007-2018 3rd Quarter, $ Million............................. 60 Table 31: Footwear exports of Turkey by countries, 2007--2018 3rd Quarter, $ Million ............................ 62 Table 32: Footwear imports of Turkey by sub-segments, 2007--2018 3rd Quarter, $ Million .................... 63 Table 33: Footwear export of Turkey by sub-segments, 2007--2018 3rd Quarter, $ Million ...................... 64 Table 34: Footwear retail market and key footwear retailers* in Turkey, 2016-2017, Mn$ ..................... 66 Table 35: Breakdown of footwear producers by size, 2018 ....................................................................... 69 Table 36: Leading companies in footwear, 2018 ........................................................................................ 70 Table 37: Footwear parts & components market balance in Turkey, 2007-2017, $ Million ...................... 78 Table 38: Top 10 sole/insole manufacturers in Turkey, Mn pairs & tons, 2017, ........................................ 80 Table 39: Turkey import of footwear components (HS 6406), by countries, 2007-18 3rd Quarter, $ Mn .. 85 Table 40: Turkey import of uppers and parts (HS 640610), by countries, 2007-2018 3rd Quarter, $ Mn .. 87 Table 41: Turkey import of outer soles and heels (HS 640620), by countries, 2007-18 3rd Quarter, $ Mn 87 Table 42: Turkey import of removable in-soles, heel cushions, by countries, 2007-18- ............................ 88 Table 43: Turkey export of footwear components (HS 6406), by countries, 2007-18 3rd Quarter, $ Mn .. 89 Table 44: Breakdown of footwear components & accessories producers by size, 2018 ........................... 89 Table 45: Leading companies in footwear components & accessories, 2018 ............................................ 90 Table 46: Number of incoming tourists by nationalities, 2007-2018 October (top 20 countries) ............. 95 Table 47: Leather sector production forecast, 2017-2023, $ Million ......................................................... 97 Table 48: Customs duty for HS 41 group by country groups, 2018 .......................................................... 103 Table 49: Customs duty for HS 42 tariff heading by country groups, 2018 .............................................. 104 Table 50: Additional customs duty for HS 42 tariff heading by country groups, 2018 ............................. 104 Table 51: Total customs duty for HS 42 with additional tax by country groups, 2018 ............................. 104 Table 52: Customs duty for HS 43 tariff heading by country groups, 2018 .............................................. 105 Table 53: Additional customs duty for HS 43 tariff heading by country groups, 2018 ............................. 105 Table 54: Total customs duty for HS 43 with additional tax by country groups, 2018 ............................. 105 Table 55: Customs duty for HS 64 tariff heading by country groups, 2018 .............................................. 106 Table 56: Additional customs duty for HS 64 tariff heading by country groups, 2018 ............................. 106 Table 57: Total import charges for HS 64 with additional customs duty, 2018 ....................................... 107 Table 58: Beymen turnover by sales channels, 2015-2017 ...................................................................... 140 Table 59: Beymen share of product groups sales per sales channels, 2017, % ........................................ 142

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Abbreviations

$ All dollar terms are US dollars ASD Footwear Industrialists Association of Turkey Bn Billion CAGR Compound annual growth rate CIS Commonwealth of Independent States DETEK Leather Technologists and Chemists Association

EDMIB Aegean Leather and Leather Products Exporters' Association EFTA European Free Trade Area EU European Union GDP Gross Domestic Product GDP Gross Domestic Product IDMIB Istanbul Leather and Leather Products Exporters' Association ITC International Trade Centre ITKIB Istanbul Textile and Apparel Exporters Associations LASIAD Laleli Manufacturers and Businessmen Association Mn Million OIZ Organised Industry Zones

SGK Social Security Institution SSD Turkish Leather Goods Association TDKD Turkish Leather Garment Manufacturers' Association TL Turkish Lira TOBB Union of Chambers and Commodity Exchanges of Turkey TSDS Turkish Leather Industrialists Association TUDIS Turkish Leather Industry Employer’s Association

TUIK Turkish Statistical Institute TÜRDEV Turkish Leather Foundation VAT Value added tax WTO World Trade Organisation

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Executive summary

Leather & leather products manufacturing industry

The trade volume between Italy and Turkey amounted to $19.8 Bn in 2017 Italy has an average trade surplus of $4.0 Bn with Turkey during the last decade. In 2017, total export of Italy to Turkey amounted at $11.3 Bn which made it 5th largest exporter to Turkey after China, Germany, Russia and USA.

As of 2017, Turkey’s total leather products –including footwear import was $1.2 Bn and Italy was the second largest exporter to Turkey with an overall share of 17% and $204 Mn amount.

Production value of the leather sector was around $4.2 Bn (TL15.5 Bn) as of 2017. The CAGR of the leather sector was 1.9% in between 2007 and 2017, and it was slightly less than the GDP growth of 2.4% in $ terms in the same period.

During the last decade, imports in leather sector decreased from $1.6 billion to $1.2 billion level.

In the past decade, the growth of leather sector exports from $0.8 billion in 2007 to $1.3 billion in 2017 with a CAGR of 4.2% in the period became the key drive for the increase in domestic production.

The largest segment in leather sector was footwear industry which accounted for 62.9% of the production value in 2017.

Turkey is a net importer for raw hides and skins. During the last decade, between 50-80% of total raw hides and skin was imported. Italy was the 8th largest exporter of raw hides and skins to Turkey with a share of 4% in 2017.

Production volume of tanned and dressed leather decreased from 57.9 million m2 in 2007 to 33.1 million m2 in 2017, with a CAGR of -5.4% per annum.

Imports of processed leather was also decreased almost 50% in the last decade from 17.1 million m2 in 2007 to 9.2 million m2 in 2017.

Italy was the second largest exporter of processed leather to Turkey after Azerbaijan in 2017.

The production in leather accessories (saddlery, bags & luggage and leather goods) increased highly. The 2017 production volume was 3.1 times over the 2007 level.

The key factor for the production growth in the leather accessories segment was protective measures of the Turkish government especially for bags and luggage imports from China and other Far East countries.

Turkey’s exports in the leather accessories also increased highly during the 2007 and 2017 period.

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As of 2017, the leather garments industry is the smallest segment in the leather sector. In 2017, there are around 700 enterprises active in the industry according to official statistics of TUIK published in November 2018.

There was a decline in leather garments manufacturing at a CAGR of -4.4% in volume terms in the last decade.

The imports of leather garments also decreased at a CAGR of -5% during 2007 and 2017; in the same period exports of Turkey decreased more with a CAGR of -7%.

The share of Italy was 10% both in value and volume terms in Turkey’s leather garment import. Most of the leather garments imported from Italy are branded high-end products.

Turkish companies that make contract manufacturing for luxury international brands mostly use Italian leather, which were already defined in the specs of the manufacturing contract.

Footwear

Turkish footwear industry is the largest segment in the leather industry and the production growth was the most prominent one during last decade.

The footwear industry production in value terms was around $2.5 billion as of 2017.

Thanks to additional taxes applied by Turkey in footwear import especially from Far East countries since August 2014, the total import of footwear decreased by 15% in value terms and 22% in volume terms between 2015 and 2017.

The production volume of the footwear industry increased with a CAGR of 6.1% per between 2007 and 2017. The most remarkable success of the Turkish footwear industrialist was in export.

Most of the production was not genuine leather products; 90% of the production was made of artificial leather, textile, and non-woven materials.

There are around 6,000 companies active in the footwear industry as of 2017, around 100 of which are large size companies. There are only 20-30 companies having over 250 employees according to TOBB industry database.

Majority of the local footwear retailers worked with contracted footwear manufacturers who are producing under retailer’s brand name such as Bambi, Beta, Desa, Elle, Hotic, Flower, Kemal Tanca etc.

Few of the retailers such as Bambi, Beta, Desa, Flo (Ziylan), Gezer, Kavsan (Greyder) have also their own production facilities; however, they produce only a limited share of the products they sold.

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Total foreign trade volume of Turkey in footwear industry was $1.3 billion as of 2017 and expected to be $1.5 billion in 2018 and it reached the peak in 2014 with $1.6 billion. The footwear export of Turkey exceeded import for the first time in the near history in 2017 and the trade surplus of Turkey in footwear is expected to be larger in 2018 with around $250 million.

Italy was the third largest country in Turkey’s footwear import during the last decade and will protect its position in 2018 with increasing export to Turkey.

Due to the protective measures of the Turkish government by taking serious anti-dumping measures in against cheap imports from China and other Far East countries especially after 2014, footwear imports from China decreased 59% between 2013 (the peak year of the imports from China with $499 million) and 2017.

Most of the Italy’s footwear export to Turkey is leather shoes and bags as well as accessories.

Italy was the leading exporter to Turkey in genuine leather footwear product group. In 2017, the share of Italy in genuine leather exports of Turkey in value terms was 86% and in volume terms 69%.

During the last decade various high-end Italian brands in footwear entered in the Turkish market through their own stores and/or making trade agreements by leading luxury retailers.

o Alberto Guardiani (Barners Group) opened its first store in Ankara “Next Level” shopping mall in 2013 and the second one in Akasya shopping mall in Istanbul in 2017.

o Hogan (Tod’s Spa) entered Turkish footwear market in August 2014 through its store in Akasya shopping mall. Afterwards Hogan opened new stores in Nisantasi and and Istinye Park shopping mall.

o In September 2013, Beymen opened mono brand store of Valentino in Istinye Park shopping mall.

o Demsa Group, Dogus group and Dillasima opened various new stores of high-end Italian brands like Armani, Gucci etc.

o Various footwear retailers like Beta, Cabani, Henry, Moccassini (Bülent Tanca), Tamer Tanca Inc (with Kemal Tanca branded stores), Vespa etc. started to sell Italian shoe brands in their selected stores and Internet stores.

All these developments led a significant increase in footwear imports of Turkey from Italy and it was reached its peak in 2014 with $104 million; which represented almost 50% increase compared to its 2007 level.

IBS expects Italy’s export in footwear to Turkey will again reach $100 million level in 2018, due to continuing growth in luxury ready-wear retail in the country.

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Turkey’s export in footwear increased significantly during the last decade.

The footwear retail market size was around $4.7 billion in 2017.

With the changing retail market structure of Turkey, the share and penetration of the branded retail chains in footwear has been increasing through their stores in shopping malls.

There are 15-20 key local footwear retailers in Turkey. In addition, footwear retailers, ready wear retailers are also a key retail channel for the footwear sales.

In the low and medium price range LC Waikiki, Koton, Defacto, Ozdilek and in the high-end range Beymen, Boyner, Demsa Group, Hugo Boss, Vakko are key ready-wear retailers in Turkey.

The footwear sales turnover of Boyner Group (which includes Altinyildiz, Aymarka, Beymen Magazacilik and Boyner Buyuk Magazicilik) which was around $183 million in 2017, and LC Waikiki’s footwear sales turnover which was around $132 million make these companies one of the top ten footwear retailers in Turkey.

Italian footwear brands are present in the Turkish market in three key channels:

o Through multi-brand stores of luxury multi-channel stores of Turkish ready-wear retailers such as Ay- Marka, Beymen, Boyner, Demsa Group, Dillasima Group, Vakko etc.

o Secondly but rarely through mono brand stores of high-end luxury ready wear retailers like Barners Group, Beymen, Dillasima Group, Demsa Group (Roberto Cavalli, Gucci-Nisantasi, Salvatore Ferragamo – Nisantasi) Dogus Group etc such as Alberto Guardiani (by Barners Group), Gucci (by Dogus Group), Tod's S.p.A / Hogan (by Derique owned by Erdal Ayaydin), etc

o Thirdly and widely through high-end stores of top local footwear retailers like Tamer Tanca, Deriden (and Markapark), Kifidis, Yargici etc and very limited through selected stores of low and medium segment retailers like Ayakkabi Dunyasi, Flo, Deichman etc.

Components & accessories in footwear industry

Footwear parts & components market accounted at $125 million production in 2017.

Overall consumption was $146 million which grew at a CAGR of 9.1% between 2007 and 2017. Around 40% of the local consumption is met by import in 2017.

Components industry local production growth in the last 10 years was slightly higher compared to the growth in footwear industry which was 6.1% CAGR. Relatively higher consumption growth is linked to export-oriented growth of footwear industry.

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While China is by far the dominant supplier of footwear components which constituted 80% in 2017 in value terms, Italy is the second largest supplier to Turkey, having a share of 10%, with a value of $5.6 million.

In the first nine months of 2018, there was -20% decrease in the imports of footwear components due to decreasing domestic production. Imports from China, the leading exporter of Turkey in this category decreased 24% in the first nine months.

Although there was an increase in imports from Italy in the first nine months of 2018, IBS identified that majority of the imports was in the first two quarters of the year which was declined radically in the third quarter. IBS estimate there will be very limited amount of imports from Italy also in the fourth quarter of 2018 and finally there will be decline in the year total of 2018.

Turkey’s main export destination for footwear components has traditionally been Russia, CIS countries and Eastern Europe.

Italian companies have a very good image and are key suppliers in various raw materials and components such as chemicals, leather (both genuine and artificial), footwear textile, soles and heels as well as various finishing materials (lasts).

In components area Erdogdu Group and Duyar as well as Palamut Group are key distributors of Italian companies active in raw materials and components supply. COIM Turkey, a subsidiary of COIM SpA (Chimica Organica Industriale Milanese) is also representing a number of foreign brands in Turkey.

Growth drivers

Increasing exports especially in footwear, bags and luggage as well as leather and fur garments due to diversification of export markets

Increasing number of tourists visiting Turkey

Protective measures of government by additional customs duty especially in against to competitive and cheap imports from Far East countries.

Due to ongoing downturn in Turkish economy and high devaluation of Turkish Lira most of the footwear producers will shift their focus from domestic market to foreign markets and they will target to increase their exports.

The key growth driver for the leather sector in 2017 was the high increase in export of footwear, bags, and luggage as well as leather and fur garments.

In the next five years, the number of incoming tourists is expected to reach 53 million with a CAGR of 6.2% between 2018 and 2023.

With the increasing tourist volumes, the domestic sales will increase at least $100 million in bags and luggage and $150 to 200 million leather and garments in the forecast period of 2018-2023.

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The protective measures applied by the Turkish government through imposing additional customs duty to far East countries including China, India, Vietnam was another key driver for the increasing investments in especially footwear, bags and luggage segments and the increasing local production in leather sector.

Market forecasts

In the forecast period, between 2017 and 2023, the leather sector (in broad definition) is projected to grow at a CAGR of 3.6% in US dollars terms, compared to the CAGR of 1.9% between 2007 and 2017.

Leather industry production is projected to reach $5.1 billion value in 2023 while footwear will account for slightly 64% of this value.

Regulations

Since August 2014, Turkish government has started to take protective measures to support the local industry in the leather sector.

First in August 2014, Turkish government started to apply additional customs duty for the import of footwear products for the far eastern country groups. With the decree of the Council of Ministers of 2014/29076, Turkey started to impose additional 50% customs duty for genuine leather footwear products or minimum $5 per pairs and 30% additional customs duty for artificial leather or textile footwear products or minimum $3 per pairs. In addition, Turkey started to impose 20% additional customs duty for semi-finished parts of footwear.

In each sub-product groups there is no duty for EU and EFTA countries.

Competition

As of 2018, there are around 280 companies and 290 enterprises listed by union of Chambers (TOBB) industry database having capacity certificate in leather and fur processing in Turkey.

Within listed leather and fur processing companies, only 3% of the companies have over 100 employees, 10% having 50-99 employees and 25% has 25-49 employees, rest of them are less than 24 employees.

The largest companies in the Turkish leather processing segment are Iskefe Deri, Sepicileri Caybasi Deri, Sen Deri, Uyguner Deri, Rodeo Deri and Cevahir Deri companies.

As of 2018, there are around 205 companies and 212 enterprises listed by Union of Chambers (TOBB) industry database having capacity certificate related with leather accessories (bags, luggage, leather goods and saddlery) manufacturing.

Within listed leather accessories companies, around 14% of the companies have over 100 employees, 11% having 50-99 employees and 22% has 25-49 employees, rest of them are less than 24 employees.

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Desa, Matras, Kandermir Leather, Uyar Saraciye, Sen Leather, MCS Group, Petek Saddlery, Tergan, SF Leather and Hilal Canta are the key local producers in the leather accessories manufacturing.

As of 2018, there are around 230 companies and 238 enterprises listed by Union of Chambers (TOBB) industry database having capacity certificate related with leather garments manufacturing.

Within listed leather garment manufacturers, 12% have over 100 employees, 10% have 50-99 employees and 20% has 25-49 employees, remaining 58% of the companies have less than 24 employees.

Desa, Orjin Group & Aydinli Leather, Agamer, Sen Leather, Sued Mod Leather, Doruk Leader and Lider Leather are key companies in the leather garments manufacturing.

As of 2018, there are around 678 companies and over 680 enterprises listed by Union of Chambers (TOBB) industry database having capacity certificate related with footwear manufacturing.

Within listed footwear manufacturers, 2% have over 250 employees, 6% have 100 to 249 employees, 11% have 50-99 employees and 26% has 25-49 employees, remaining 55% of the companies have less than 24 employees.

Gezer, Flo (Ziylan), YDS, Kavsan (Greyder), Ciftciler Footwear, Muya, Ozdallar, Akinal, Mekap, Ceyo, Tripstep are key producers in footwear sector with over 200 employees and $20 million/year turnover.

TOBB industry database listed 117 companies that have capacity reports relevant to leather and footwear components industry defined under the 15.20.40 NACE code.

There are only nine companies having more than 100 employees and 11 companies with 50-99 employees in the footwear components segment.

Sole production capacity in Turkey is estimated at 500 million pairs (circa 100,000 tons) as of 2017. The key producers are Ziylan Taban, Elit Taban, Ozsahin Taban, Global EVA, Opar Ayakkabi, Lamci, Fatih Okce, Alkan, Sonar, As Fuspet in the sole/in-sole manufacturing within footwear components segment.

Major players

Product group Key companies

Processed leather and fur

Iskefe Leather – Istanbul Tuzla, Bursa, Bolu Gerede, and Nigde

Sepiciler Caybasi Leather – Izmir

Sen Leather – Tekirdag / Corlu

Uyguner Leather – Istanbul Tuzla and Bursa

Rodeo Leather – Izmir

Cevahir Leather – Istanbul Tuzla

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Yilbay Leather – Tekirdag

Prima Leather

Teknofin Artifical Leather, Istanbul

Bags, luggage, leather goods and saddlery

Desa

Matras

Kandemir Leather & Textile (CantaTurk)

Uyar Saddlery

Sen Leather – Tekirdag / Corlu

MCS Group

Petek 1855

Tergan

SF Leather

Footwear Gezer

FLO (Ziylan Footwear)

Muya

YDS Textile & Leather – Ankara

Kavsan (Greyder)

Ciftciler Footwear (Conever)

Akinal Footwear

Urgan Footwear (Dunlop/Fila)

Ozdallar (Macromen)

Tristep

Mekap

Yesil Footwear

Footwear retailers

FLO (Ziylan)

Adidas Group

LC Waikiki

Deichmann

Nike Inc.

Tamer Tanca

Beymen

Inci

Boyner

Ayakkabi Dunyasi

Footwear component

producers

Akinal Footwear

Fatih Okce

Gezer Footwear

Ramiz Tarhan

Samsun Akin Rejenere

Dusal EVA

ABC Medical

Ziylan Taban and FLO (Ziylan)

On-Ar Group

Footwear component distributors

Coim Turkey

Erdogdu Group

Palamut Group

Duyar Shoe Materials

Birtug Foreign Trade

IBS 15

Opportunities & Challenges

Leather

Turkish leather industry imports 58% of the raw leather consumed in the domestic market, South America and South Asia countries being the most prominent supply sources.

Italian leather (and components as well) would be used by Turkish contractors when international retailers impose such intermediate goods/materials as per their contracts.

Current exchange rates with the depreciated Lira make Italian import too expensive for the industry.

Companies/traders tend to make import largely for stocking keeping in mind that current exchange volatility would hit again.

Footwear

Depreciation of Turkish Lira against Euro poses financial advantage in contract manufacturing opportunities with Turkish footwear companies.

Current economic turmoil in Turkey brings merger and acquisition opportunities in Turkey as many footwear companies.

Increasing tourist numbers particularly from Middle East and Russia (expected to be more than 6 million in 2019) brings dynamism to mid and high segment footwear and leather products.

Market will be stabilized in 1-2 year with more financially strong and well managed companies will be present in the market.

High segment Italian footwear still has ground in the market as the high income consumers continue to pay for luxury brands.

Any investment to increase brand awareness of Turkish consumers will eventually pay off.

While luxury Italian footwear will continue to be on the shelves, the range of collection would be rather limited in the short term with regard to strong Euro against Lira

Components

While Turkish companies are well placed in producing soles, hills, the raw materials are largely imported from Italy. Italian positioning is very strong in adhesives, sealants and other chemicals

Prominent distributor companies are well experienced in working with Italian manufacturers.

IBS 16

Footwear, leather and components industry in Turkey

IBS 17

1 Leather & leather products manufacturing industry

1.1 Market landscape

1.1.1 Introduction

Leather and leather products manufacturing industries is one of the oldest industries in Turkey. The leather business is a traditional craft business in Turkey dating back to the 12th century. Until the start of the economic liberalisation years with early 1980’s, sector’s activities remained within the country. As of mid 80’s with developed foreign trade, the sector opened itself to the world and expanded dramatically.

Initial efforts to modernise the leather industry began in the 1970s but significant progress on a real industrial scale only began in the mid­1980s. At present, there are nine operating organised industry zones (OIZ) in Turkey specialised in leather. The wastewater treatment plants for majority of these zones have been completed. In addition, the construction of one organised leather industry zones is continuing. Sector production is made according to international standards and is becoming more sensitive to health and the environment issues; 90% of the production is reportedly conformed with international health and environmental standards. Turkey can now produce all the machinery and 90% of the chemicals which it needs for leather making and export them as well. Leather manufacturers are mainly located in Balikesir (Gönen), Bolu (Gerede), Bursa, Denizli (Honaz), Gaziantep, Isparta, Istanbul (Tuzla), Izmir (Menemen), Manisa (Kula), Nide (Bor), Tekirdag (Corlu) and Usak.

Since leather processing business requires special expertise and investment, the way to compete in the sector necessitates an institutional structure and organization. While the number of manufacturers of leather tanning and processing has experienced a significant decline since 2006, major companies have survived.

While Turkish leather industry grows as export-oriented (1% of manufacturing industries’ output, 0.5% of total labour force and 0.9% of total Turkish exports earnings in 2017), the industry provides opportunities as the import of leather and footwear declines in the recent years. It is notable that more than half of Turkey's officially recorded leather export originates from direct sales to tourists.

The product categories to be covered in this research are as follows:

HS '41 - Raw hides and skins (other than fur skins) and leather

HS '42 - Articles of leather; saddlery and harness; travel goods, handbags, etc.

HS '64 - Footwear, gaiters and the like; parts of such articles (footwear components)

IBS 18

1.1.2 General and leather sector trade between Italy & Turkey

Chart 1: Trade volume (total) between Italy and Turkey, $ Billion, 2007-2017

Source: TUIK and ITC-Trade Map, 2018; IBS analysis

Trade volume between Italy and Turkey amounted to $19.8 Bn (billion) in 2017 after a peak of $21.3 Bn in 2011. In this trade, Italy has an average surplus of $4 Bn with Turkey during the last decade, the highest years of Italy’s surplus was in 2012 with $7 Bn and decreased to $2.8 Bn in 2017. In 2017, total export of Italy to Turkey amounted at $11.3 Bn which made it 5th largest exporter to Turkey after China, Germany, Russia and USA. Turkey’s exports to Italy reached its peak during the last decade with $8.5 Bn in 2017. Turkey was the 13th largest exporter to Italy.

Chart 2: Turkey's footwear, leather and components imports by countries 2017, $ Million

Source: TUIK and ITC-Trade Map, 2018; IBS analysis

As of 2017, Turkey’s total leather products –including footwear import was $1.2 Bn and Italy was the second largest exporter to Turkey with an overall share of 17% and $204 million. In 2017, Italy’s total leather products export was $24.9 Bn, and export to Turkey accounted only 0.8% of the Italy’s export in the sector.

10.0 10.7

7.6

10.1

13.5 13.3 12.912.1

10.6 10.211.3

7.5 7.8

5.9 6.57.9

6.4 6.7 7.1 6.9 7.68.5

17.4 18.5

13.5

16.6

21.319.7 19.6 19.2

17.5 17.8

19.8

0.0

5.0

10.0

15.0

20.0

25.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$ Bill ion

Italy's exports to Turkey Turkey's exports to Italy Trade volume Italy-Turkey

30%

17%

12%

6%

4%

3%

2%

2%

2%

1%

22%

IBS 19

1.2 Market size and growth

1.2.1 Market balance in leather sector

The historic market trends in Turkish leather sector to be analysed covering the following sub-sectors:

Raw hides and skins

Tanning and dressing of leather

Leather garments industry

Leather accessories covering saddlery, bags and luggage and leather goods (including belts, gloves, hats, wallets etc.)

Footwear and footwear components

Production value of the leather sector was around $4.2 Bn (TL15.5 Bn) as of 2017, according to latest industry and service statistics of TUIK published in November 2018.

The sector production in value terms (US dollar) increased at a CAGR of 1.9% between 2007 and 2017, from $3.5 billion in 2007 to $4.2 billion in 2017. The sector reached its highest production value in 2012 with $4.6 Billion.

Table 1: Leather industry market balance in Turkey, 2007-2017, $ Million

CAGR 2007 2012 2015 2016 2017 2007-17 Production 3,518 4,628 4,167 4,247 4,237 1.9% Imports 1,650 2,033 1,568 1,312 1,237 -2.8% Exports 846 1,118 1,175 1,183 1,280 4.2% Consumption * 4,322 5,543 4,560 4,376 4,194 -0.3% * Consumption figure includes the local sales to the foreign tourists in Turkey which is accepted as exports by the leather industry associations. e: estimate; only production figure is estimated by IBS for 2017. Source: TUIK foreign trade statistics, TUIK, Annual Industry and Service Statistics, period 2017 (published 02.11.2018)

During the last decade, imports in leather sector decreased with a higher compound average rate of -2.8% from $1.6 billion to $1.2 billion level.

In the past decade there was a growth trend only in exports of leather and leather products. Turkey’s leather industry exports increased from $0.8 billion in 2007 to $1.3 billion in 2017 and exceed imports first time in the near past.

Local consumption figures which includes the local sales to tourists (tourist sales accounted significant share in leather industry) was in decreasing trend due to negative effects of the political tension with Russian Federation and the terrorist attacks in metropolitan cities of Turkey related with the war in Iraq and Syria. After 2017 summer and in 2018 majority of these problems started to be resolved, and the incoming tourist volume and the tourism revenues of Turkey has returned to its old days.

IBS 20

1.2.2 Local production

Production value of the leather sector was around $4.2 Bn (TL 15.5 Bn) as of 2017, according to the latest industry and service statistics of TUIK. Sector production in value terms (US dollar) increased at a CAGR of 1.9% between 2007 and 2017, from $3.5 billion in 2007 to $4.2 billion in 2017.

The share of leather sector in Turkey’s GDP has been steady, average %0.5, during the period and is estimated to be same in 2018. The share of leather sector in overall manufacturing output value was around 1.0% in 2017.

Table 2: Leather sector market size in Turkey, 2007-2017, $ Mn

NACE code Activity Description 2007 2012 2015 2016 2017 14 Leather garments 964 553 378 258 334 14.11 Leather garments & articles 964 553 378 258 334 15 Leather and related products 2,554 4,076 3,789 3,988 3,903 15.11 Processed leather 796 1,027 885 903 810 15.12 Saddlery, bags & luggage etc. 286 585 450 421 430 15.20 Footwear 1,472 2,464 2,454 2,664 2,663 14+15 Leather industry, total 3,518 4,628 4,167 4,247 4,237 Manufacturing industry, total 316,590 428,752 410,606 402,804 431,461 Share in manufacturing industry 1.1% 1.1% 1.0% 1.1% 1.0% Share of leather sector in GDP 0.5% 0.5% 0.5% 0.5% 0.5% GDP, current prices, Mn $ 672,108 872,040 859,797 860,900 851,106 Source: TUIK, Annual Industry and Service Statistics, period 2017 (published 02.11.2018)

The largest segment in leather sector was footwear industry which accounted for 62.9% of the production value in 2017, followed by tanning and dressing industry with a share of 19.1%. The smallest segments are the saddlery, bags, luggage and leather goods industry and leather garments industry and with a respective share of 10.2% and 7.9% in 2017.

Chart 3: Leather sector production by segments, value share, 2017

Source: TUIK, Annual Industry and Service Statistics, 2018; IBS analysis

62.9%

19.1%

10.2%

7.9%

Footwear

Tanning & dressing

Sadlery, bags & luggage

Leather garments

IBS 21

As of 2017, there were around 691 enterprises active in leather garments industry and 8,931 enterprises were active in manufacture of leather and related products, of which 856 in tanning and dressing, 1,929 of them in saddlery, bags and luggage and leather accessories production. The largest amount enterprises were active in footwear industry with around 6,146 companies.

Table 3: Number of enterprises in leather sector, 2007-2017

Nace Rev 2 Activity Description 2007 2010 2015 2016 2017 14 Leather garments 999 807 829 714 691 14.11 Leather garments & articles 999 807 829 714 691 15 Leather and related products 8,444 8,707 8,845 8,826 8,931 15.11 Processed leather 1,137 941 891 864 856 15.12 Saddlery, bags & luggage etc 1,868 2,125 1,913 1,908 1,929 15.20 Footwear 5,439 5,641 6,041 6,054 6,146 14+15 Leather industry, total 9,443 9,514 9,674 9,540 9,622 Manufacturing industry, total 309,841 299,928 335,311 433,636 437,364 Share of leather sector in manufacturing industry 3.0% 3.2% 2.9% 2.2% 2.2% Source: TUIK, Annual Industry and Service Statistics, period 2017 (published 02.11.2018)

Share of leather sector within manufacturing industry enterprises decreased from 3.0% to 2.2% between 2007 and 2017. During the last decade approximately 180 enterprises have shut down in which the largest decrease was in leather garments industry with around 310 enterprises. The key reasons of the decrease were:

decreasing trade volume with key export markets of Turkey mainly with Russia due to political problems between Russia and Turkey,

decreasing volume of incoming tourists from Russia and other EU countries due to political problems between Russia and Turkey as well as political uncertainties and unsecure environment due to terrorist attacks and coup attempt during 2015 and 2016.

the consolidation of the sector during these years,

increasing competition of Far East countries in the sector.

1.2.3 Raw hides and skins

Livestock

Although the livestock population of Turkey is high among agricultural countries in the world, due to significantly low productivity levels; the leather sector in Turkey is dependent to import to meet its raw hides and skins demand.

Where the share of stock-breeding was around 60-70% of total agricultural output of developed countries, it is between 20-25% in Turkey. This main reason behind this is the poor organized sector structure and uneducated animal breeders.

The livestock population increased at a CAGR of 3.4% between 2007 and 2017. The overall population was 43.4 million in 2007 and reached to 60.7 million in 2017.

IBS 22

Table 4: Number of animals by kinds, 2007-2017, Million heads

Share CAGR 2007 2012 2015 2017 2017 2007-17 Bovine animals 11.1 14.0 14.1 16.1 26.5% 3.8% Ovine animals 31.7 35.8 41.9 44.3 73.0% 3.4% Other animals 0.6 0.4 0.3 0.3 0.5% -6.2% Turkey total 43.4 50.2 56.4 60.7 100.0% 3.4% Turkey ovine & bovine, total 42.9 49.8 56.1 60.4 99.5% 3.5 Italy ovine & bovine, total 15.5 15.0 13.8 14.6 62.9% -0.6 World ovine & bovine, total 3,640.5 3,772.9 3,836.7 n.a. Turkey share in World 1.2% 1.3% 1.5% n.a. Italy share in World 0.4% 0.4% 0.4% n.a. * Other animals include horses, asses, mules, camels and pigs Source: TUIK and FAO, IBS analysis, September 2018

Turkey has 1.5% of the world bovine and ovine livestock population where Italy has only 0.4% share as of 2015.

In total, 5.4 million bovine and ovine animals imported by Turkey during the period which accounted 31% of the increase in the bovine and ovine population between 2007 and 2017.

Between 2007 and 2017, Turkey imported 2.9 million bovine animals (mainly from Uruguay, Brazil, Hungary, France, Australia and USA) and 2.5 million ovine animals (mainly from Australia and Bulgaria). Import of live animals from Italy was negligible between 2007 and 2017. Turkey imported a total of 12,700 bovine animals between 2007 and 2017 and only 2,556 live bovine animals from Italy in 2017.

The official number of slaughtered ovine and bovine animals in Turkey was around 11 million heads as of 2017. This excludes around 820,000 bovine and 2.7 million ovine animals to be slaughtered during the Feast of Sacrifice in 2017. Summing approximately 14.3 million animals was slaughtered as of 2017.

Table 5: Number of slaughtered animals by kinds, 2007-2017, Million units

2007 2012 2017 CAGR 2007-17 Sheep and goat 7.7 5.5 7.2 -0.6% Bovine animals 2.0 2.8 3.6 6.0% Total 9.7 8.3 10.8 1.1% Note: Data on hide production covers slaughtering in slaughterhouses and outside slaughterhouses starting from 2010 and excludes the slaughtered animals during the Feast of Sacrifice. Source: TUIK, IBS analysis, September 2018

Sector experts commented that ca 20% of the bovine and ovine leather skins collected during the Feast of Sacrifice in Turkey were not usable due to wrong processing and preservation methods, however, which was 50% in ten years ago.

IBS 23

Raw hides and skins

Turkey is a net importer for raw hides and skins. During the last decade, between 50-80% of total raw hides and skin was imported. Total market size of the raw hides and skin sector is estimated around $200 million in 2017, well below the 2007 value of $400 million, according to official statistics.

In unit terms, total consumption of hides and skins decreased significantly with a CAGR of -5.4% from 55.5 million units to 30.9 million units in 2017. Local production volume was stable during the last decade while export and import decreased dramatically. The import volume decreased by 26.6 million units between 2007 and 2017, and the export volume was one-fourth of the 2007 quantity in 2017. In 2018, IBS estimates around 30% increase in volume terms for the import of raw hide and skins and 25% increase in value terms.

Italy was the 8th largest exporter of raw hides and skins to Turkey with a share of 4% in 2017. Iraq, Turkmenistan, Libya, UK and Afghanistan were top five countries in Turkey’s raw hides and skins import in 2017 and accounted almost 50% of imports.

Table 6: Raw hides and skins market balance in Turkey, 2007-2017, Million units

CAGR 2007 2012 2015 2016 2017 2007-17 Production 13.3 11.2 13.7 12.6 13.6 0.3% Imports 44.5 33.2 14.1 12.2 17.9 -8.7% Exports 2.3 0.5 0.6 0.5 0.6 -12.6% Consumption 55.5 43.9 27.2 24.3 30.9 -5.7% Share of imports 80% 76% 52% 50% 58% Source: TUIK, production, foreign trade statistics and IBS estimates, 2018

Turkey’s raw hides and skins production does not meet the local demand in both qualitative and quantitative terms. For instance, the leather garments industry mainly imports its hides and skins primarily because of the quality problem in the locally produced raw leather. In this case leather and leather goods production is directly affected by world stock and prices, so tanners plan to make bulk purchases for their raw material need at convenient times in order cope with the high prices.

In 2017, 75% of the hides and skins consumption of Turkey was from ovine animals and the rest was from bovine animals. The share of hides and skins from ovine animals was 64% in production, and 86% in imports.

IBS 24

1.2.4 Tanning and dressing

Turkey’s leather industry dates back to second half of 15th century primarily concentrated in Kazlicesme, Istanbul’s historical tanning centre. Currently there are around 850 tanneries in Turkey employing roughly 9,200 people.

Production volume of tanned and dressed leather decreased from 57.9 million m2 in 2007 to 33.1 million m2 in 2017, with a CAGR of -5.4% per annum. Turkey’s processed leather import was 9.2 million m2 in 2017 while the export was around 8 million m2.

Table 7: Processed leather market balance, 2007-2017, Million m2

CAGR 2007 2012 2015 2016 2017 2007-17 Production 57.9 45.8 28.3 26.1 33.1 -5.4% Imports 17.1 13.5 8.2 8.2 9.2 -6.0% Exports 6.6 7.4 7.2 7.5 8.0 1.9% Consumption 68.3 51.8 29.3 26.7 34.3 -6.7% Source: TUIK foreign trade statistics and IBS estimates, 2018

Local consumption of processed leather decreased almost half of its size in 2017 compared to 2007 level. As of 2017, 75% of the tanned and dressed leather was ovine leathers and the remaining 25% was bovine leathers. This breakdown was almost same for the last decade.

Considering the 80 million m2 tanning and dressing capacity, the capacity utilization rate of the sector was decreased from 85% in 2007 to 43% in 2017

Imports of processed leather was also decreased almost 50% in the last decade from 17.1 million m2 in 2007 to 9.2 million m2 in 2017. Italy was the second largest exporter of processed leather to Turkey after Azerbaijan in 2017. Tanned leather exports of Italy decreased 60% between 2007 and 2017 from 3.4 million m2 in 2007 to 1.4 million m2 in 2017. Imports from Italy accounted for 8% of the total processed leather imports of Turkey in 2017. Around 62% of Italy’s exports are in HS 4107 category -Leather further prepared after tanning or crusting "incl. parchment-dressed leather", of bovine "incl. buffalo" or equine animals, without hair on, whether or not split-.

Being one of the oldest industries in Turkey, the technology level used in the industry did not show a major improvement but there are a few number of medium and large size companies with high technology processing infrastructure.

The sector is still very labour intensive and mechanisation level remains low. One factor affecting this is the relatively cheap labour cost in Turkey. According to the SGK (Social Security Institution) statistics the average daily salary level of employees in the sector was around $18 per day, considering 10 hours of working per day, the hourly average wage in the sector was around $1.8 in 2016. After high devaluation of Lira in 2017 and 2018, the hourly net minimum wage in Turkey decreased $1.3 and it was one of the lowest in EU together with Albania, Serbia and Montenegro.

IBS 25

1.2.5 Leather accessories: saddlery, bags and luggage and leather goods

The leather accessories industry is fragmented and there are only a handful of companies that have an established corporate brand. In the saddlery, bags and luggage and leather accessories industry there are around 1,900 registered producers according to the official statistics. Majority of them are micro enterprises with less than five employees.

Total official employment in the industry was around 9,800 people as of 2017.

The general business profile of these companies shows that they mostly concentrate in production, while marketing, advertisement and promotion efforts are largely avoided. Usage of financial loans is very limited; education level and number of the skilled staff is very low as well. The majority are family companies run by traditional business practices.

Most of the companies are in the form of workshops (small ateliers) that have one shaving, one cutting and one or two sewing machines. Producers use their machinery for the longest possible time (30-40 years). Second hand machinery usage is very common.

In contrast to the leather garments, in the leather accessories industry, the production volume was increased highly. 2017 production volume was almost 3.1 times over the 2007 level.

The key factor for the production growth in this segment was protective measures of the Turkish government especially for bags and luggage imports from China and other Far East countries.

During the last decade, import of saddlery, bags & luggage, leather goods decreased at a CAGR of -10.0% in volume terms, from 25,490 tonnes in 2007 to 8,895 tonnes in 2017

Table 8: Saddlery, bags & luggage, leather goods market balance, 2007-2017, Tonnes

CAGR 2007 2012 2015 2016 2017** 2007-17 Production 8,820 16,100 27,470 25,300 27,350 12.0% Imports 25,490 15,735 15,975 10,219 8,895 -10.0% Exports 4,610 6,902 8,817 9,810 11,107 9.2% Consumption * 29,700 24,933 34,628 25,709 25,138 -1.7% * Consumption figure includes the local sales to the foreign tourists in Turkey which is accepted as exports by the leather industry associations. ** Production figures is estimated by IBS for 2017 Source: TUIK foreign trade statistics, TUIK manufacturing industry production statistics and IBS estimates, 2018

In against decreasing import, local production increased almost 3.1 times as the export also increased 2.4 times during the same period. Turkey’s leather accessories export doubled between 2007 and 2017 in volume terms. Export in this segment was only 4,610 tonnes in 2007 and reached to 11,107 tonnes in 2017. In 2017, the export volume exceeded import first time during the last decade.

IBS 26

Main reason of the decreasing domestic consumption was decreasing sales to the tourists due to sharp decline in number of tourists from Russia and European countries especially in 2016 and 2017. The consumption is expected to increase again with the expected increase in incoming tourists in the next years.

Around 30% of the local production in this category is sole leather products and the share of leather products within exports was 24% in 2017. The share of sole leather products was only 11% in import.

Most of the production and foreign trade in handbags and luggage are artificial leather and textile products.

The production value of the leather accessories industry increased from $286 million to $459 million with a CAGR of 4.8% between 2007 and 2017.

Table 9: Saddlery, bags & luggage, leather goods market balance, 2007-2017, $ Million

CAGR 2007 2012 2015 2016 2017 2007-17 Production 286 585 450 421 459 4.8% Imports 424 374 394 287 272 -4.3% Exports 180 248 199 176 188 0.4% Consumption * 531 711 645 533 543 0.2% * Consumption figure includes the local sales to the foreign tourists in Turkey which is accepted as exports by the leather industry associations. Source: TUIK foreign trade statistics; TUIK, Annual Industry and Service Statistics-2017

The leather accessories industry production in value terms was lower compared to increase in volume terms between 2007 and 2017. This is mainly because the shift of industry from genuine leather products to artificial leather and textile products in surface materials of especially bags and luggage.

As a result, both average unit production price and average unit export price of the industry outputs has decreased significantly during the last decade. In 2007, the average unit production price of one kg of the industry output was $32, where it was only $17 in 2017. The average unit export price of Turkey in this segment was also decreased from $39 to $17 per kg due to shift from manufacturing genuine leather articles in the past to manufacturing artificial leather and textile articles in 2017.

IBS 27

1.2.6 Leather garments

As of 2017, the leather garments industry is the smallest segment in the leather sector. In 2017, there are around 700 enterprises active in the industry according to official statistics of TUIK published in November 2018. On the other hand, as of end 2017, there were around 390 companies having manufacturing capacity certificates (excluding small workshops less than 5 employees) in the TOBB industry database. Total employment in leather garments manufacturing industry (including small workshops) was estimated around 5,700 paid employees as of 2017.

As with other areas of leather sector, leather garment companies are mostly small-scale family firms having adequate capital to produce their own products and have their own customers.

The leather garments sector has two distinct periods pinned at 1990s. Before 1990s, all companies worked for a few corporate companies and small-scale family establishments were producing sub-contracted garments since they did not have adequate capital. After 1990s, with new markets such as Russia, CIS and the Balkan countries became available and prospective; these companies acquired capital considerably through shuttle trade and became financially stronger and more independent.

There was a decline in leather garments manufacturing at a CAGR of -4.4% in volume terms in the last decade. The production volume decreased from 9,611 tonnes to around 6,107 tonnes in 2017.

Table 10: Leather garments market balance, 2007-2017, Tons

CAGR 2007 2012 2015 2016 2017** 2007-17 Production 9,611 9,660 6,407 5,552 6,107 -4.4% Imports 595 315 190 118 63 -20.1% Exports 3,099 1,051 731 767 830 -12.3% Consumption * 7,107 8,924 5,866 4,903 5,340 -2.8% * Consumption figure includes the local sales to the foreign tourists in Turkey which is accepted as exports by the leather industry associations. ** Production figure is estimated by IBS for 2017 Source: TUIK foreign trade statistics, TUIK manufacturing industry production statistics and IBS estimates, 2018

There was a significant decrease in the leather garments foreign trade between 2007 and 2017. Russia is Turkey’s key export market in leather garments. The main reason of the decrease in export volume was the economic crisis in Russia as well as political tensions between Russia and Turkey during the period. The industry export decreased with a negative CAGR of -12.3% between 2007 and 2017.

The import volume decreased with a higher rate compared to export and production; with a CAGR of -20.1% between 2007 and 2017.

Decrease in domestic demand was almost parallel to the decrease in production at a CAGR of -2.8% during the same period. Main reason of this high decrease in domestic consumption was the decreasing tourist volume from Russia as well as EU countries

IBS 28

because most of the domestic sales were duty free sales to tourists visiting Aegean and Mediterranean coastal cities of Turkey.

The leather and fur garment industry production in value terms decreased from $964 million to $334 million between 2007 and 2017.

Table 11: Leather garments market balance in value, 2007-2017, $ Million

CAGR 2007 2012 2015 2016 2017 2007-17 Production 964 553 378 258 334 -10.0% Imports 47 110 92 62 29 -4.8% Exports 230 163 124 119 116 -6.6% Consumption * 782 895 431 281 224 -11.7% * Consumption figure includes the local sales to the foreign tourists in Turkey which is accepted as exports by the leather industry associations. Source: TUIK foreign trade statistics, TUIK, Annual Industry and Service Statistics-2017

In value terms, the decrease in production and local consumption was higher compared to the decrease in volume terms. This proves the negative trend in unit prices of leather and fur garments in dollar terms in the local market. In dollar terms the average unit prices of leather garments decreased around 62% of the 2007 price level. In contrast, the average unit export prices of leather garments in 2017 increased around 88% compare to 2007 export price levels. This indicates that Turkish producers exported value-added products but sold relatively cheaper priced mass products in the local market. The average unit price of Turkey’s export in leather garments was $139 per kg in 2017 and it was $74 per kg in 2007.

On the other hand, in leather garments import, average unit price of imported products increased almost five times in 2017 compared to 2007 level. Average unit price of the imported products was $454 per kg while it was $79 in 2007. This is mainly as a result of an increase in the share of value-added high segment products in leather garments imports due to the new trade barriers by Turkish government in against to the cheap and especially Far East origin product imports in the segment.

Leather for the leather garments industry is mainly imported as local leather manufacturers do not maintain production quality. Main foreign suppliers of processed leather for leather garments are Azerbaijan, Italy, India, Kenya, Tajikistan and Brazil.

1.2.7 Footwear

The footwear and footwear components sectors were elaborated in detail in Section 2 and Section 3 of the report.

IBS 29

1.3 Industry structure and infrastructure

Turkish leather and leather products sector grew rapidly in the 1980s and 1990s, and with the competition conditions emerging in the 2000s, the sector has entered a transformation process. Then it focused on protecting its manufacturing infrastructure and competitive power in export.

The majority of Turkey's leather and leather products manufacturing industry is located in the organized industrial zones; especially in specialized industry zones established exclusively for the leathers sector. Due to environmental reasons, the tanning and dressing enterprises are located mainly in these regions. While there has been a significant decline since 2005 in the number of manufacturers of leather tanning and dressing, large and corporate companies have been able to survive.

One of the most important characteristics of the sector, which mainly operates in the Leather Organized Industrial Zones, is environmentally sensitive, modern and high-quality production in parallel to the European standards.

Leather manufacturers are mainly located in Balikesir (Gonen), Bolu (Gerede), Bursa, Denizli (Honaz), Gaziantep, Isparta, Istanbul (Tuzla), Izmir (Menemen), Manisa (Kula), Nigde (Bor), Tekirdag (Corlu) and Usak provinces. Istanbul (Zeytinburnu) is considered as the most important trade centre for the Turkish leather wear industry.

Figure 1: Geographic concentration of leather sector in Turkey, 2017

Source: IBS

In the leather sector:

Tanning and dressing industry is mainly located at following provinces: o Istanbul-Tuzla, Tekirdag-Çorlu, Bursa, Balıkesir-Gonen, Bolu-Gerede,

Izmir-Menemen, Usak, Isparta, Manisa-Kula and Hatay,

Leather garments industry companies are in Istanbul and Izmir.

Almost 50% of the footwear industry companies are in Istanbul and remaining in Gaziantep, Izmir, Konya and Bursa etc.

Tanning and processing

Leather apparel

Footwear

IBS 30

Before 1990s, most of the leather industry companies were located within urban centres of the cities. During this period, concerns about industrial pollution and environmental problems urged especially tanneries as well as companies from other segments of the sector to move out of city centres.

In 1986, first steps towards moving companies which were located in Kazlicesme district (the traditional and historic centre of the industry since Ottoman times) of Istanbul to the newly established Istanbul Leather Organized Industry Zone in Tuzla (which is outskirts of the city) were taken, and the zone was fully operational as of 1992. Afterwards the leather industry companies which were located within Izmir city centre Yesildere moved to Izmir Menemen Leather Industry Zone. In 1997, the status of leather zone in Izmir changed to a Free Trade Zone. Today there are 40 leather companies, five leather chemicals companies and one leather machinery company are active in the Free Trade Zone out of 76 companies.

As of end 2017, there are 11 specialized industrial zones established for leather sector in Turkey, one of which is under construction and remaining is operative. The largest of the specialized leather OIZs was Istanbul Leather OIZ (Tuzla). There are around 194 active companies in the region. Other important and well established OIZs are Izmir (Menemen), Tekirdag - Corlu and Usak Leather OIZs.

Table 12: Specialized leather industry zones in Turkey, end 2017

Number Number of Current Area of industrial operating employment Occupancy Name of the OIZ (hectare) parcels companies (people) rate, % Balikesir-Gonen 109 86 32 427 39 Bolu Gerede 1 196 110 28 810 40 Bursa Leather 190 121 24 610 35 Denizli Leather Specialized 63 75 13 200 35 Isparta Mix Leather 85 66 7 210 24 Istanbul Leather (Tuzla) 741 360 194 9350 86 Izmir Free Trade Zone (Menemen) 162 189 80 ( 40*) 1,600 70 Manisa-Kula Leather under construction Nigde Bor Mix Leather 292 170 49 1275 53 Tekirdag-Corlu Mix Leather 130 80 54 1201 58 Usak Leather 264 120 83 1817 79 Total 2,232 1,549 670 17,500 58 * In Izmir Free Trade Zone 40 companies of operating 80 companies are in leather sector. Source: IBS desk research and interviews, IBS analysis, 2018

In total there are 670 operating companies in the OIZs which accounted around 8% of the total sector enterprises. The companies located in OIZs are mostly medium and large size companies and accounted approximately 25% of the sector employment.

Today almost all these leather organized industry zones are equipped with water treatment plants and provides modern industrial infrastructure for the companies.

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Figure 2: Map of specialized leather industry zones, 2017

Source: IBS

There is discounted land allocation incentive in specialized leather industry zones with low occupancy rates. There is 90% discounted land allocation in Manisa Kula Leather and Nigde Bor Mix, 70% discount in Usak Leather OIZ, %60 discount in Balikesir Gonen and Denizli Leather, 50% discount in Bolu Gerede, Isparta Leather OIZs. There is no discounted land allocation in Bursa Leather OIZ, Istanbul Tuzla Leather OIZ, Izmir FTZ, and Tekirdag Corlu Leather OIZ because these OIZs are almost fully occupied.

Around 75% of the companies active in the leather sector were micro enterprises employing 1-9 workers, the share of small companies was 17%, medium size companies were 2.6% and finally large size companies accounted less than 1% share in 2016.

Chart 4: Breakdown of leather sector companies by size, 2017

Source: TUIK, Annual Industry and Service Statistics, IBS analysis, 2018

Istanbul Leather (Tuzla) OIZ(194 companies)

Tekirdag Corlu Leather OIZ(54 companies)

Balikesir-Gonen OIZ(32 companies)

Manisa Leather OIZ(under construction)

Izmir Menemen FTZ(40 companies)

Denizli Leather OIZ(13 companies)

Usak Leather OIZ(83.)

Isparta Mix Leather OIZ(7 companies)

Nigde Bor Mix OIZ(49 companies)

Bolu Gerede OIZ(28 companies)

Bursa Leather OIZ(24 companies)

79.7%

17.4%

2.6%0.3%

Micro companies (1-9 employees)

Small size companies (10-49

employees)

Medium size companies (50-249 employees)

Large size companies (over 250 employees)

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1.4 Foreign trade in leather sector

1.4.1 Foreign trade in leather sector

Turkey has long been a net importer in leather sector, though the growth trends in the last decade show export rising faster than import, and finally in 2017 Turkey became a net exporter in the leather sector. Export in value terms grew at average compound rate of 4.2% during the 2007 and 2017 period where import declined at average compound rate of -2.8%.

Chart 5: Leather sector foreign trade, 2007-2018e, $ Million

Total trade volume of Turkey in the leather sector reached its peak in 2012 amounted at $3.2 Bn and decreased to $2.5 Bn in 2017. In 2017, value of Turkey’s leather export was 3% over that of the import which stood at $1.3 billion. Trade deficit of Turkey in the leather sector decreased from its peak $915 million in 2012 to a trade surplus of $43 million in 2017. The main reason of decline in trade deficit was the protective measures of the Turkish government by taking serious anti-dumping measures in against cheap imports from China and other Far East countries especially after 2014.

Table 13: Leather sector foreign trade, 2007-2018 3rd Quarter, Mn $

Growth 2017 2018 CAGR 2017-18 2007 2012 2015 2016 2017 9M* 9M 2007-17 9M Exports 846 1,118 1,175 1,183 1,280 975 1,104 4.2% 13.2% Imports 1,650 2,033 1,568 1,312 1,237 927 909 -2.8% -1.9% Trade volume 2,497 3,150 2,743 2,495 2,516 1,903 2,014 0.1% 5.8% Trade balance -804 -915 -393 -129 43 48 195 Share in Turkey's exports 0.8% 0.7% 0.8% 0.8% 0.8% 0.8% 0.9% Share in Turkey's imports 1.0% 0.9% 0.8% 0.7% 0.5% 0.5% 0.5% *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

846

1,118 1,1751,183 1,280

1,4501,650

2,033

1,5681,312 1,237

1,213

2007 2012 2015 2016 2017 2018e

$ Million Exports Imports

e: IBS estimate

Source: TUIK and ITC Trademap, IBS analysis and estimate for 2018

IBS 33

The export in leather sector was $1.1 billion in the first nine months, where the import was around $0.9 billion, and the trade surplus of Turkey increased to $0.2 billion in the same period. In the first nine months of 2018, the leather sector exports increased 13.2% mainly because of high devaluation in Turkish Lira. The sector companies underlined that export to Russia, Italy and most of the EU countries as well as selected Middle East and African countries increased significantly during the first nine months of 2018. In contrast there was a continuing decrease in import excluding raw hides and skins and processed leather products.

IBS estimates that the leather sector export will reach $1.4 billion and the import will stay at the level of $1.2 billion for the year total of 2018.

The share of leather sector export in Turkey’s total export remained same with 0.8% during the last decade. On the other hand, the share of leather sector import decreased from 1.0% in 2007 to 0.5% in 2017.

In volume terms Turkey was a net importer during the period. The CAGR of the leather sector export in volume term was higher between 2007 and 2017 with 6.5% and the decline in import was higher compare to value terms with a negative CAGR of -4.1%.

Table 14: Leather sector foreign trade, 2007-2018 3rd Quarter, '000 Tonnes

Growth 2017 2018 CAGR 2017-18 2007 2012 2015 2016 2017 9M* 9M 2007-17 9M Exports 71 95 111 123 133 106 111 6.5% 5.0% Imports 239 208 138 137 157 113 136 -4.1% 20.7% Trade volume 310 303 248 260 290 219 247 -0.7% 13.1% Trade balance -168 -114 -27 -13 -24 -7 -25 *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

In the first nine months of 2018, the key change in the volume of import was the increasing trend; the import volume reached 136 thousand tonnes with 20.7% growth compared to first nine months of 2017. The key sources of this increase were increasing volume of import in the raw as well as processed and finished leather.

This growth trend shows that during the last decade, the average unit export price of Turkish leather sector products has declined from $12/kg in 2007 to $10/kg in 2018 (estimated), and average unit import price has increased from $7/kg in 2007 to $11/kg in 2015 but then again decreased to $6/kg in 2018. This main reasons behind this trend were:

Decreasing volume of imported finished products in against to raw materials,

Increasing volume of cheaper leather product import against high segment finished leather products.

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Chart 6: Average unit price in leather sector foreign trade in Turkey, 2007-2018e, $/kg

1.4.2 Foreign trade in leather sector by countries

The following table gives the trend in Turkey’s leather sector import by top 15 trade partners.

Table 15: Leather sector import by countries, 2007-2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 2007 2012 2015 2016 2017 9M* 9M 2017 2007-17 9M China 627 737 613 444 370 290 249 30% -5.1% -14.3% Italy 232 254 228 201 204 152 163 17% -1.3% 7.2% Vietnam 74 127 173 179 154 117 120 12% 7.6% 2.8% Indonesia 54 85 70 79 70 51 48 6% 2.7% -6.8% India 44 100 82 60 50 36 27 4% 1.2% -25.8% Spain 83 107 41 28 31 25 29 3% -9.2% 15.3% France 35 47 28 27 28 20 24 2% -2.3% 22.4% Germany 31 27 20 18 23 18 19 2% -3.0% 7.6% Free Zones 82 48 32 22 19 14 13 2% -13.4% -1.4% Romania 15 15 16 16 18 10 9 1% 1.3% -12.3% Portugal 7 9 15 13 17 13 8 1% 8.7% -39.7% Hungary 2 3 13 13 16 12 7 1% 22.9% -43.5% Cambodia 1 9 9 11 13 10 14 1% 36.9% 35.1% Iraq 0 4 5 7 12 9 8 1% 77.9% -11.2% Bangladesh 0 5 7 7 11 5 6 1% 49.4% 8.4% Others 363 456 217 187 201 146 167 16% -5.7% 14.5% Total 1,650 2,033 1,568 1,312 1,237 927 909 100% -2.8% -1.9% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

Italy consistently was the second largest country in Turkey’s leather sector import after China between 2007 and 2018. Top 15 countries accounted for an average 82% of Turkey’s import in leather sector in the last decade. Share of top 15 countries was 84% in 2017 and 82% in the first nine months of 2018.

12 12

11 1010

7

10

11

10

8

6

2007 2012 2015 2016 2017 2018e

Average unit price, $/kg Exports Imports

e: IBS estimate

Source: TUIK and ITC Trademap, IBS analysis and estimate for 2018

IBS 35

Turkey’s leather sector import from China started to decline significantly after 2016 and the CAGR of imports of Turkey from China was -5.1% between 2007 and 2017. In addition to China, countries like Italy, Spain, France, Germany, Free zones having a declining trend in its leather sale to Turkey between 2007 and 2017.

In the first nine months of 2018, the declining trend in import from China has been continuing by getting stronger; the decrease in import from China was -14.1% compared to the first nine months of 2017. On the other hand, unexpectedly there was an increase in import from Italy as well as other EU countries like France and Spain in the first nine months of 2018; there was 7.2% growth in import from Italy in value terms, 15.3% growth in import from Spain, 22.4% growth in import from France and %7.6 growth in import from Germany. The main reason of this increase was largely due to, as IBS identified, the traders made their purchases in the first half of the year as they foresaw the currency fluctuation in Turkey at the second half of the year. IBS interviews with key distributors proves this suggestion. These companies declared that they made very limited import in the second half of the year. In addition, foreign trade statistics showed that there was a significant decline in the third quarter compared to first two quarters of 2018.

In 2017, China maintained its ranking as the top country in Turkey’s leather sector import. The leather products import from China amounted at $370 million representing 30% of total import of Turkey. Import from China is expected to decrease around $317 million in 2018 with a decline of -%14 due to shrinking demand in low- and medium-priced leather products market in Turkey. The majority of the leather sector import of Turkey from China was footwear segment products and accounted approximately 65% of total leather sector import. It is followed by handbags with a share of 11% and travel bags with a share of 9% and trunks, suitcases etc with a share of 6%. These four top categories accounted 90% of the China’s leather sector exports to Turkey in 2017.

The second largest trade partner of Turkey in leather import was Italy. Import from Italy amounted to $204 million in 2017 and is expected to reach around $220 million with a growth of 7% in 2018. The main sources of growth in Italy’s export to Turkey was in footwear and leather accessories segments where there was a decrease in raw and processed leather. In the first nine months of 2018, the import of Turkey from Italy in leather sector was $11 million over the same period in 2017 as discussed in above paragraph. The 46% of the Italy’s leather export to Turkey was footwear products and the second largest category was handbags with 18% share in 2017. These top two categories accounted 64% of the Italy’s leather sector export to Turkey in 2017. Most of the leather sector imports from Italy are branded luxury products of ready-wear and sportswear which were marketed through high end retail chains active in Turkey. (See details in Section 2.3 and 2.4)

Vietnam was the third largest country in leather sector export to Turkey with 12% share in Turkey’s leather import in 2017. Vietnam will be again the third largest supplier of Turkey in leather sector in 2018. The imports of Turkey from Vietnam in leather sector reached approximately $120 million in the first nine months of 2018 and is expected to

IBS 36

reach $159 million in 2018. 92% of the leather import of Turkey from Vietnam was footwear products and mostly sportswear in 2017. Turkey’s import from Vietnam was tripled between 2007 and 2017. This increase in the import from Vietnam is mostly due to early purchases of big international sports shoe brands, again, that foresaw the depreciation of Turkish Lira against Dollar and Euro.

Indonesia was the fourth largest country in Turkey’s leather sector import with a share of 6%, and again a high share (93%) of leather imports from Indonesia was footwear products like Vietnam. Indonesia will remain as fourth largest exporter to Turkey in leather sector considering its $48 million export to Turkey in the first nine months of 2018.

Top 15 countries accounted for an average 62% of Turkey’s leather sector export in the last decade. As of 2017, the share of top ten countries was 62%. Italy was the fourth largest export market of Turkey in leather sector in the last decade.

Table 16: Leather sector exports by countries, 2007 -2018 3rd Quarter, $ Million

Growth 2017 2018 CAGR 2017-18 2007 2012 2015 2016 2017 9M* 9M Share 2007-17 9M Germany 105 81 93 100 110 83 87 9% 0.4% 5.3% Iraq 15 86 130 91 107 85 75 8% 21.6% -12.0% Russia 90 177 94 39 91 69 127 7% 0.1% 84.2% Italy 59 99 88 59 71 53 73 6% 1.9% 38.7% Bulgaria 29 20 20 48 60 50 29 5% 7.7% -42.5% UK 55 57 59 51 51 38 35 4% -0.7% -8.9% France 50 41 44 50 46 35 34 4% -0.7% -1.7% Spain 30 18 30 39 43 31 36 3% 3.6% 17.0% Saudi Arabia 19 43 35 40 39 32 27 3% 7.4% -15.8% Romania 40 13 22 31 37 28 34 3% -0.8% 21.1% USA 29 24 25 32 33 24 25 3% 1.3% 2.8% Netherlands 33 17 26 27 26 22 23 2% -2.2% 4.8% India 1 1 10 13 25 17 23 2% 42.3% 34.9% Israel 12 8 17 21 24 19 20 2% 7.2% 7.4% Serbia 17 10 14 18 23 17 17 2% 3.2% 2.0% Others 264 423 467 524 492 373 439 38% 6.4% 17.7% Total 846 1,118 1,175 1,183 1,280 975 1,104 100% 4.2% 13.2% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

Although Turkey’s largest export market was Germany in 2017, due to high increase in export to Russia in the first nine months of 2018, Russia has become again the top export destination for Turkey. During the last decade, between 2008 and 2015 Russia was the largest export destination for Turkey, due the political problems described below Germany has become again the top export destination for Turkish leather sector products since 2016. Turkey’s export to Germany increased from $105 million in 2012 to $110 million in 2017 with a CAGR of 0.4% during the period.

In 2017, Iraq maintained its second place in Turkey’s leather sector export but there was a significant decrease in export to Iraq in the first three quarter of 2018 with a decline

IBS 37

of -12% due to political imbalance in northern part of Iraq. The leather sector export of Turkey amounted at $107 million and represented 8% of total sector exports of Turkey in 2017. It is expected to decrease $94 million in the year total of 2018. The majority of the leather sector export of Turkey to Iraq was footwear segment products and accounted 87% of total sector exports of Turkey. Majority of the footwear products exported to Iraq were made of artificial leather and textile materials. Turkey’s leather sectors exports to Iraq increased seven-fold between 2007 and 2017, compensating the decrease in other key markets.

Russia has been traditionally a key export destination for Turkish leather industrialist and traders. There was a noticeable decrease in export to Russia due to political tensions between two countries in 2016; after Turkey’s downing a Russian jet in Syria. In addition to political tensions, economic problems in Russia also resulted in a negative trend in leather exports. In 2017, the political tension between two countries diminished which gave the pave for a significant increase in Turkey’s leather sector exports to Russia from $39 million in 2016 to $91 million in 2017, with a growth rate of 133%. In the first nine months of 2018, there was an enormous growth of 84% in the Turkey’s export to Russia in leather sector and it is expected to reach $168 million in 2018.

Italy was the fourth largest export destination of Turkey. Having 6% share in Turkey’s leather sector export Italy was a key market for Turkish leather sector companies. Turkey’s export to Italy in the sector was increased with a CAGR of 1.9% between 2007 and 2017, increased from $59 million to $71 million. Turkey’s leather export reached its peak value in 2014 with $119 million during the last decade. Between 2010 and 2015, export of Turkey fluctuated between $88-119 million and in 2016 there was a significant drop up to $59 million. In the first nine months of 2018, export of Turkey to Italy was increased with a growth rate of 39% and reached $73 million and is expected to reach over $100 million in 2018-year total.

In volume terms top fifteen countries in Turkey’s leather sector import were different from the order in value terms. China was again the top source country in Turkey’s leather import in volume terms with a share of 15% and followed by Iraq and Turkmenistan (due to import of heavier goods such as raw hide and skins). In the first nine months of 2018, there was 21% increase in import of Turkey due to high increase in raw and processed leather import. In raw and processed leather especially import from UK, Afghanistan, Mongolia, USA and Dominic Republic increased highly in 2018.

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Table 17: Leather sector imports by countries, 2007-2018 3rd Quarter, '000 Tonnes

Growth 2017 2018 Share CAGR 2017-18 2007 2012 2015 2016 2017 9M* 9M 2017 2007-17 9M China 41 40 35 26 23 18 16 15% -5.6% -10% Iraq 0 4 5 11 23 16 15 14% 154.2% -5% Turkmenistan 7 7 5 7 8 6 7 5% 2.6% 10% Italy 10 13 8 7 7 6 6 5% -3.5% 3% Azerbaijan 7 9 3 9 6 5 3 4% -1.3% -36% Vietnam 3 5 7 7 6 4 5 4% 8.0% 6% Libya 1 3 4 3 5 4 3 3% 16.5% -29% UK 26 8 1 4 4 2 8 3% -16.1% 264% Afghanistan 0 9 10 9 4 2 8 3% 48.6% 349% Australia 6 10 3 2 4 3 3 3% -3.9% -6% Georgia 7 1 0 1 3 2 3 2% -7.2% 10% Indonesia 2 3 3 3 3 2 2 2% 4.0% 1% Qatar 0 1 3 3 3 3 2 2% 44.1% -12% France 9 6 2 1 3 2 2 2% -11.2% 2% India 2 4 3 3 3 2 2 2% 5.3% -10% Others 119 89 45 42 51 36 51 33% -8.1% 43% Total 239 208 138 137 157 113 136 100% -4.1% 21% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

Although Italy was the 2nd country in Turkey’s leather sector imports in value terms, it was the 4th country in volume terms with a share of 5% in 2017.

Chart 7: Average unit import price of leather sector products Turkey from Italy, 2007-2018e

The average unit price of leather products imported from Italy was significantly higher compared to the general average. In 2017, the average unit price of leather sector import of Turkey from Italy was $28/kg where it was $8/kg for the average. IBS estimates that the average unit price of leather sector import of Turkey from Italy increased to $30/kg in 2018 where there was a decline in general average to $6 per kg.

710

1110

86

2320

2930

28 30

2007 2012 2015 2016 2017 2018e

Average price of imports, total Average price of imports from Italy

$/kg

IBS 39

1.4.3 Foreign trade in leather sector by segments

Footwear was the largest segment in the leather sector foreign trade, accounted 55% in value terms for imports and 60% for exports in 2017.

Table 18: Foreign trade of leather sector by segments, 2007-2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 2007 2012 2015 2016 2017 9M* 9M 2017 2007-17 9M Raw leather Imports 327 402 98 78 105 77 96 9% -11% 24% Exports 16 3 2 1 3 2 1 0% -17% -43% Trade balance -312 -400 -97 -76 -103 -75 -94 Semi-processed and finished leather Imports 282 282 189 151 154 112 119 12% -6% 7% Exports 105 158 179 183 208 153 162 16% 7% 6% Trade balance -178 -124 -9 32 53 41 42 Leather garments Imports 47 110 92 62 29 21 8 2% -5% -64% Exports 230 163 124 119 116 84 82 9% -7% -2% Trade balance 183 53 32 57 87 63 74 Bags & Luggage, leather goods, saddlery and harness Imports 424 374 394 287 272 205 187 22% -4% -9% Exports 180 248 199 176 188 137 157 15% 0% 15% Trade balance -244 -127 -195 -111 -84 -68 -30 Footwear Imports 570 864 795 734 676 512 499 55% 2% -3% Exports 317 546 670 704 766 600 702 60% 9% 17% Trade balance -253 -318 -124 -30 90 87 203 Leather sector, total Imports 1,650 2,033 1,568 1,312 1,237 927 909 100% -3% -2% Exports 846 1,118 1,175 1,183 1,280 975 1,104 100% 4% 13% Trade balance -804 -915 -393 -129 43 48 195 *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

In Turkey’s leather sector import the second largest category was bags & luggage, leather goods, saddlery and harness industry which amounted at $272 million and accounted 22% of the Turkey’s leather sector imports in 2017.

The third largest category in import was semi-processed and finished leather amounted at $154 million and 12% of the leather sector imports in 2017. This segment was followed by raw leather imports with $105 million and 9% of the sector imports in 2017.

The smallest segment in import of the sector was leather garments amounted at $29 million and 2% of the sector imports in 2017.

In the first nine month of 2018, there was a significant increase in import of Turkey in “raw skins and leather” and “processed and finished leather” categories, where there was reliable decrease in footwear and leather accessories (saddlery) and a high decrease in leather garments import. On the other hand, Turkey’s export in footwear and leather accessories increased by two digits in the first three quarters of 2018.

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Chart 8: Import of leather sector by segments, 2017, $ Million

Chart 9: Export of leather sector by segments, 2017, $ Million

Source: TUIK, ITC Trademap, IBS analysis, 2018

After footwear, the second largest export segment was semi processed & finished leather accounted for 16% share in overall leather sector export in 2017. It increased at a CAGR of 7% during the period, particularly due to decreasing export volume of finished products in the leather sector. The sector companies lobbying with the government authorities to ban the export of semi processed and finished leather as other Far East countries and evaluated this as against to the national economy.

The third largest segment in export was bags & luggage, leather goods, saddlery and harness industry amounted at $188 million and accounted 15% of the Turkey’s leather sector import in 2017. There was almost no growth in the segment’s export between 2007 and 2017. The peak in export of the segment during the period was at 2012 amounted at $248 million.

The fourth largest segment was leather garments amounted at $116 million and 15% in sector export in 2017. There was a significant decrease in leather garment export from $230 million to $116 million between 2007 and 2012.

Considering the local sales of leather garments by Turkish leather companies to the tourists visiting Turkey in the local market, the decrease was more dramatic. According to the records of different exporter’s union, export including direct sales to tourists was $239 million in 2012 and decreased to $160 million in 2017. Total decrease in export was $80 million between 2012 and 2017. It means that there were $77 million direct sales of leather garments to tourists in 2012 and it decreased to $44 million in 2017 and the decrease in direct sales to tourist was around $32 million between 2012 and 2017 with a CAGR of -10% during the period.

53%

16%

15%

9%0%

Footwear

Semi-proccessed & finishedleatherBags& Luggage, leather goods,saddlery & harnessLeather garments

Raw leather

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Chart 10: Exports of leather garments including direct sales to tourists, 2012-2017, $ Million

There were only five companies in the top 1,000 exporters list of Turkey in 2017. These five companies accounted 13% share in Turkey’s leather sector export in 2017 and two of them are foreign trade companies and the other two are footwear companies. There was only one tannery in the list: Sepici Leather.

Table 19: Leading leather sector exporters in Turkey, 2017, $ Million

2017, Exports $ Mn Share TGS Foreign Trade Inc (Ready-wear manufacturers) 50 4% Flo (Ziylan Footwear) 35 3% DSD Foreign Trade Inc (Leather manufacturers) 35 3% Gezer footwear 28 2% Sepici Leather 23 2% Total (Top five exporters) 171 13% Total Turkey leather exports 1,280 100% * TGS’s total exports was $958 million, $50 million part is only leather and leather products exports of the TGS. Source: TIM 2017 Top 1000 Exporters of Turkey, published in 2018

163116

77

44

0

50

100

150

200

250

300

2012 2017

Official exports Direct sales (exports) to tourists

239

160

CAGR 2012-2017

-8%

-10%

-7%

$ Million

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1.4.4 Italy -Turkey foreign trade in leather sector

The leather sector import value of Turkey from Italy was $204 million in 2017 and expected to be around $220 million in 2018 considering the nine month import of Turkey from Italy which was 7% over the import in the first nine month of 2017. The main sources of growth in Italy’s export to Turkey was in footwear and leather accessories segments where there was a decrease in raw and processed leather. The main reason of this increase was largely due to, as discussed above, the traders made their purchases in the first half of the year as they foresaw the currency fluctuation in Turkey at the second half of the year.

The CAGR of the import of Turkey from Italy was -1.3% between 2007 and 2017. Italy’s export to Turkey reached its peak in 2012 with a value of $254 million. There was a $50 million decrease in import from Italy between 2012 and 2017 and it is expected to be around $35 million between 2012 and 2018. Main reason in decreasing import from Italy was mainly decreasing export of Turkey in raw, semi- processed and finished leather.

Table 20: Imports from Italy in the leather sector by segments, 2007-2018 Q3, $ Million

Growth 2017 2018 Share CAGR 2017-18 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M Raw leather 20 46 11 6 9 6.9 5.2 4% -8.0% -25% Processed leather 93 71 44 38 38 27.1 25.6 19% -8.6% -6% Leather garments 4 5 6 4 3 2.6 2.6 2% -1.5% -1% Leather accessories* 37 49 61 56 56 41.4 48.6 27% 4.3% 17% Footwear 78 83 107 97 98 74.5 81.5 48% 2.3% 9% Total 232 254 228 201 204 152 163 100% -1.3% 7% * Saddlery, bags and luggage and leather accessories Source: TUIK and ITC Trademap, IBS analysis, 2018 October

During the period there was only increase in “bags, luggage and accessories” and “footwear” categories export of Italy to Turkey. The total increase in these categories was $22 million between 2012 and 2017 where there was $72 million decrease in raw, semi- processed and finished leather as well as leather garments exports of Italy to Turkey during the same period.

The largest segment in Italy’s leather sector export to Turkey was footwear segment with a share of 48% in 2017 and followed by the “bags, luggage and accessories” category with a share of 27%. Semi-processes and finished leather products were the third largest segment having a share of 19% in 2017. Turkish companies imported mostly finished bovine leather from Italy. The import of semi-processed and finished leather reached its peak in 2007 with a value of $93 million and decreased to $38 million in 2017. The share of Italian companies in Turkey’s semi-processed and finished leather was 25%.

Turkish companies that make contract manufacturing for luxury international brands mostly use Italian leather, which were already defined in the specs of the manufacturing

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contract. Companies like Acar Leather & Creative, Desa, Derimod, Matras, SF Leather, Orjin Deri, Lodarno Belts are example of such firms working with international retailers and fashion brands.

Chart 11: Italy’s leather sector export to Turkey by segments, 2017, $ Million

Source: TUIK and ITC Trademap, IBS analysis, 2018 October

The footwear imports of Turkish companies from Italy accounted almost 14% of the Turkey’s total footwear import in 2017. In 2017, 75% of the footwear import of Turkey from Italy was shoes with leather upper. In this sub-segment imports from Italy accounted 32% of the category imports of Turkey. Thanks to its key international brands in luxury ready-wear and leather goods, Italy was clearly the leading supplier in the high-end branded footwear market in Turkey.

The high-end leather footwear and leather accessories (bags, luggage and leather goods) companies and retailers whom the key ones listed below imports majority of the high-end Italian shoes, bags and leather accessories to Turkey.

Beymen (with a rich collection of Italian brands like Alberto Fasciani, Bottega Veneta, Buttero, Dolce&Gabbana, Etro, Fabi, Fendi, Magnanni, Mazzoleni, Miu Miu, Prada, Valentino Garavani, Versace etc),

Demsa Group (Salvatore Ferragamo),

Deriden & Markapark (Alberto Guardiani, Armani, Chiara Bellini, Due Italiani, Geox, Guiseppe Mengoni, NeroGiardini, Roberto Botticelli, Roberto Cavalli, Tosca Blu etc.)

Dogus Group (Gucci, Porche Design),

Tamer Tanca (Alberto Guardiani, Dolce & Gabbana, Fabi, Franceschetti, Gutteri, Macossini, Moleschi, Prada, Rucoline, Valentino)

Prada Spa (through own stores and other retailers like Beymen etc.: Prada and Miu Miu brands),

Vakko (Armani, Fratelli Roseeti, Moreschi, Rene Caovilla, Santoni, Versace)

48%

27%

19%

4%

2%

IBS 44

Turkey’s export to Italy was fluctuating between $60-100 million range between 2007 and 2017, amounted at $59 million in 2007 and with a CAGR of 1.9% between 2007 and 2017 increased to $77 million in 2017. It is expected to reach over $100 million in 2018. The main reason behind the increasing exports was the devaluation TL in 2018. As a result, Turkish leather sector products became more attractive for Italian footwear and leather goods traders. IBS identified several Italian traders in both AYMOD and AYSAF fairs and exhibitions who were making business agreements with Turkish companies.

Table 21: Exports of Turkey to Italy in the leather sector by segments, 2007-18 Q3, $ Million

Growth 2017 2018 Share CAGR 2017-18 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M Raw leather 5.4 4.9 4.6 4.3 4.4 0.5 0.1 6% -2.0% -77% Processed leather 1.0 5.5 19.1 13.9 16.5 13.0 15.0 23% 31.9% 16% Leather garments 19 15 11 14 12 8 6 17% -4.6% -22% Leather accessories* 27 62 35 10 20 7 22 28% -3.0% 198% Footwear 6 12 18 17 18 13 18 25% 12.5% 41% Total 59 99 88 59 71 42 61 100% 1.9% 47% * Saddlery, bags and luggage and leather accessories Source: TUIK and ITC Trademap, IBS analysis, 2018 October

In the first nine month of 2018, the export of Turkey to Italy increased 47% compared to the first nine month of 2017. This is mainly due to increasing export of Turkey in “bags, luggage and leather accessories” segment.

56% of Turkey’s export to Italy was under “bags, luggage and leather accessories” and “processed leather” segments in 2017 with equal shares of 28% each. The footwear sector was the third largest segment in Turkey’s export to Italy with 25% and followed by leather garments with a share of 17%. The export of raw leather was negligible.

Chart 12: Turkey’s leather sector exports to Italy by segments, 2017, $ Million

Source: TUIK and ITC Trademap, IBS analysis, 2018 October

The share of “bags, luggage and leather accessories” segment is expected to increase 46% in 2018 and will follow by the footwear sector with 24% and processed leather 20% share.

28%

28%

25%

17%

2%

$ Mn

$ Mn

$ Mn

$ Mn

$ Mn

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1.5 Leather industry distribution system and trade practices

As mentioned above, Turkey is dependent to import of hides and skins, around 50-60% of the raw hide and skin demand meet through imports. Mostly tanneries import directly depending on their raw hides and skins demand. Tanneries can do some of their import through inward processing regime and imports raw hides and skins without customs duty for exporting the processed leather produced by these hides and skins. There are also various small and medium size traders of hides and skins such as Alderi, Arter Foreign Trade, Halley Fur, Ozgunesciler, Toktas Deri etc.

Figure 3: Leather sector market structure, 2017

In processed leather, Turkish tanneries meet around 80% of the local demand and exports approximately 20% of the finished leather. There are around 850 tanneries in Turkey as of 2017 but only 50% of them are working regularly. Most of the sector companies are located in Organized Industrial Zones specific to leather industry. There are only ten companies having more than 100 employees in the industry. Some of these companies are also active in leather trading (imports and exports) together with independent traders like Aslan Deri, A1 (Alma Group), Isra Group, etc. And as declared to IBS most of the footwear, leather garments and bags and leather goods manufacturers meet their finished leather demand directly from local tanneries and/or their wholesalers and retailers, and they mostly imported directly from foreign manufacturers or traders. Most of the imported processed leather are direct imports of local producers who are producing shoes and bags for their contracted orders by international footwear and ready-wear retailers.

In leather processing (tanning) sector, the key strategic tendency of sector companies are as follows:

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To improve production capacities of the sector companies to meet large size orders especially from international retailers,

To increase the production quality of sector companies to meet international health, safety and environmental standards,

To improve sector clustering policies, and

To develop new marketing strategies both for domestic and export markets.

IBS understands that Turkish tanneries will focus more on export markets in the near future due to constriction in the local market.

The leading companies like Iskefe, Sepiciler, Sen deri, Uyguner Deri are active in the market through their wholesalers as well as their own branches in key cities. Most of the local leather producers declared IBS that they do not sell imported processed leather but due to limited availability of raw leather through domestic production they import raw leather from different sources. This will change depending on commercial conditions and the quality of the raw leather.

1.6 Competition in leather sector

1.6.1 Key Companies in processed leather

As of 2018, there are around 280 companies and 290 enterprises listed by union of Chambers (TOBB) industry database having capacity certificate in leather and fur processing in Turkey.

The complete list of the companies by their employee size and provinces as well as NACE Rev.2 production codes were listed in Annex I of the report.

Within listed leather processing companies, only 3% of the companies (ten companies) have over 100 employees, 10% having 50-99 employees and 25% has 25-49 employees, rest of them are less than 24 employees. IBS presents the profiles of top three companies with over 100 employees below.

Table 22: Leading companies in processed leather and fur, 2018

Company name Nace Rev.2 Location # of employees Iskefe Deri 15.11.32 Bolu, Bursa, Istanbul 350 Sepiciler Çaybaşi Deri 15.11.31 Izmir 320 Şen Deri -Corlu 15.11.41 Tekirdag 205 Uyguner Deri 15.11.32 Istanbul 155 Rodeo Deri Sanayi 15.11.31 Izmir 151 Cevahir Deri 15.11.32 Istanbul 136 Yilbay Deri 15.11.41 Tekirdag 120 Prima Deri 15.11.32 Istanbul 107 Teknofin Deri Suni Deri 15.11.52 Istanbul 102 Deri 2000 15.11.41 Izmir 99 Source: TOBB Industry database, IBS analysis 2018

Iskefe Leather – Istanbul (Tuzla), Bursa, Bolu Gerede, and Nigde

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www.iskefe.com.tr info@iskefe.com.tr T: +90 216 394 02 72 F: +90 216 394 02 70 Bulut Kargın, Import Specialist, bulutkargin@iskefe.com.tr

Iskefe Leather is the leading company in leather manufacturing in Turkey and it especially manufactures industrial leathers for the shoe sector. Its product range includes wet blue, crust, finished leather for safety shoes and army boots. Iskefe Leather processes 200 tonnes cattle hide daily with its five plants at Istanbul, Bursa, Gerede and Nigde. Besides own production; it gives contract manufacturing services to the sector through its developed technological infrastructure and machine park for wet processing and drying areas. Apart from the domestic shoe manufacturers Iskefe Leather is also producing leather for the international shoe and handbag manufacturers. Please see Annex V for a more detailed coverage for İskefe Deri.

Sepiciler Caybasi Leather – Izmir

www.sepiciholding.com info@sepiciholding.com T: +90 232 850 50 00 F: +90 232 850 50 92 Metin Bengisu, Foreign Trade Manager, metin.bengisu@sepici.com.tr

Established in 1927, one of the oldest tanneries in Turkey. The company is located in Izmir Caybasi. The company is the largest integrated tannery in Turkey. The production capacity of the company is around 1 million square meters per year. Sepiciler has three different facilities in its Caybasi premises to produce chrome leather, sole leather, and vegetable leather. The company is working with leading companies in the world and exports 75% of its production. The company has very modern production infrastructure giving importance to environment and also energy efficient sustainable production methods. Sepiciler Caybasi Leather was awarded two times as the best tannery of the Europe. The company has employed over 300 workers. Please see Annex V for a more detailed coverage for Sepiciler Deri.

Sen Leather – Tekirdag / Corlu

www.senderi.com.tr senderi@senderi.com.tr T: +90 212 639 78 50 F: +90 212 639 78 59 Reyhan Sever, Foreign Trade Manager, reyhan.sever@senderi.com.tr

Established in 1991, Sen Leather is an integrated company active in tanning and garment manufacturing in Turkey. The company is known as the largest tanner of Spanish entrefino, Merino lamb skin double-face (shearling) in the World. The company has 600,000 square meter annual production capacity of double-face lambskin. In addition to processed leather, the company has also around 60,000 pieces leather garments

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production capacity. It has 14,000 m2 closed production area and over 200 employees. The company has an R&D team directed by international designers and a R&D laboratory in Corlu. The company gives high importance in environmentally friendly production and has its own water treatment facilities.

1.6.2 Key Companies in bags, luggage, leather goods and saddlery

As of 2018, there are around 205 companies and 212 enterprises listed by Union of Chambers (TOBB) industry database having capacity certificate related with bags, luggage, leather goods and saddlery manufacturing.

Table 23: Breakdown of bags, luggage, leather goods and saddlery producers by size, 2018

Company size Number Share Over 100 29 14% 50-99 24 11% 25-49 47 22% 10-24 arası 48 23% less than 10 64 30% Total 212 100% Source: TOBB Industry database, IBS analysis, 2018

Within listed segment companies, around 14% of the companies have over 100 employees, 11% having 50-99 employees and 22% has 25-49 employees, rest of them are less than 24 employees.

There are a significant number of textile companies having capacity declarations for the NACE codes related with this segment production. These companies are producing handbags and accessories from textile, artificial leather and leather materials along with textile and ready-wear production. In addition to these companies there are also some automotive components and packing manufacturers producing bags in addition to their main production line. To identify the top segment companies who are their core business are production of bags, handbags, leather goods and saddlery products, IBS excluded the above-mentioned textile, automotive components, packaging and stationery companies from the leading companies list presented below.

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Leading companies with over 100 employees in the bags, luggage, leather goods and saddlery products segment are as follows:

Table 24: Leading companies in bags, luggage, leather goods and saddlery, 2018

Companies Location Employee size* YDS Textile & Leather Ankara 1,200 Desa Istanbul, Bolu (Duzce) 816 Matras Istanbul, Usak 494 Kandemir Leather &Textile Istanbul 180 Uyar Saddlery Istanbul 156 Sen Leather & Ready-wear Istanbul 152 MCS Group (Mekin Saddlery) Istanbul 131 Petek Saddlery Istanbul 128 Tergan Leather Istanbul 125 SF Leather Izmir 121 Hilal Canta Promotion Ordu 105 * related with production facilities. Source: TOBB Industry database, IBS analysis 2018

IBS presented the profile of YDS in footwear section because the core business of the company is footwear production.

Desa – Istanbul

www.desa.com.tr T: +90 212 473 18 00 Meltem Tokel, Purchasing Manager, meltem.tokel@desa.com.tr

Completed its vertical integration from tanning and dressing to leather ready-wear retail, Desa is the leading leather sector company in Turkey. Desa has three factories.

Tekirdag Corlu – tanning and dressing factory, the factory has 2.7-million-year ovine skin, and around 100,000 bovine skin processing capacity. Desa produced leather for its own use as well as international brands like Prada, Pollini, Giorgio Armani ve Chanel etc.

Istanbul, Halkali – leather garments and leather goods factory, Desa has a production capacity around 100,000 leather garments, over 300,000 leather bags and around 100,000 textile accessories (handbags etc) per year in this premise.

Bolu, Duzce -– leather garments and leather goods factory, Desa has a production capacity over 700,000 leather bags per year.

In 2017, Desa produced around 100,000 leather bags, 120,000 leather accessories (wallets, belts, gloves etc), and around 40,000 units of leather garments.

As mentioned above Desa is also a major leather ready-wear and leather goods retailer having 116 stores in Turkey. Desa is also main distributor of Samsonite in Turkey for 27 years. As of 2017, there were around 45 Samsonite stores operated by Desa in Turkey. The retail turnover of Desa was around TL 151 million in 2016 and expected to be around TL 170 million in 2017.

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Matras – Istanbul

www.matras.com e-ticaret@matras.com T: +90 212 474 96 98 F: +90 212 630 37 23 Deniz Ergin, Purchasing Manager, deniz@matras.com.tr

Established in 1970, Matras is another vertically integrated well-known leather sector company. Matras has its own tannery located in Tuzla, Istanbul, and the company has leather garment, bags, luggage and leather goods production facilities in Istanbul and Usak. Matras has increased its production capacity 30% in 2014 with its new Usak factory. The annual production capacity of the company was around 250,000 units leather bags and garments as of 2018. In addition to its own production, Matras produce leather bags and garments for international brands like Prada, Mui Mui, MullBerry, Burberry.

Matras is also active in retailing and have 15 stores in Turkey.

Kandemir Leather & Textile (CantaTurk) – Istanbul

www.cantaturk.com info@cantaturk.com T: +90 212 687 32 35 F: +90 212 687 32 22

Kandemir Leather and Textile was established in 1996 by Ali Kandemir. The company used CantaTurk brand name.

Kandemir has a production capacity of 60,000 units per year leather accessories (bags, belts and accessories) and 2.4 million units per year fabric bags.

According to the capacity reports, the company has around 180 employees in its production facilities. Kandemir is mainly active in promotion business. The company is working with over 100 promotion agencies and companies.

Uyar Saddlery – Istanbul

www.uyarsaraciye.com info@uyarsaraciye.com T: +90 212 424 01 50 Ceren Boru, Purchasing Executive, satinalma@uyarsaraciye.com

Established in 1957, it is one of the largest producers and distributor of bags and luggage in Turkey. The company has a factory in Silivri/Istanbul and produce over 100,000 units of luggage and travel bags in a year and over 250,000 school bags. Uyar Saddlery is also active in woman handbags market and leather accessories, the company produce around 75,000 units of woman handbags and 200,000 units of leather accessories in a year. The luggage brands of the company are Ground, Karts, Jamos and they have production licence for Pierre Cardin luggage.

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The company is the distributor of Nike, Benetton, Fornarina, Sisley, Camel, Quicksilver, Calvin Klein and Guess bags and luggage brands in Turkey. The company exports minimum 25% of its annual production.

Sen Leather – Tekirdag / Corlu

www.senderi.com.tr sender@senderi.com.tr T: +90 212 639 78 50 F: +90 212 639 78 59 Reyhan Sever, Foreign Trade Manager, reyhan.sever@senderi.com.tr

As a vertically integrated company Sen Leather’s profile is presented in the tanning and garment manufacturing segment. The company is also active in leather garments as well as leather bags and luggage segments. In addition to its leather garment manufacture, the company has over 100,000 units per year leather bags and accessories production.

1.6.3 Key Companies in leather garments

As of 2018, there are around 230 companies and 238 enterprises listed by Union of Chambers (TOBB) industry database having capacity certificate related with leather garments manufacturing.

Table 25: Breakdown of bags, luggage, leather goods and saddlery producers by size, 2018

Company size Number Share Over 100 29 12% 50-99 24 10% 25-49 47 20% 10-24 arası 48 20% less than 10 90 38% Total 238 100% Source: TOBB Industry database, 2018

Within listed leather garment manufacturers, 12% have over 100 employees, 10% have 50-99 employees and 20% has 25-49 employees, remaining 58% of the companies have less than 24 employees.

As in other segments, there is also significant number of textile companies having capacity declarations for the NACE codes related with leather and fur garments manufacturing. To identify the leading companies in this segment we eliminated the companies whom core business are not manufacturing of leather and fur garments.

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Leading manufacturing companies in the bags, luggage, leather goods and saddlery products are as follows:

Table 26: Leading companies in leather and fur garments, 2018

Companies Location Employee size* YDS Textile & Leather Ankara 1,200 Desa** Istanbul, Bolu (Duzce) 685 Orjin Group & Aydinli Leather Istanbul 400 Agamer Leather Izmir 161 Sen Leather Istanbul 152 Sued Mod Leather Istanbul 149 Doruk Leather Istanbul 102 Lider Leather Izmir 102 * related with production facilities. **employees related with leather garments manufacturing. Source: TOBB Industry database, IBS analysis, 2018

The profile of YDS is presented in footwear section, Desa and Sen Leather is presented in Section 1.6.2. Here we present the remaining companies within leading companies.

Orjin Group/Aydinli Leather – Istanbul

www.orjin.com info@orjin.com T: +90 212 550 40 50 F: +90 212 550 20 50 Yılmaz Özcan, Foreign Trade Manager, yilmaz.ozcan@orjin.com

Two companies operate under the Orjin Group: Orjin Leather and Aydinli Leather which specializes in manufacturing ready-made leather & fur articles. Orjin Leather was established in 1980 and Aydinli Leather in 1987. Orjin Group has more than 30 years’ experience in leather garment business. The company is active vertically in production, exports and retail of leather and leather/fur garments. Orjin Group produce both its own creation as well as carries out contract manufacturing for the well-known international fashion and luxury brands. The group’s turnover from leather business was over $100 million as of 2016. The production capacity is around 200,000 pieces of leather garments per year.

The company has a logistics centre in Germany. Orjin group is also active in retail, real estate, and tourism businesses. Orjin Group has 50% share in Istanbul’s prestigious shopping mall Istinye Park and as well it’s the distributor of Hugo Boss in Turkey.

Orgin Group has around ten stores named as “Elements” to sell leather garments and ready wear products. The Group has also stores in USA and EU countries.

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Agamer Leather – Izmir

www.agartioglu.com.tr info@agamoda.com.tr T: +90 232 328 19 66 F: +90 232 328 19 65 Bekir Agartıoglu, Purchasing Manager, bekiragartioglu@hotmail.com

Established in 2012, Agamer is a successful leather and fur garments producer located in Izmir. The company has also its own tanning and dressing facilities to produce leather for its leather/fur garments manufacturing. The factory located in Izmir Ataturk Organized Industry Zone.

The company has around 160 employees related with leather garments production. In its tannery Agamer produced shearling and lamb Nappa. Agamer also uses high quality leathers from Italy, Spain and Far East countries including India.

The production capacity of the company was around 180,000 pieces of leather and fur garments per year.

Agamer exports majority of its production and main export destinations are Russia, EU countries and USA.

Sued Mod Leather – Istanbul

www.suedmod.com info@www.suedmod.com T: +90 212 410 28 28 F: +90 212 410 28 88 Narin Çakır, Foreign Trade Manager, narincakir@suedmod.com

Established by Huseyin Gecgoren in 1965, today the company owned by Mr. Tamer Gecgoren. Sued Mod Leather has its production facilities in Bagcilar Istanbul. The company has 6,000 square meters closed area and an annual capacity of 100,000 pieces of leather and fur garments. The company exported 95% of its production and has limited presence in the local market. Around 45-50% of exports were to EU countries, 30% to Russia, 10% to USA and 10% to Far East countries.

The company has around 150 employees related with production with sales, marketing and trading personnel, the total employment of the company reached around 300 people.

Sued Mod uses domestic leather as well as high quality leather from Italy, India, New Zeeland, Spain, UK, and other Far East countries.

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Doruk Leather – Istanbul

www.dorukderi.com info@dorukderi.com T: +90 212 294 90 00 F: +90 212 294 90 02

Müge Gürün, Foreign Trade Manager, mugegurun@dorukderi.com

Established by Sedat Kursun in 1989, Doruk Leather is a leading manufacturer in leather and fur garments. The company has two facilities in Kagithane, Istanbul with a closed area of 10,000 square meters. The annual production capacity of the company is around 100,000 pieces. The company has a department store for tourists in Antalya named as Ottimo Leather Centre having 20,000 m2 closed areas and operates a hotel in the region.

Lider Leather – Izmir

www.liderderi.com.tr T: +90 232 376 81 97 F: +90 232 376 80 73 Ebru Dengiz, Finance Manager, ebrud@liderderi.com

Lider Leather, was originally established in 1980 to produce leather garments to Alfa Inc.; a leather trading group. In 1994 Marc Galiko separated company from Alfa and started production independently.

In addition to leather garment factory, tannery unit was incorporated into the system in Salihli in 1990. Afterwards the tannery of the company moved to Izmir Free Zone in 1998, Lider Leather started to operate in an integrated plant including both tannery and leather and fur garments manufacturing facility.

The company is involved with foreign trade since its foundation and has established good relationships with serious companies in Europe. The company positioned itself as an exporter company and has limited presence in the local market.

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1.7 Major M&A activities and investments

1.7.1 M&A

Excluding the acquisition of Reno retail store chain by FLO, there is not any M&A deal in leather and footwear sector for the last 4-5 years. This acquisition of FLO can be evaluated under retail sector value chain.

1.7.2 Incentives

Share of leather industry in the investment incentive certificates has also been negligible. In the first two months of 2018, only three, out of 532, certificates were granted to the companies in the leather industry all of which were domestic companies. In 2017, four foreign-origin companies received incentive certificates totalling at TL 34 million.

Table 27: Investment incentives certificates granted to the leather industry, Units and TL million, 2015-2018*

2015 2016 2017 2018 Leather All Leather All Leather All Leather All

Number of certificates

Domestic 20 4,260 17 4,887 27 7,138 3 508

Foreign 0 234 1 223 4 338 0 24

TOTAL 20 4,494 18 5,110 31 7,476 3 532

Amount of total incentives, Mn TL

Leather All Leather All Leather All Leather All

Domestic 127 65,085 101 66,891 161 84,658 8 6,333

Foreign 0 34,943 1 31,169 34 93,599 0 1,823

TOTAL 127 100,027 102 98,060 195 178,257 8 8,156

Source: Ministry of Economy, 2018

Industry experts commented that most of the leather industry investments were made in Istanbul, Bursa and Tekirdag, the least advantageous regions covered in the investment support scheme of the Turkish government. Export oriented industry is historically concentrated in western provinces of Turkey as covered in the above sections.

Please see Annex VIII for a full and detailed list of investment incentive certificates granted in the last three years.

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2 Footwear

2.1 Market size in Footwear

Turkish footwear industry is the largest segment in the leather sector and both the production and exports growth of the industry were the most prominent ones during last decade.

Table 28: Footwear industry market balance in Turkey, 2007-2017, Million pairs

CAGR 2007 2012 2015 2016 2017 2007-17 Production* 194 383 428 446 476 9.4% Imports 32 50 43 35 34 0.4% Exports 56 126 180 214 222 14.7% Consumption 160 288 278 255 278 5.7% * Production data is estimated by IBS from TUIK production statistics Source: TUIK foreign trade statistics, TUIK manufacturing industry production statistics and IBS estimates, 2018

The production volume of the footwear industry increased with a CAGR of 9.4% between 2007 and 2017. The most remarkable success of the Turkish footwear industrialist was in export. The export volume of the industry was quadrupled in the last decade, which was 56 million pairs in 2007, reached 222 million pairs in 2017.

Thanks to additional taxes applied by Turkey in footwear imports especially from Far East countries since August 2014, the import of footwear decreased almost by 40% between 2014 and 2017. The government applied 30% additional customs duty for artificial leather footwear products and 50% additional customs duty for genuine leather products. (See details Section 5)

Chart 13: Footwear industry market balance in Turkey, 2007-2017, Million pairs

Source: TUIK foreign trade statistics, TUIK manufacturing industry production statistics and IBS estimates, 2018

194

3256

160

383

50

126

288

428

43

180

278

446

35

214255

476

34

222

278

0

100

200

300

400

500

600

Production* Imports Exports Consumption

Mn pairs

2007 2012 2015 2016 2017

CAGR: between 2007-2017

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This protection measures also affected the international retailers like Adidas, Cacharel, H&M, Hummel, Zara, and many global brands that manufactured their footwear products mostly in Far East countries. After the increase of customs duty rates some of these international brands decided to manufacture selected range of their footwear products in Turkey instead of importing. As a result, local production volume started to increase in footwear and most of the domestic companies invested for new production facilities and lines. Between August 2014 to March 2018 Adidas, Beta, Clarks, LC Waikiki, Lacoste, Camper and Zara are some of the companies that have invested in or have investment plans in local production, to decrease negative effects of the additional customs duties. Asa result, one of the leading producers and retailers in the footwear sector, Flo (Ziylan Ayakkabi) established a large size green-field production facility in Sanliurfa and increased its local production rate within overall production from 60% to 80% in 2017.

In parallel to the World footwear market trends, most of the production was not genuine leather products; 90% of the production was made of artificial leather, textile, and non-woven materials. Out of 476 million pairs of footwear production around 10% (approximately 45-50 million pairs) were made from genuine leather materials in 2017).

The footwear industry (excluding footwear components and parts to be analysed separately in the following section) production in value terms was around $2.5 billion as of 2017. The CAGR of the industry production in value terms was 6.1% between 2007 and 2017.

Table 29: Footwear industry (excluding footwear component & parts) market balance in Turkey, 2007-2017, $ Million

CAGR 2007 2012 2015 2016 2017 2007-17 Production* 1,407 2,319 2,313 2,540 2,538 6.1% Imports 540 806 729 668 617 1.3% Exports 283 509 627 663 729 9.9% Consumption 1,664 2,616 2,416 2,545 2,427 3.8% * Production figures are estimated by IBS for 2016 and 2017. Source: TUIK foreign trade statistics, TUIK manufacturing industry production statistics and IBS estimates, 2018

In value terms, the CAGR of the footwear export was 9.9% where the CAGR of import was only 1.3% between 2007 and 2017. Making its peak in 2012, the domestic consumption was almost stable between 2015 and 2017 at around $2.4-2.5 billion.

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2.2 Footwear industry structure

The key elements in the footwear value chain are raw material suppliers, components suppliers, footwear manufacturers, footwear retailers and finally end-users. This section presents the general structure of the sector and in Section 2.4 the footwear retail structure and trade practices in Turkey will be analysed in detail.

The footwear sector value chain in Turkey as follows:

Figure 4: Footwear sector value-chain, 2018

In terms of raw material and components local production has significant share in footwear production but in some areas the imports have significant stake such as artificial leather, footwear chemicals (polyester and polyurethane systems, EVA, artificial rubber for sole, insole as well as artificial leather production, adhesives etc), machinery etc. In all the above areas where import have high shares, Italy is one of the top four supplier of Turkey. Especially in chemicals the share of Italy is considerable with the presence of Coim, Elachem, Epaflex, Sipol and Technogi. In addition, Italian machinery companies are far away dominant in the Turkish market with various brands.

There are around 6,000 companies active in the footwear industry, around 100 of which are large size companies. There are only 20-30 companies having over 250 employees according to TOBB industry database. The majority of the companies in the sector are small and medium size enterprises.

Most producers at the higher end of the market are members of the Association of Shoe Manufacturers, but the level of technology and mechanisation in the sector as a whole is low. With the exception of some 100 larger plants and another 300 medium sized plants the production process is very labour intensive. Machinery usage is limited or non-existent, and shoe production is completely labour intensive for the rest. Majority

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of the companies do not work with designers and have no R&D investments. In designs and models, the local footwear producers mostly follow international companies and EU countries including Italy, Germany, France, Spain and Portugal.

As of 2018, there are around 678 companies and over 680 enterprises listed by Union of Chambers (TOBB) industry database having capacity certificate related with footwear manufacturing.

Almost 50% of the footwear industry companies are in Istanbul and remaining in Gaziantep, Izmir, Konya and Bursa etc.

The complete list of the top 100 companies by their employee size and estimated revenue by provinces as well as NACE Rev.2 production codes listed in Annex II of the report.

In Turkish footwear sector retail practice, there are very few multi brand companies excluding retailers of imported brands such as Barners Group, Beymen, Boyner and Demsa Group, Dillasima Group etc. Majority of the local footwear retailers worked with contracted footwear manufacturers who are producing under retailer’s brand name such as Bambi, Beta, Desa, Elle, Hotic, Flower, Kemal Tanca etc. A few of the retailers such as Bambi, Beta, Desa, Flo (Ziylan), Gezer, Kavsan (Greyder) have also their own production facilities; however, they produce only a limited share of the products they sold. (Please see details in Section 2.4)

Italian companies have a very good image and are key supplier in various raw materials and components such as chemicals, leather (both genuine and artificial), footwear textile, soles and heels as well as various finishing materials (lasts). In components area Erdogdu Group and Duyar as well as Palamut Group are key distributors of Italian companies active in raw materials and components supply. (Please see details in Section 3 of this report)

2.3 Foreign trade in footwear industry sector

Total foreign trade volume of Turkey in footwear industry was $1.3 billion as of 2017 and expected to be $1.5 billion in 2018 and it reached the peak in 2014 with $1.6 billion. The footwear exports of Turkey exceeded imports first time in the near history in 2017 and the trade surplus of Turkey in footwear is expected to be larger in 2018 with around $250 million.

Turkey’s footwear imports reached its peak in 2013 during the last decade with $ 935 million and in 2018 it is expected to decrease $604 million with a 35% decrease between 2013 and 2018.

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Chart 14: Footwear foreign trade in Turkey, 2007-2018e, Million US$

Italy was the third largest country in Turkey’s footwear imports during the last decade and will protect its position in 2018 with increasing export to Turkey.

Top four countries (China, Vietnam, Italy and Indonesia) accounted 81% of Turkey’s footwear imports in 2017 and their share is expected to increase 83% in 2018. Top 15 country’s share in footwear imports of Turkey was increased 94% to 97% between 2007 and 2017 and was also 97% in the first nine months of 2018.

Table 30: Footwear imports of Turkey by countries, 2007-2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 Country 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M China 265 445 315 247 205 162 160 33% -2.5% -1.2% Vietnam 68 119 152 158 140 106 112 23% 7.5% 6.6% Italy 71 73 100 91 92 70 76 15% 2.7% 8.6% Indonesia 51 78 62 73 65 47 44 10% 2.4% -6.4% Portugal 7 8 14 12 16 12 8 3% 9.3% -39.2% Cambodia 1 9 9 10 12 9 11 2% 35.1% 27.1% Spain 10 10 16 13 11 9 9 2% 0.7% 0.9% Romania 9 6 7 9 10 5 4 2% 1.0% -19.6% Bangladesh 0 2 5 5 10 5 5 2% 59.1% 8.9% India 6 16 9 9 10 7 8 2% 4.7% 16.4% Germany 2 4 8 7 9 8 11 2% 18.4% 41.0% Tunisia 1 1 4 7 8 6 2 1% 26.2% -66.8% Bosnia & Herz. 1 1 3 5 7 5 5 1% 25.0% -7.6% Thailand 16 9 8 4 3 2 2 1% -15.3% -13.0% Slovakia 1 1 1 1 2 2 2 0% 12.9% 17.2% Others 32 24 17 16 17 12 12 3% -6.3% 0.2% Total 540 806 729 668 617 466 471 100% 1.3% 1.2% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

Due to the protective measures of the Turkish government by taking serious anti-dumping measures in against cheap imports from China and other Far East countries

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especially after 2014, footwear import from China decreased 59% between 2013 (the peak year of the import from China with $499 million) and 2017. There was $60 million decrease from China in absolute value terms between 2007 and 2017. On contrary import of Turkey from Vietnam and Italy increased with a same CAGR of 13% between 2007 and 2017. The main reason behind the increase from Vietnam was the increase of sneakers sales by well-known brands like Adidas, Nike etc who were produced their shoes mainly in Vietnam. The main reason behind the increase from Italy, the attractive and growing high-end and luxury retail market between 2007 and 2017.

Most of the Italy’s export in footwear to Turkey are leather shoes and bags as well as accessories. Alberto Guardiani (Barners Group) opened its first store in Ankara “Next Level” shopping mall in 2013 and the second one in Akasya shopping mall in Istanbul in 2017. Hogan (Tod’s Spa) entered Turkish footwear market in August 2014 through its store in Akasya shopping mall. Afterwards Hogan opened its Nisantasi and and Istinye Park shopping mall stores. In September 2013, Beymen opened mono brand store of Valentino in Istinye Park shopping mall. Demsa Group, Dogus group and Dillasima opened various new stores of high-end Italian brands like Armani, Gucci etc. In addition to the above developments, various footwear retailers like Beta, Cabani, Henry, Moccassini (Bülent Tanca), Tamer Tanca Inc (with Kemal Tanca branded stores), Vespa etc. started to sell Italian shoe brands in their selected stores and Internet stores.

All these developments led a significant increase in footwear imports of Turkey from Italy and it was reached its peak in 2014 with $104 million; which represented almost 50% increase compare to its 2007 level. Afterwards, there was a decreasing trend between 2014 and 2017 but it was still over $90 million as of 2017. The main reason behind the decreasing trend was devaluation of Turkish Lira, decreased tourist volume in 2015 and 2016 and increasing protection measures by the Turkish governments.

Increasing expenditure of high income Middle Eastern, Russian and CIS origin tourists in Turkish luxury retail market as well as high spending of young generation who are closely following international fashion trends leads significant opportunities for internationally well-known Italian brands.

Turkey’s exports increased significantly during the last decade. Top fifteen countries accounted 63% share in Turkey’s exports and its share decrease two points between 2007 and 2017. The Turkey’s export was much more diversified compare to its imports.

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Table 31: Footwear exports of Turkey by countries, 2007--2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 Country 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M Iraq 14 79 116 81 94 75 64 13% 21.0% -14% Russia 22 97 58 24 65 48 107 9% 11.4% 124% Germany 14 19 36 42 46 37 46 6% 12.6% 25% Bulgaria 16 10 10 21 41 34 18 6% 9.5% -47% S.Arabia 18 42 33 37 36 29 24 5% 7.1% -16% Romania 24 9 14 20 26 20 25 4% 1.1% 23% UK 18 16 22 20 23 17 17 3% 2.6% -2% Spain 5 2 7 13 20 13 20 3% 15.6% 56% Italy 6 11 17 17 18 15 21 2% 12.5% 41% Israel 7 5 11 15 18 14 15 2% 10.4% 9% Serbia 10 5 8 11 16 12 12 2% 4.5% 1% Netherlands 18 9 17 16 15 14 10 2% -2.1% -28% Algeria 0 8 18 19 14 12 13 2% 43.4% 14% Azerbaijan 3 11 10 16 13 10 11 2% 15.5% 6% France 9 7 14 16 13 9 10 2% 3.3% 6% Others 100 181 236 296 272 209 257 37% 10.6% 23% Total 283 509 627 663 728 569 672 100% 9.9% 18% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

The key countries with increased export during the last decade were Iraq, Russia, Germany, Bulgaria and Saudi Arabia. In absolute value terms in $, the increase in export to these countries explained almost 40% of the increase between 2007 and 2017. The remaining 20% explained by the other top 15 countries in export and remaining 40% was due to increase in export to other 168 countries.

In the first three quarter of 2018, there was %124 increase in export to Russia, 56% increase in export to Spain and 41% increase in export to Italy and 25% increase in export to Germany.

This proves that how Turkish companies shifted their focus from domestic market to foreign markets due to contracted local demand. The weakening TL can be seen also key factor behind the increase in footwear export, but it is obvious that in cost terms Turkish footwear industry dependent mostly to imported raw materials. For that reason, weakening TL created a competitive advantage for Turkish producers only in labour cost terms. Otherwise it must be reminded that almost all other costs for the Turkish footwear industry are in foreign currency terms.

Italy was the ninth key market for Turkish footwear exporters and export to Italy increased with a CAGR of 12.5% which was over the average CAGR of 9.9% during the same period. IBS identified that many footwear producers are in negotiation and/or experience with Italian companies in the near past. The competitive wholesale price of high-quality leather shoes attracted some Italian companies to do sub-contracted production in Turkey. IBS identified that the average wholesale price of a high-quality leather shoe was €30-35 band in Turkey where it was €90-100 in Italy during the last

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three-four years. The key problem between Turkish and Italian companies was business confidence. As declared by Turkish footwear manufacturers some Italian companies have negative experiences with Turkish companies such as delivering shoes not up to samples, or delay in delivery time etc. To improve foreign trade volume between countries, the footwear manufacturers of Turkey suggested organizing matchmaking events and other business activities to improve business confidence between Turkish and Italian companies in footwear industry.

Majority of the footwear imported by Turkey are made from artificial leather, plastic and textile upper and plastic sole. The largest sub-category in footwear import was HS6404 category with 42% share in 2017 and followed by HS6403 with 37%. The waterproof shoes for outdoor wear (6401) sub-segment had only 1% share in 2017.

Table 32: Footwear imports of Turkey by sub-segments, 2007--2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 HS code 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M 6401 1 5 8 4 6 3 2 1% 14.6% -51.8% 6402 164 283 178 136 124 92 94 20% -2.7% 1.2% 6403 270 314 280 251 226 170 160 37% -1.8% -5.8% 6404 97 182 259 273 259 198 214 42% 10.4% 8.0% 6405 9 22 5 3 4 2 2 1% -8.5% 1.8% Total 540 806 729 668 617 466 471 100% 1.3% 1.2% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

The HS6404 category (footwear uppers of textile materials and with any type of sole) has the highest CAGR between 2007 and 2017 after small HS6401 segment. The HS6404 segment was still growing fast with 8% growth rate in the first nine months of 2018 compare to the first nine months of 2017.

Majority of the footwear exported by Turkey was also made from artificial leather, textile and plastic materials. The largest sub-category in footwear export was HS6403 category (footwear uppers of leather and with any type of sole) with 45% share in 2017 and followed by HS6402 (sport shoes) with 26%. The waterproof shoes (6401) sub-segment had a higher share compare to import with 2% in 2017; thanks to YDS and other military and outdoor shoe producers.

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Table 33: Footwear export of Turkey by sub-segments, 2007--2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 HS code 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M 6401 6 7 12 11 13 10 10 2% 8.7% 2.5% 6402 59 116 160 183 190 152 150 26% 12.4% -1.2% 6403 168 252 282 268 327 254 322 45% 6.9% 26.7% 6404 28 89 117 139 139 106 138 19% 17.2% 30.4% 6405 23 45 55 62 59 46 51 8% 10.0% 10.5% Total 283 509 627 663 729 569 672 100% 9.9% 18.2% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

The HS6404 and HS6403 segments were the largest growing two segments in Turkey’s footwear export in the first nine month of 2018 with a respective growth rate of 30.4% and 26.7% in the period.

The share of imported genuine leather shoes in total footwear market in volume terms was only 0.1% in 2017. The share of genuine leather shoes decreased from 6% in 2008 to 1% in 2017. Turkey imported approximately 661,000 pairs of genuine leather shoes in 2008 and it decreased up to 215,000 pairs in 2017. In value terms the genuine leather import was $ 67 million in 2008 (the peak import during the last decade) and decreased to $39 million in 2017. The unit price of imported genuine leather shoes was around $65 per pair in 2008 and increased to $184 per pair in 2017.

Chart 15: Genuine leather footwear imports of Turkey, 2007-2017, Million US$ & Thousand pairs, $ per pair

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Italy was the leading exporter to Turkey in genuine leather footwear product group. In 2017, the share of Italy in genuine leather exports of Turkey in value terms was 86% and in volume terms 69%. Turkey imported $34 million and approximately 150,000 pairs of genuine leather shoes from Italy in 2017.

Italy’s genuine leather shoes export to Turkey reached its peak in value terms in 2014 with $48 million and in volume terms in 2008 with 278,000 pairs.

The unit export price of genuine leather shoes from Italy to Turkey was $227 per pair in 2017 where it was $109 in 2007 and $113 in 2008 (peak year in volume terms). This proves that Turkey imported mainly high-end luxury leather shoes from Italy.

Chart 16: Genuine leather footwear export of Italy to Turkey, 2007-2017, Million US$ & Thousand pairs, $ per pair

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2.4 Footwear retail: distribution structure & trade practices

The footwear retail market size was around $4.7 billion in 2017 and the leading footwear retailers (excluding ready-wear retailers) are as follows.

Table 34: Footwear retail market and key footwear retailers* in Turkey, 2016-2017, Mn$

Turnover (Mn $) Share Company Name Trade marks 2016 2017 2017 FLO (Ziylan) Flo, Polaris 458 502 10.7% Adidas Group Various channels 205 214 4.6% Deichmann Deichmann 137 125 2.7% Nike Inc. Various channels 125 110 2.3% Tamer Tanca Kemal Tanca, TNC Plus, TNC Plus Kids 98 96 2.0% Inci Inci 73 73 1.5% Ayakkabi Dunyasi Ayakkabı Dunyasi 56 68 1.5% Hotic Hotic 69 68 1.5% Kavsan Greyder 69 77 1.6% Marka Park Marka Park 48 51 1.1% Beta Beta 28 40 0.8% Derimod** Derimod 26 28 0.6% Elle Elle 26 28 0.6% Ay Marka Divarese 27 28 0.6% Camper Turkey Camper 26 23 0.5% Deriden Deriden 19 21 0.5% Desa** Desa 15 15 0.3% Landmark Group Nine West, Aldo 15 15.1 0.3% Total of top 18 1,519 1,581 33.7% Others 3,371 3,110 66.3% Total 4,891 4,691 100.0% * Excluding readywear retailers like Beymen, Boyner, Defacto, Koton, LC Waikiki; Mavi etc. ** Only footwear sales turnover of Derimod and Desa. Source: IBS desk research, interviews and estimates.

As underlined by a PWCs study the share of organised retail in the total retail industry has expanded tremendously due to the flood of investments in new shopping centres and thanks to the growing number of chain stores, while at the same time competition has intensified. With the changing retail market structure of Turkey, the share and penetration of the branded retail chains in footwear has been increasing through their stores in shopping malls. By the end of 2017, there are 400 shopping malls in Turkey having 12 million square meters leasable area. The number of shopping malls is expected to reach 415-420 by the end of 2018. Istanbul accounted 38% share having 118 shopping malls and followed by Ankara (38), Izmir (22), Antalya (19) and Bursa (14).

There are 15-20 key local footwear retailers in Turkey. In addition, footwear retailers, ready wear retailers are also a key retail channel for the footwear sales. Ready wear retailers either low and medium price range or luxury retailers have significant shares in footwear market. In the low and medium price range LC Waikiki, Koton, Defacto, Ozdilek and in the high-end range Beymen, Boyner, Demsa Group, Hugo Boss, Vakko are key ready-wear retailers in Turkey. The footwear sales turnover of Boyner Group (which includes Altinyildiz, Aymarka, Beymen Magazacilik and Boyner Buyuk Magazicilik) which was around $183 million in 2017, and LC Waikiki’s footwear sales turnover which was

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around $132 million make these companies one of the top ten footwear retailers in Turkey.

The rapid growth of footwear retailers seems to be interrupted due to recent financial problems in the Turkish economy and high devaluation in Turkish Lira in 2018. By mid-2018 due to high devaluation of Turkish Lira, several footwear retailers went into concordatum for structuring their debts including key footwear retail companies such as Beta, Hotic, Sabo (Nando) and Yesil Kundura. As declared by the Footwear Producers Association, these announcements for concordatum began to affect local manufacturers who are producing shoes for these retailers. The Association declared that retail chains have experienced a bottleneck in cash flow due to long-term debts up to 18 months terms to footwear manufacturers and decreasing expenditures by end-users. Due to financial problems in footwear retailers, some footwear producers have started to stop/pause production. The high and dollar-based rents of shopping malls and dollar-based pricing in imported raw materials and components in the sector disturbed the payment structure of the companies who are selling in Turkish Lira in the market. In addition, decreasing local demand leads further complications in the cash flow of retail companies. The local footwear producers declared IBS in the AYMOD October 2018 shoe fair, they are going to focus more in exports during the next two -three years (between 2019 and 2021) to reduce the negative effects of current imbalances in the domestic market.

The short profile of the top five retailers in footwear sector (excluding the international sport shoes companies such as Adidas and Nike) are as follows:

Flo (Ziylan): with around 1,100 retail outlets (550 in Turkey, 50 abroad with own brand and 500 “Reno” outlets in Europe). In 2017 Flo sold around 40 million pairs of shoes with a turnover around $500 million only in Turkey. Together with its operations abroad the company revenue reached over $665 million in 2017. Flo has a limited collection of Italian brands in its selected stores in Turkey and its stores in Europe.

Deichmann is one of the largest footwear retailers in the EU’s distributing low and medium segment products. The company entered Turkish market in 2006 and reached over 130 stores by the end of 2017. Most of the stores of the company are in shopping malls and the turnover of the company reached $125 million as of 2017. The company sold around 7 million pairs shoes in 2017. The 90% of the shoes sold by Deichmann was produced by local manufacturers. Only 10% of the shoes were imported by the company. Internet sales accounted only 3% of the total sales as of 2017 and the yearly growth rate was around 20-30%.

Tamer Tanca Inc. (Kemal Tanca, Tanca Plus and Tanca Kids) is another key local retailer in footwear was established in 1950. The company has around 130 stores in 40 provinces. The company has stores under Kemal Tanca, Tanca Plus and Tanca Kids trademarks. The share of Internet sales of the company was 10% as of 2017. Tamer Tanca reached $96 million turnover in 2017 through selling 1.5 million pairs of shoes. The company worked with 100-150 local footwear

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manufacturers and workshops. Tamer Tanca sold also several Italian brands in its selected high-end stores as well as online including: Alberto Guardiani, Dolce & Gabbana, Franceschetti, Giuseppe Zanotti, Gutteri, Mocassini, Moreschi, Prada, Luco Line, Valentino. The company declared that it has negotiations with several Italian companies for private label production in Turkey.

Inci established in 1917 (one of the oldest footwear producer and retailer in Turkey) having 99 stores in Turkey and 5 stores abroad, one of the leading players in footwear. The company has 90% of its stores in shopping malls. The 2017 turnover of the company was around TL 265 million ($73 million). Around 8% of the sales turnover of Inci was through online sales (either through their online store or independent e-retailers). Women footwear products accounted 55% of the sales. Inci does not sell any Italian and foreign brands in its stores.

Ayakkabı Dunyasi opened its first store in 1996 by Akbacakoglu family having 100 years experience in footwear industry. In 2014 Esas Holding (owned by Sevket and Ali Sabancı and Kamisli families) acquired the majority shares of Ayakkabi Dunyasi. The company today has over 70 stores and reached around $68 million turnover.

Italian footwear brands are present in the Turkish market in three key channels:

Through multi-brand stores of luxury multi-channel stores of Turkish ready-wear retailers such as Ay- Marka, Beymen, Boyner, Demsa Group, Dillasima Group, Vakko etc.

Secondly but rarely through mono brand stores of high-end luxury ready wear retailers like Barners Group, Beymen, Dillasima Group, Demsa Group (Roberto Cavalli, Gucci-Nisantasi, Salvatore Ferragamo – Nisantasi)) Dogus Group etc such as Alberto Guardiani (by Barners Group), Gucci (by Dogus Group), Tod's S.p.A / Hogan (by Derique owned by Erdal Ayaydin), etc.

Thirdly and widely through high-end stores of top local footwear retailers like Tamer Tanca, Deriden (and Markapark), Kifidis, Yargici etc and very limited through selected stores of low and medium segment retailers like Ayakkabi Dunyasi, Flo, Deichman etc.

IBS identified the following Italian shoe brands in the Turkish market:

Alberto Guardiani, Alberto Fasciani, Alberta Ferreti, Alviero Martini, Angelo Berivicato, Bull Boxer, ASH, Borelli, Bontoni, Botegga Venetta, Brunello Cucinelli, Buscemi, Casadei, Claudio Conti, Cesare Pacioti, Chiara Ferragini, Diego Dolcini, Dolce & Gabana, Fabi, Fendi, Gianna Meliani, Gianni Versace, Gianvito Rossi, Geox, Giorgio Armani (Armani, Armani Jeans, Emporio Armani etc) Giuseppe Zanotti, Gucci, Hogan, Lorena Antoniazzi, Moreschi, Moschino, Nina Rubens (Panta Rei S.R.L.), New Italia, Fratelli Rosetti, Prada, Rene Caovilla, Roberto Cavalli, Rouge, Ruco Line, Salvatore Ferragamo, Santoni, Sergio Rossi, Superga, Tod’s, Tosca Blues, Valentino, Valentino Gravani, Zegna

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The leading low and medium segment retailer Flo sold several Italian footwear brands (especially in men shoes segment) in its selected stores like Taksim, Istinye Park shopping mall in Istanbul etc. IBS identified the following brands in Flo stores:

Glif, Brecos, Kebo, Sant Luis Calzature srl (brand: Zen)

In addition, there was only one Italian brand in comfort shoes segment was available in Deichmann: the other key player in low and medium segment footwear retail.

2.5 Key manufacturing companies in footwear

As of 2018, there are around 678 companies and over 680 enterprises listed by Union of Chambers (TOBB) industry database having capacity certificate related with footwear manufacturing.

The complete list of the companies by their employee size and provinces as well as NACE Rev.2 production codes listed in Annex II of the report.

Table 35: Breakdown of footwear producers by size, 2018

Company size Number Share Over 250 16 2% 100- 249 42 6% 50-99 74 11% 25-49 174 26% 10-24 170 25% less than 10 202 30% Total 678 100% Source: TOBB Industry database, 2018

Within listed footwear manufacturers, 2% have over 250 employees, 6% have 100 to 249 employees, 11% have 50-99 employees and 26% has 25-49 employees, remaining 55% of the companies have less than 24 employees.

As in other segments, there is also significant number of textile companies having capacity declarations for the NACE codes related with footwear manufacturing. These companies are mostly towel producer who are producing bathroom slippers from textile materials. To identify the leading companies in this segment IBS eliminated these companies whose core business are not manufacturing of footwear.

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Leading companies in the footwear with over 200 employees are as follows:

Table 36: Leading companies in footwear, 2018

Company name Location # of

employees* Turnover** $Mn, 2017

Gezer Istanbul, Bolu 2,500 >250

Flo Istanbul, Sanliurfa 1,500 150-200

YDS Ankara 1,200 100-150

Kavsan (Greyder) Çorum 1,200 100-150

Çiftçiler Ayakkabi Istanbul 524 40-60

Muya Istanbul 475 40-60

Özdallar Ayakkabi Istanbul, Malatya 400 40-60

Akinal Ayakkabicilik Gaziantep 392 40-60

Mekap Trabzon 287 20-35

Ceyo Istanbul 275 20-35

Tristep Çorum 202 20-35

* related with production facilities. ** calculated on the basis of sector productivity Source: TOBB Industry database, IBS analysis, 2018

The profiles of the top 11 footwear manufacturers are as follows (some of these companies are also active in footwear retail like Flo (Ziylan), Kavsan (Greyder) etc.

Gezer – Istanbul

www.gezer.com T: +90 212 886 51 52 Korhan Kurklu, Deputy General Manager: responsible from sales, kkurklu@gezer.com

Established in 1968, Gezer is the largest slippers and shoe manufacturer of Turkey. The company’s annual production capacity was around 90 million pairs per year. Gezer has two factories located in Istanbul and Bolu. The company has over 100,000 square meters closed production area, of which 36,000 square meters in Bolu. Representing the first company having ISO 9001 quality assurance system certificate in the sector, Gezer sustains to apply quality concept in every stage of production.

Gezer Footwear attaches importance to institutionalization and R&D studies and makes continuous investments in these areas. R&D department with its closed area of 1000 m2 and 75 specialized employees sustains its activities both in country and abroad to create designs complying with foot health and with which users can feel themselves comfortable and unique.

Gezer has three brands: Loris, Finley and Ziley.

Gezer produced also artificial leather in its group company Polex Chem. Polex Chem is a unique company in Turkey integrated with Gezer’s footwear production.

The total operation turnover of the company was around TL 351 million in 2016. Gezer’s production was around 70-75 million pairs per year and exports around 25-30% of its

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production to fifty countries. The company is the leader company in slippers as well as with over 3 million pairs production in boots. Gezer has 70 slippers wholesaler, 11 boots wholesaler, 44 factory sales outlets and over 30,000 dealers in Turkey.

FLO (Ziylan Footwear) – Istanbul

www.flo.com.tr T: +90 364 531 25 32 Aydın Oktay, Purchasing Manager, aydin.oktay@flo.com.tr

Before footwear production Ziylan family started sole manufacturing in 1970s. In 1985 Ahmet Ziylan established the Ziylan Footwear and entered sport shoes production. After launching the “Kinetix” brand, which is the most preferred sports brand in Turkey today, in the domestic market in 1989, Ziylan Footwear has had the Polaris brand registered in 1994 and reached the position of the sector leader also in the slippers segment within a very short time. Ziylan Footwear has stepped into the market with the FLO brand in 2001 and established the “shoes store chain” system in Turkey. FLO currently market leader with around 20% market share in footwear retail and followed by

It has become the distributor of the Dockers by Gerli brand in 2003 and subsequently acquired the right for the licensed production of the brand. FLO acquired Lumberjack, the iconic brand of Italy, in 2012.

In November 2013, FLO sold 50% share of the company to the partnership of Gözde Enterprise Capital Investment Partnership Inc (Paladis Group), BİM (largest discount store chain of Turkey) and Mater Footwear BV.

After Turkish government’s protective polices by applying additional customs duty to footwear imports from Far East countries, FLO decided to establish a new factory in Turkey instead of contracted production in China and other Far East countries. FLO has made an investment of TL 15 million and established its new footwear factory in Sanliurfa, where it offers employment to 1,000 people to produce 1.8 million pairs of shoes per annum in the first stage.

In 2014, Sport in Street has been established in the “sneaker” group, which reflects a comfortable and sporty lifestyle, as a new retailing concept that has been created to offer world renowned brands collectively. Sport in Street, which serves in 85 stores throughout Turkey as of February 2018, is aimed to reach over 120 stores by the end of 2018.

FLO has accomplished its largest acquisition in 2016, by acquiring the German HR Group, which houses Europe’s second largest shoes retail brand Reno within its organization, together with Capiton AG that is again the most important fund investment company of Germany. Reno has over €550 million as of 2016. Reno sold approximately 25 million pairs of shoes per year.

By the end of 2017, FLO reached 537 stores domestically through the FLO and Sport in Street retail channels, also offers its services in almost 50 FLO stores abroad. In addition, FLO has over 500 stores in its new retail brand Reno. In 2017 FLO opened 122 new stores

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and closed down 15 stores. In 2018, the company targets to open 80 new stores in Turkey and 30 abroad and will increase its number of employees from 9,000 to 10,500.

Offering employment to more than 13,500 individuals in its retail business of which 9,000 was in Turkey and 4,500 was in Europe (Reno stores). The company also employed around 1,500 people in its production facilities. In 2017, FLO produced around 3.5 million pairs of shoes in its factories and sold 45 million pairs of shoes through FLO stores and additional 25 million through Reno stores. In 2017, FLO sold almost 70 million shoes in its 1,050 stores (together with Reno) and the company supplied 70% of the shoes sold in FLO and Reno stores from Turkey. In 2018, FLO targets to sell 80 million pairs of shoes with around 14% growth compared to 2017.

YDS Textile & Leather – Ankara

www.ydsboots.com info@yakupoglu.com.tr T: +90 312 398 12 13 Can Kahraman, Board Member, info@yakupoglu.com.tr

Established in 1927 YDS, is located in Ankara. The company has 100,000 square meters total area and 80,000 square meters closed area. YFD employed around 1,200 skilled workers and 20 engineers in its factory.

YDS is the largest company in the leather sector production with its turnover in Turkey. It was the only company within top 1,000 company list of Istanbul Chamber of Industry in 2016.

In addition, the company is the largest footwear manufacturer in Europe with its significantly large production capacity. The company’s core business is production of military boots as well as textile products and bags. Because YDS’s core business is footwear production, the detailed profile is presented in the footwear section.

The company has ISO EN 9001 Quality Assurance System Certificate, OHSAS 18001 Occupational Health and Safety Management System Certificate, ISO 14000 Environmental Management System Certificate, Laboratory Accreditation Certificate, membership of SATRA Laboratories and we are committed in improving our product quality.

The daily capacity of YDS is as follows;

3,000 pairs of double density injected rubber soled shoes and / or

2,500 pairs of single density injected rubber soled shoes

5,500 pairs of direct vulcanized rubber soled shoes

5,000 pairs of double density injected pu / pu, pu / tpu, pu / rubber soled shoes

1,500 pairs of Goodyear welted shoes and

5,000 pairs of unit soled shoes

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Kavsan (Greyder) – Çorum

www.greyder.com greyder@greyder.com T: +90 364 531 25 32 Şükran Aydın, Purchasing Manager (Footwear), sukran.aydin@greyder.com

Kavsan Ayakkabi was established in 1996 headquartered in Corum. The company is engaged in footwear manufacturing sector and footwear retail. The company’s total operating revenue was TL 210 million in 2016.

Kavsan produced %100 leather casual, tracking, sport shoes and boots for women, men and children under Greyder brand name. The company has a production facility in Corum. As of 2018, Kavsan is also active in footwear retail through 95 “Greyder” stores in Turkey and two stores in Romania. The company has also over 200 dealers to distribute its products in Turkey.

Total production capacity of Kavsan with its two factories located in Corum was around 1.4 million pairs per year. Kavsan has one 10,000 square meters closed area factory in Corum with a production capacity of 750,000 pairs /year and a new 7,000 square meters second factory with a production capacity of 600,000 pairs /year.

Ciftciler Footwear (Conever) – Istanbul

www.conever.com.tr info@conever.com.tr T: +90 212 445 67 67 Serdar Akay, Manager, serdar@conever.com.tr

Ciftciler Footwear was established in 2003 headquartered in Istanbul. The company has a factory having 15,000 square meters closed area in Istanbul. Ciftciler produce leather and artificial leather footwear for men, women and children. The company has 6 million pairs /year production capacity and has produced both under its own brands named as Conever, Never Only and Farmers and in addition active in contract manufacturing.

After the 2008 crisis, Ciftciler management decided to make limited production with their own brands and has started to contract production for the leading retail brands in Turkey. Today Ciftciler is mainly working as a contractor manufacturer for ready-wear and footwear retailers like Defacto, Hotic, LC Waikiki, Loft, US Polo etc.

The company has a R&D department employing 25 experts who are responsible for the designs and models of the company.

Ciftciler supplied 20% of its raw material from international markets and 80% from domestic sources.

Muya – Istanbul

www.muya.com muya@muya.com

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T: +90 212 855 73 73 Erkan Yavuztürk, Purchasing Manager, planlama@muya.com

Muya Poliuretan was established in 1994 headquartered in Istanbul. The company lost its former factory in 1999 Kocaeli earthquake and afterwards established a new factory in Gurpinar, Beylikduzu Istanbul in 2000. Muya has 12 million pairs polyurethane sole and 21 million pairs slippers production capacity in its new factory. In 2000, Muya opened sales offices in USA and Germany and opened a second factory in Moscow, Russia in 2002 with a capacity of 9 million pairs per year. In 2003, the company established its thermo soles production facility with a capacity of 6 million pairs per year. The company launched its sport shoe line in 2016 and targets to reach a sales volume of one million pairs in 2018. Muya sold its products through 500 dealers in Turkey. The company has an R&D team of 12 experts.

The company’s total operating revenue was TL 49 million in 2016.

Ozdallar (Macromen) – Istanbul

www.marcomen.com.tr info@marcomen.com.tr T: +90 212 671 24 45 Cem Ateş, Purchasing Manager, cem@marcomen.com.tr

Prior to founding Ozdallar, the chairman of the company Yusuf Ozdal started his career as a white-collar worker in 1975, then he started his own company as Yusuf Ozdal in Gedikpasa, Istanbul in 1982. The company continued its operations here until 2005, after which a 3000-square-metre plant was purchased in Ikitelli to begin mass production. As business grew, the company increased its production capacity. In 2014, the company established a plant in Malatya that does mass production over an area of 10,000 square-metres indoors and 50,000 square-metres outdoors. The company’s current annual capacity is 1.5 million pairs and produces around 750,000 pairs per year. Ozdallar has nearly 400 distributors in Turkey with whom they work regularly. The company has been growing by 20-25% each year for the last five years. Ozdallar have around 400 employees at our 2 plants. Our Marcomen and Scootland brands have amassed their own consumer group since 2011. It’s very important to us to ensure the development of our brands, which is why we’re focused on using more visuals to promote our brand in our stores. We have store projects in the future. We’ll start to open our own stores in approximately 1-2 years. We’ve been laying the groundwork for this for 4 years. This time, we’ll reach the consumer with our own concept and the Marcomen brand.

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Akinal Footwear – Gaziantep

www.akinal.com.tr akinal@akinal.com.tr T: +90 342 337 43 32 Fatih Palta, Foreign Trade Manager, sales@akinal.com.tr

Akinal Footwear was established in 1985 headquartered in Gaziantep. The company is a family company currently managed by the third generation of the family. The factory of Akınal Footwear is built on a closed area of 16,000 square meters and it has a production capacity of 30 million pairs per year. Akınal has PU Injection, EVA Injection, PVC machines and mounting lines in its factory. The company produced slippers and footwear for men, women, and children. An Italian designer group develops the models and creations of the company.

The brand name of the company is Akınal Bella. The company’s products to be sold through an extensive dealer network in Turkey and the company exports around 40% of its production mainly to EU countries including Belgium, Bulgaria, Germany, Greece, Hungary France, the Netherlands, Italy, Romania as well as Azerbaijan, Iraq, Kuwait, Lebanon, Saudi Arabia, and UK. The largest export market of Akınal was Italy.

The company’s total operating revenue was TL 58 million in 2016.

Mekap – Trabzon

www.mekap.com info@mekap.com T: +90 462 711 43 35 Erdem Yılmaz, Purchasing Manager, erdemyilmaz@mekap.com.tr

Established in 1972, Mekap was the first company using PU injection technology in Turkey. The company headquarter, and the factory is located in Trabzon. Mekap is active in production of safety work shoes, casual and sport shoes. Today Mekap has three factories with a total closed area of 20,000 square meters, eight PU injection lines, and a production capacity of 3 million pairs per year.

The total operating revenue of the company was TL 81 million as of 2016.

Mekap is planning to establish a new factory in Zonguldak to produce 300,000 pairs per year leather face footwear.

Ceyo

www.ceyo.com.tr mail@ceyo.com.tr T: +90 212 432 94 94 Engin Ege, Purchasing Manager, ceyo@ceyo.com.tr

Established in 1964 Ceyo is one of the oldest footwear brands in Turkey. The company active in production of orthopaedic slippers and shoes for women, men and children and also in footwear retail with its own stores and with a strong dealer network in Turkey

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and other countries. Ceyo has 50 own stores in Turkey and 13 in other countries. In addition, Ceyo products are sold around 1,500 dealers. Ceyo brand is one of the widely known and appreciated orthopaedic slippers brand in Turkey. The company has a production capacity of 5 million pairs per year.

Tristep – Çorum

www.tristep.com.tr iletisim@tristep.com.tr T: +90 364 250 1414 Fatma Demir, Administrative Manager, fatma.demir@tristep.com.tr

Tristep was established by three partners (Bilal Dogan, Mehmet Emin Dogrucu and Bilal Cakir) to make contract manufacturing to local and ready-wear and footwear retail chains in Turkey. The chairman of the company Mr.Bilal Dogan has already a factory in China (BSG (Xiamen) Import & Export) before this partnership and has experience in contract manufacturing to international brands in China. The company started production in 2015 in Corum with a trade name of LYS Footwear. In 2017, the shareholders of the company decided to launch their own brand along with contract manufacturing and choose the brand name Tristep and changed the name of the company also to Tristep.

In the first phase of the investment, the company started production with an annual capacity of 2.4 million pairs. By the end of 2017, the company reached a production capacity of 4.2 million pair/year earlier than expected. The company targets to reach a production capacity of 9 million pairs by the end of 2018. Tristep targets to meet increasing demand by international retail chains and brands for locally produced footwear products to eliminate the Turkish government’s protective measures for Far East origin footwear imports.

In 2015, Tristep first employed around 250 employees. By the beginning of 2018, the number of employees in Tristep increased around 400 workers and in the full capacity, the company is expected to employ around 1,000 people.

Tristep has been producing casual and sport shoes for Hummel, Lotto, Kinetix, New Balance and has contacts and negotiations to produce for Bestseller Group brands (Vere Mode, Jack Jones, Only, Selected (Femme/Homme), Noisy May, Vila (Clothes), Object, Nameit, Pieces, Only&Sons, Junarose, Y.A.S, Mama Licious, Jacqueline de Yong, Produkt, LMTD) and Tempe-Inditex brands such as Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home ve Uterqüe.

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3 Components & accessories for footwear industry

3.1 Components & accessories production

Turkish footwear components and accessories industry covers over 50 types of sub products directly and indirectly relevant to footwear sector. While some of them are classified in different sectors such as chemicals, textile etc., they are an integral part of footwear industry. The industry is defined with below categories in broader sense:

Leather

Synthetic leather and footwear textile

Soles and heels

Lasts

Chemicals including Adhesives (Hot melt adhesives, PVA glues etc).; Dyes and printing materials; Raw materials for sole, in-sole and heels production (Polyurethane systems (PU), Ethylene vinyl acetate (EVA), Natural Rubber (NR), Emulsion-Styrene Butadiene Synthetic Rubber (E-SBR), Chloroprene Rubber (CR), Nitro Rubber, Styrene-butadiene rubber (SBR/ Neolith), Saturated polyesters such as adipic acid Polyester polyols, saturated polyesters for thermoplastic polyurethanes etc), Waxes

Materials (cords, elastics, footwear tacks, nails and screws, insoles, labels, ribbons, sewing needles, straps, toe puff and counters, welts etc.)

Machinery and moulds

Accessories (yarn etc.)

Due to use of chemicals, synthetic leather, textile materials, yarns in various sectors other than footwear, IBS analysed the market trends in narrow terms covering only materials under HS 6406 tariff code that includes:

Uppers and parts (HS 640610),

Outer soles and heels (as finished products) (HS 640620), and

Insoles, heal cushions, gaiters, leggings and other removables used in footwear sector

In addition, the production figure below does not include the own-production of large and medium size footwear producers such as Akınal, Flo, Gezer, Kavsan, Muya, Mekap, YDS etc.

Although the market analysis below does not include chemicals and resins used in footwear production. IBS identified that Italian companies are key players in synthetic resins market in Turkey, such as:

Coim is a leading company in polyester and polyurethane resins segment in Turkey. In addition, companies like Epaflex, Elachem are also active in the Turkish market. IBS learned that the Germany origin producer BASF also imported polyurethane systems to Turkey from its factory located in Italy. IBS

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identified that for PU resins (under HS 390705 tariff code) Italy is the leading exporter country to Turkey for the last decade. In 2017, 40% of the alkyd resins imported under HS390705 tariff code were imported from Italy to Turkey).

In EVA resins IBS identified Selasti (distributed by Erdogdu group in Turkey). In EVA resin (under 300130 HS tariff code) Italy again the leading exporter to Turkey. In 2017, 30% of the EVA resin imported from Italy to Turkey.

In saturated polyesters in primary forms (under 390799 HS tariff code) IBS identified Elachem as a key company from Italy. In this HS code again, Italy has 20% share in in Turkey’s imports.

According to narrow definition of the footwear parts & components market as explained above, the sector production was around $125 million in 2017.

As local production does not meet the demand, nearly half of local consumption (excluding own production of large size companies) is met by import.

Components industry local production growth in the last 10 years was slightly higher compare to the growth in footwear industry which was 6.1% CAGR between 2007 and 2017. Relatively higher consumption growth is linked to export-oriented growth of footwear industry.

Overall consumption was $146 million which grew at a CAGR of 9.1% between 2007 and 2017.

Table 37: Footwear parts & components market balance in Turkey, 2007-2017, $ Million

CAGR 2007 2012 2015 2016 2017 2007-17 Production* 65 145 141 124 125 6.8% Imports 30 58 65 66 59 7.1% Exports 33 37 44 41 38 1.2% Consumption 61 166 163 150 146 9.1% * Note: Production figure does not include own production of footwear parts and components (like soles, uppers etc) by medium and large size companies like Akınal, Flo, Gezer, Kavsan, Muya, Mekap, YDS etc Source: TUIK foreign trade statistics, TUIK manufacturing industry production statistics and IBS estimates

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3.2 Industry structure & infrastructure

3.2.1 Footwear material distributors

Footwear companies does not generally import directly from suppliers abroad. There are a number of local distributor companies to deliver foreign brands in Turkey. All the footwear companies IBS interviewed during the AYMOD expressed that they purchase shoe making materials from companies like Duyar, Erdogdu and Palamut Group, all of which has many distributorship agreements with several Italian brands. In AYSAF 2018 Fair IBS have chance to contacted with Erdogdu Group, Palamut Group and COIM Turkey who is a subsidiary of COIM SpA (Chimica Organica Industriale Milanese) and also representing a number of foreign brands in Turkey.

Duyar Shoe Materials, Izmir Please see Annex VII for a more detailed coverage about Duyar

Erdogdu Group, Istanbul Please see Annex VII for a more detailed coverage about Erdogdu

Palamut Group, Istanbul Please see Annex VII for a more detailed coverage about Palamut

COIM Turkey www.coimturkey.com T: +90 212 217 66 07(pbx) F: +90 212 217 66 01 Ergün Turan, Sales Manager, ergun.turan@coimgroup.com

COIM Turkey Polyurethanes and Chemicals Inc. has been established in 2014 as a wholly owned subsidiary of COIM SpA (Chimica Organica Industriale Milanese), a leading global supplier of polyesters and polyurethane systems and chemicals.

COIM Turkey, in addition to COIM product groups, also represents/distributes some other international brands including:

- LUCITE International (UK) - Acrylic Specialty polymers, Resins and Sheets

- AGC Chemicals Europe (UK) - Fluoropolymers

- JOHNSON MATTHEY Catalysts (UK) / INTERCAT Additives

- CONTIFIBRE SpA (Italy) - Tactel yarns

- VABER Industriale SpA (Italy) - Industrial Hot-Melt Adhesives and Mastics.

- KÖMMERLING (UK) - Bonding Agents

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Birtug Foreign Trade Inc. www.birtug.com.tr info@birtug.com.tr T: +90 212 407 03 67 F: +90 212 407 03 63 Burcu Yazıcıoglu, Foreign Trade Manager, burcu@birtug.com.tr

Birtug started providing footwear components and materials in 1986. Its first distributorship agreement was with German brand Rhenoflex GmbH and followed by another German brand Jacob Keck. After successful business with international partners Birtug added Italian brands F.Lli Bartoll Spa and Metallurgica Lombarda Spa to its distributorship portfolio. Full list of its current brands and products are as follows:

Brand Origin Product types

Rhenoflex Germany Toe puff and counter

Puntali Fiore Italy Toe puff, counter and solvent

Biagioli Italy Nonwoven insole material, Nail-proof midsole

Keck Germany Adhesives, hardeners, finishing materials, release agent, PUR mould cleaner

Bartoli Italy Fiber, duralite and model cardboard

M.Lombarda Italy Nails, heel attaching screws

Siderma Romania Polyamide Lining

Sipol Italy Polyester and polyamide based holtmelt

3.2.2 Sole/insole manufacturers and distributors

Sole/insole production capacity in Turkey is estimated at 500 million pairs (ca 100,000 tons) as of 2017. Within this amount, commercial production is roughly 300 million pairs as the remaining amount is captive production of companies like Gezer, FLO (Ziylan) and Muya. Gezer only 100 million pairs annual production capacity for its own slipper production. Capacity utilization rate of the sector is around 50-60%.

Table 38: Top 10 sole/insole manufacturers in Turkey, Mn pairs & tons, 2017,

Company name Mn pairs Tons

1 Ziylan Taban 39 13,026

2 Elit Taban 35 11,690

3 Özşahin Taban 35 11,690

4 Global EVA 18 6,012

5 Opar Ayakkabı 12 4,008

6 Lamcı 10 3,340

7 Fatih Ökçe 9 3,006

8 Alkan 9 2,839

9 Sonart 8 2,672

10 As Fuspet 6 2,004

Others (est.) 319 39,713

Total (est.) 500 100,000

Source: TOBB, AYSAD, IBS analysis, 2018

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60% of the footwear production in Turkey is polyurethane soles while 20% is eva, 10% is leather, 5% is rubber and remaining 5% is from other sole materials. While soles are manufactured in Turkey is raw material of polyurethane, resin and others are largely imported. COIM (Italy) and BASF (Germany, plant in Italy) are the major supplier for this raw material largely from Italian sources. These companies provide this raw material not only to footwear industry but also to other industries including automotive, plastics, construction materials etc.

There are 117 companies listed in the TOBB industry database where IBS identified only 47 active manufacturers from the relevant database of AYSAD, and from other available sources.

Ziylan Taban

www.ziylantaban.com info@ziylantaban.com T: +90 212 689 08 58 F: +90 212 689 08 58 İlker ÖZMEN, Import and Export Manager, iozmen@ziylantaban.com

Ziylan, since 1983, is one of the largest sole manufacturers of Turkey. It is also a licensed contractor and exporter of French sole manufacturer SKLOP. It has slightly 40 million pairs production capacity. While being a Ziylan Group company, it provides soles to its another group company FLO. It is also a very large supplier to the industry.

Fatih Ökçe

www.fatihokce.com.tr info@fatihokce.com.tr T: +90 212 698 19 00 F: +90 212 698 19 05 Faruk Ekmekçi, Corporate Sales Responsible, faruk.ekmekci@fatihokce.com.tr

Founded in 1973 in Istanbul, Fatih Ökçe began production with heels for men shoes. Being a member of Europe's most important laboratory center SATRA, Fatih Ökçe is the leader company in shoe lasts, heels and plateaus. It is also one of the prominent companies in soles (eva, rubber, TPU and thermo) and insoles.

GKS Taban,

www.gkstaban.com info@gkstaban.com T: +90 212 549 64 38 F: +90 212 549 64 39 Elena Çeliker, Planning Manager, planlama@gkstaban.com

Being an important sole (thermo, polyurethane, TPU, rubber) manufacturer, GKS has a partnership with Italian TSM Fondi, a child shoe sole manufacturer.

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Aktif Ayakkabı (Akform Soles)

www.akform.com.tr info@akform.com.tr T: +90 212 671 72 02 F: +90 212 671 72 06 Özcan Yılmaz, General Manager, ozcan@akform.com.tr Elif Coşkun Gençer, Customer Engagement Manager, elifc@akform.com.tr

Akform is a company that produces insole for shoes and footwear market in Turkey. Its product portfolio includes polyurethane and foam shoe insoles in Istanbul in a 4,000 square-meter factory. It has another production facility in Karabük Organized Industrial Site at the Black Sea Region. In its facilities, it has a capacity to produce 60,000 pairs P.U. injection, 40,000 pairs special foam, 35,000 pairs E.V.A., P.E. and felt insoles daily, as well as shoe lining, by using latex lamination, flaming lamination and film lamination. Its trademarks include SMARTFLEX MEMORY FOAM for footwear market and other industries such as automotive, white appliances, furniture, packing, work and safety industry for protective materials. It is also producing high density foam ORTHOFLEX for the footwear industry.

3.3 Components & accessories industry distribution system

Turkish footwear components and materials companies are well placed in domestic production. In 2017, domestic production was estimated at $125 Mn while 30% of the local production was exported as final goods. However, Turkish industrial structure, similar to other industries, is heavily dependent on foreign raw material/intermediate goods to produce the final product.

Figure 5: Components & accessories industry distribution system

Source: IBS analysis, 2018

As described in above section, plastics and chemicals raw materials for soles, heels etc., are largely imported and Italy has been the leading source country for such materials.

Footwear materials$146 Mn consumption in 2017

Soles and heels Lasts ChemicalsMaterials (cords, elastics, footwear tacks, nails and

screws, insoles, labels, ribbons, sewing needles,straps, toe puff and counters, welts etc.)

Machinery and moulds Accessories (yarn etc.)In

tern

atio

nal

mar

kets

30% of local production ($38 Mn) is exported

40% of local consumtion ($59 Mn) is imported

Duyar, Erdoğdu and Palamutare the largest materials(chemicals, adhesives, bondingagents etc.) suppliers

47 active sole and partscompanies. Companies likeGezer, Ziylan (FLO) and Muyaare captive and also a supplierto the industry

Footwear

Leathergarments

Saddlery, bags andleather goods

Production & import

Production

Otherindustries likeautomotive, plastics etc.

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Though TOBB industry database lists 110 sole manufacturers, IBS identified 47 active sole manufacturers while Gezer, Ziylan (Flo) and Muya are leading manufacturers and captive, producing for their own footwear production and for the industry as well. Ziylan, the largest and one of the oldest sole manufacturers, leads the sole industry with slightly 40 million pairs production capacity. A third generation Ziylan family member is also active in the eva sole industry since 2016 with an annual nine million pairs. Gezer and Muya, leading slippery manufacturers of Turkey, are also specialized in slippery soles, having 100 million and 21 million pairs annual production capacity.

Adhesives, and chemicals like PU, TPU, SBR are largely imported and distributed to the market by large size components and material distributor/manufacturer companies like Duyar, Erdogdu and Palamut. Elit Taban, the second largest sole manufacturer of Turkey with 35 million pairs/year capacity, told that it purchased 80% of its raw material from Erdogdu. Below table shows subsegments in the components sector with their individual capacities.

Figure 6: Supply chain from components/materials (chemicals) to footwear

Source: IBS analysis, 2018

EVA SOLES

Company CapacityMn Pairs /year

Global EVA 18

Bayrak Taban 12

3GEN Taban 9

Dusel EVA 6

Egemen Taban 2

Ella Taban 1

Bella Taban 0.3

Bilsan EVA n.a.

Ege Taban n.a.

PU/ TPU / SBR etc. SOLES

Company CapacityMn pairs /year

Gezer (own-use) 100

Ziylan 40

Muya (own-use) 21

Suat Taban 12

Opak (own-use) 12

Alkan Taban 8.5

Fatih Okce 8

Sonart 8

YDS (own-use) 6

Erbil Taban 4.5

GKS 3.6

Bağbek 3

Polat 1

INSOLES

Company CapacityMn Pairs /year

Ake Spor 15

Elit Taban 12

Lamcı 12

Akform 10

As Fuspet 6

Ustasan 3

Fatih Okce 1.5

HEELS /LASTS

Company CapacityMn Pairs /year

F. Okce (heels) 3.0

F. Okce (lasts) 0.2

Forma (lasts) 0.2

Ramiz (lasts) 0.2

RAW MATERIAL SUPPLIERS (mainly chemicals)Italian suppliers: ACI, COIM, Costchem, Epaflex, Elachem, Puntalifiore, Kenda Farben, Overmec, Selasti, Sipol, Vaber etc (by distributors incl.

Birtug, Erdogdu, Duyar, Palamut etc.)Internationals: BASF, Henkel, Ravago and other internationals from China, Korea, EU etc.

Locals: Altug Kimya, Kimteks, Kobe, Oynurden, Polimeks, Sotas, Universal etc.

LOCALPRODUCTION

IMPORTSThrough local distributors:

ERDOGDU, DUYAR, PALAMUT GROUP, etc.Italians: Bartolli, Davos, M. Lombarda, Natsrotex,

Garde, Tallonit, Technogi etc.

FOOTWEAR MANUFACTURERS / RETAILERS

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Same distribution system also applies to artificial leather industry. 42% of the local demand, 85,000 tonnes, is met by import in which China is a dominant leader with 70% of the imported amount. Italy has only 3% share in artificial leather market while other countries in the top five, apart from China, has similar shares too. Flokser is the leading Turkish company with 21,000 tons/year production capacity.

Figure 7: Supply chain from components/materials (artificial leather) to footwear and leather

Source: IBS analysis, 2018

Italian brand Giardini is distributed by Erdogdu as well. While local production capacity is adequate for other materials such as nails, zippers, tacks, metal accessories, sewing materials etc., those large distributors also provide from foreign brands including Italians.

SYNTHETIC LEATHER

Company Capacity‘000 Tonnes/year

Flokser 21Persu Sunni Deri 7.5

Sonart 6.5

Depar 6

Gezderi 6

Politeks 5

Sahinler 3Nur Sunni Deri 2.5

Gurle 2.1

Teknofin 0.5

Hefa n.a.

RAW MATERIAL SUPPLIERS (mainly chemicals)Italian suppliers: ACI, COIM, Costchem, Epaflex, Elachem, Puntalifiore, Kenda Farben, Overmec, Selasti, Sipol, Vaber etc (by distributors incl.

Birtug, Erdogdu, Duyar, Palamut etc.)Internationals: BASF, Henkel, Ravago and other internationals from China, Korea, EU etc.

Locals: Altug Kimya, Kimteks, Kobe, Oynurden, Polimeks, Sotas, Universal etc.

LOCAL PRODUCTION

FOOTWEAR MANUFACTURERS / RETAILERS, UPHOLSTERY, BAG & LUGGAGE, SADDLERY Etc.

SYNTHETIC LEATHER IMPORTS

Country 2017 ‘000 Tonnes/year

China 24.4Germany 1.3

Czech Rep. 1.3

Italy 1.2

Korea 1.2

Others 6.2

Total 35.6

Italy’s share 3%Italian firms:Giardini (Erdogdu)

Share of imports 42%mostly (~70%) from China

SYNTHETIC LEATHER MARKET BALANCE, 2017

‘000 TonnesProduction 73Imports 36Exports 23Consumption 85

IMPORTS

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3.4 Foreign trade in components & accessories

Footwear components industry is defined under HS 6406 tariff code covering the main items as such:

640610: Uppers and parts (excluding stiffeners and general parts made of asbestos)

640620: Outer soles and heels, of rubber or plastics

640690: Parts of footwear; removable in-soles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof (excluding outer soles and heels of rubber or plastics, uppers and parts thereof other than stiffeners, and general parts made of asbestos)

As stated above around 40% of the local footwear components (in narrow definition) is met by import which accounted at $59 million in 2017. Turkey’s footwear components import has been slightly stable in the last five years; with peaks in 2015 and 2016 reaching $65-66 million. While China is by far the dominant supplier of footwear components which constituted 80% in 2017 in value terms, Italy is the second largest supplier to Turkey, having a share of 10%, with a value of $5.6 million.

Table 39: Turkey import of footwear components (HS 6406), by countries, 2007-2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 Countries 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M China 16.0 37.4 49.5 55.2 47.4 37.7 28.8 81% 11.4% -24% Italy 7.1 9.7 7.4 6.0 5.6 4.2 4.7 10% -2.2% 14% India 0.6 4.5 4.2 1.0 1.4 1.3 0.6 2% 7.6% -53% Spain 0.4 0.3 0.7 1.1 0.9 0.7 0.8 2% 8.3% 11% Vietnam 0.0 0.1 0.1 0.2 0.9 0.8 0.6 2% - -21% Germany 1.0 0.5 0.3 0.4 0.5 0.4 0.4 1% -6.8% 2% Portugal 0.1 0.5 0.3 0.3 0.4 0.3 0.3 1% 20.6% 4% Free Zones 1.1 0.9 1.7 0.9 0.4 0.3 0.2 1% -9.9% -21% Czech Rep. 0.0 0.0 0.1 0.2 0.3 0.2 0.1 1% - -38% Bangladesh 0.0 0.0 0.0 0.0 0.1 0.0 0.1 0% - 237% Others 3.4 3.8 1.1 1.0 0.9 0.7 0.7 1% -12.8% 3% Total 29.7 57.5 65.1 66.3 58.8 46.6 37.5 100% 7.1% -20% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

In the first nine month of 2018, there was -20% decrease in the import of footwear components due to decreasing domestic production. Imports from China, the leading exporter of Turkey in this category decreased 24% in the first nine months.

Although there was an increase in imports from Italy in the first nine month of 2018, IBS identified that majority of the import was in the first two quarters of the year which was declined radically in the third quarter. IBS estimate there will be very limited amount of

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import from Italy also in the fourth quarter of 2018 and finally there will be decline in the year total of 2018.

During the AYSAF Fair, one of the leading distributors introduced this estimate and declared that between June 2018 to November 2018, the group did not do any import who was making regularly at least four containers per month to Turkey. They added that only one container of product will arrive in Turkish ports in the second half year.

IBS estimates that in year total of 2018, the imports of footwear components (HS6406) will be around $44 million with a decrease of 25% compare to 2017.

The sales manager of another big international raw material supplier related with footwear industry also confirmed this estimate by saying that the market declined at least 30-40% in 2018 and they expect that the slowdown will continue in the first half of the 2019 and then the market will stabilize around 70% level of the 2016-2017 volume.

Within the footwear components import, all three sub-segments had a similar share in the overall import value while “uppers and parts” segment import declined significantly during the last five years.

Chart 17: Turkey footwear components import, by sub-segments, 2012/2017, $ million

In 2012, uppers and parts import constituted 64% of all footwear components import of Turkey in which 79% was supplied from China and 12% from India and 2% from Italy. Over the years, import of uppers and parts declined $22 million in 2017, had a 38% share in components import, Italy’s share declined relatively faster, from $605,000 to $78,000.

37

13

8

58

-

10

20

30

40

50

60

70

640610 640620 640690 6406

Source: Trademap, IBS analysis, 2018

2012

22

21

16

59

-

10

20

30

40

50

60

70

640610 640620 640690 6406

Source: Trademap, IBS analysis, 2018

2017

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Table 40: Turkey import of uppers and parts (HS 640610), by countries, 2007-2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 Countries 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M China 10.6 29.2 29.9 28.0 21.5 16.5 9.1 97.0% 7.4% -45% India 0.6 4.5 4.1 1.0 0.5 0.5 0.0 2.0% -3.5% -95% Russia 0.0 0.1 0.0 0.0 0.1 0.1 0.0 0.5% - -100% Italy 0.6 0.6 0.1 0.1 0.1 0.1 0.1 0.4% -17.9% 17% Bulgaria 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0% - -56% Others 1.6 2.6 0.0 0.0 0.0 0.0 0.0 0.0% -39.1% 191% Total 13.4 36.9 34.1 29.1 22.2 17.2 9.2 100.0% 5.2% -46% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

In the first nine month of 2018, the import of “upper and parts” declined almost 50% from $17.2 million in the first nine months of 2017 to $9.2 million in 2018. IBS estimates that in year total of 2018, the import of the HS640610 segment will be around $11 million with a decrease of 51% compare to 2017.

On the contrary, import of “outer soles and heels” almost doubled by value from $12.5 million to $21.1 million between 2012 and 2017. Italy was the largest supplier of outer soles and heels in 2012 with 53% share ($6.7 million) and followed by China with 42% share. In 2017, China dominated the outer soles and heels import of Turkey with 74% share where Italy’s share in the segment decreased 20%.

Table 41: Turkey import of outer soles and heels (HS 640620), by countries, 2007-2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 Countries 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M China 4.4 5.3 13.3 17.3 15.5 12.8 6.4 73.7% 13.6% -50% Italy 4.5 6.7 6.4 4.7 4.1 3.2 3.6 19.7% -0.9% 15% Spain 0.1 0.3 0.4 0.5 0.5 0.4 0.3 2.6% 17.4% -30% Czech Rep. 0.0 0.0 0.1 0.2 0.3 0.2 0.0 1.4% - -84% Portugal 0.1 0.0 0.0 0.0 0.2 0.1 0.1 1.0% 14.6% 16% Bangladesh 0.0 0.0 0.0 0.0 0.1 0.0 0.2 0.6% - 376% India 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.3% - 22% Others 0.7 0.3 0.2 0.2 0.2 0.1 0.2 0.8% -13.0% 99% Total 9.7 12.5 20.4 23.1 21.1 16.9 11.0 100.0% 8.1% -35% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

The import of “outer soles and heels” declined 35% from $16.9 million in the first nine month of 2017 to $11.0 million in the same period of 2018. IBS estimates that in year total of 2018, the import of the HS640620 segment will be around $13 million with a decrease of almost 40% compare to 2017.

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A similar case for Italy happened in “removable in-soles, heel cushions and similar articles” segment import. While Italy’s share in Turkish import was 30% in 2012, it declined to 9% in 2017. China was the leading exporter in the segment during the last decade with increasing its share from 37% to 66% between 2012 and 2017. Vietnam and India are the fastest growing suppliers of the segment to Turkey; both reached to $ 850-900,000 level from $30-50,000 in the same period.

Table 42: Turkey import of removable in-soles, heel cushions and similar articles (HS 640690), by countries, 2007-2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 Countries 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M China 1.1 3.0 6.3 9.9 10.3 8.5 4.9 66.3% 25.2% -42% Italy 2.0 2.4 0.8 1.3 1.4 0.9 1.4 9.0% -3.4% 51% Vietnam 0.0 0.1 0.0 0.1 0.9 0.8 0.2 5.7% - -79% India 0.0 0.0 0.0 0.0 0.8 0.8 0.4 5.4% 96.1% -48% Germany 1.0 0.5 0.3 0.4 0.5 0.4 0.3 3.3% -6.6% -29% Spain 0.3 0.1 0.3 0.6 0.4 0.3 0.4 2.6% 3.6% 20% Free Zones 1.1 0.9 1.7 0.9 0.4 0.3 0.1 2.4% -9.9% -53% Portugal 0.0 0.5 0.2 0.2 0.2 0.2 0.0 1.5% 32.0% -92% Korea 0.0 0.0 0.1 0.3 0.1 0.1 0.0 0.7% - -100% Singapore 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.6% - -7% Others 1.2 0.8 0.8 0.5 0.4 0.3 0.3 2.5% -11.0% 1% Total 6.6 8.1 10.5 14.1 15.5 12.6 8.1 100.0% 8.9% -36% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

The import of HS640690 segment declined almost 36% from $12.6 million in the first nine month of 2017 to $8.1 million in the same period of 2018. IBS estimates that in year total of 2018, the import of the HS640620 segment will be around $9.5 million with a decrease of almost 40% compare to 2017.

It is remarkable that Far East suppliers like China, Vietnam were affected more negatively due shrinking in the Turkish economy compare to Italy. Italy is the only country together with Spain having growth in export to Turkey for the first nine month of 2018. IBS expects that the share of Italy will increase to 15-20% band in 2018 which is close to its share in 2012 (30%).

Turkish footwear components export, however, has been stuck around $35-40 million level since 2012. Apart from the exception in 2013 where there is an unusual hike that hit $116 million with an extraordinary export to Lithuania of $71 million, the industry’s export grew at a CAGR of 1.2% between 2007 and 2017. The sector’s export has been gradually declining since then; and accounted at $37.7 million in 2017.

The export of footwear components declined almost 3.3% from $30.6 million in the first nine month of 2017 to $29.6 million in the same period of 2018. IBS estimates that in year total of 2018, the exports of footwear components will be around $38.0 million with a small increase of 1% compare to 2017.

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IBS identified in AYSAF Fair almost all companies targeting to increase the share of export in their sales through identifying new customers in new markets and through increasing their marketing activities for exports.

Table 43: Turkey export of footwear components (HS 6406), by countries, 2007-2018 3rd Quarter, $ Million

Growth 2017 2018 Share CAGR 2017-18 Countries 2007 2012 2015 2016 2017 9M 9M 2017 2007-17 9M Russia 10.0 13.2 11.3 4.8 7.9 6.8 3.7 21% -2.3% -44.7% Bulgaria 6.0 4.7 2.5 6.6 4.2 4.0 1.1 11% -3.5% -71.1% Uzbekistan 0.2 3.0 6.3 4.8 3.8 3.2 3.0 10% 35.1% -8.4% Kazakhstan 0.0 0.1 0.7 0.7 2.0 1.7 1.2 5% 73.7% -27.9% Serbia 1.2 1.1 1.2 1.5 1.4 0.9 0.8 4% 1.5% -10.4% Turkmenistan 0.7 0.6 1.1 1.3 1.4 1.0 1.0 4% 7.4% -1.5% Israel 1.7 1.7 2.1 2.0 1.4 1.1 1.0 4% -2.0% -8.6% Albania 0.3 0.7 1.2 1.2 1.3 1.0 0.9 3% 15.3% -8.9% Iran 0.1 0.3 1.9 2.5 1.0 0.8 0.4 3% 28.0% -49.1% Romania 2.6 0.7 1.1 1.2 1.0 0.8 1.0 3% -9.0% 31.7% Others 10.6 10.6 14.2 14.2 12.3 9.3 15.3 33% 1.5% 65.2% Total 33.4 36.5 43.6 40.8 37.7 30.6 29.6 100% 1.2% -3.3% Note: listed by 2017 data *9M= Nine months (three quarters) total Source: TUIK and ITC Trademap, IBS analysis, 2018

Turkey’s main export destination for footwear components has traditionally been Russia, CIS countries and Eastern Europe. Export to Russia is at half the level of 2012 that accounted at $7.9 in 2017 with a decrease at a CAGR of -9.8% in the last five years. While losing in the Russian market, Turkish footwear components exporters gained in major Turkic republics including Uzbekistan, Kazakhstan, and Kyrgyzstan and also in Albania and Iran.

3.5 Competition in components & accessories

TOBB industry database listed 117 companies that have capacity reports relevant to leather and footwear components industry defined under the 15.20.40 NACE code.

Table 44: Breakdown of footwear components & accessories producers by size, 2018

Company size Number Share Over 100 9 8% 50-99 11 9% 25-49 27 23% 10-24 33 28% less than 10 37 32% Total 117 100% Source: TOBB Industry database, IBS analysis, 2018

There are only nine companies having more than 100 employees and 11 companies with 50-99 employees. The sector is rather characterized with small workshops having less

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than 25 employees which constitute 62% of the total industry. Nearly one-third of the companies are even small workshops with less than 10 employees.

Table 45: Leading companies in footwear components & accessories, 2018

Companies Location Employee size* Akınal Footwear** Gaziantep 392 Fatih Ökçe İstanbul 255 Gezer Footwear** İstanbul 171 Ramiz Tarhan Bartın 166 Samsun Akın Rejenere Samsun 144 Dusel Eva İstanbul 128 ABC Medical İstanbul 118 FLO (Ziylan Group)** İstanbul 117 On-Ar Footwear İzmir 111 * related with production facilities. ** Companies with two stars are producing footwear parts mainly for their own use. Source: TOBB Industry database, IBS analysis 2018

Akınal Footwear and Fatih Ökçe ranks as the leading components & accessories producers in Turkey. However, Akınal is mainly a footwear company specialized in slipper, and its company profile was already described in footwear section in 5.2.

Fatih Ökçe is the most prominent manufacturer of shoe lasts, soles, in-soles, hills and plateaus.

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4 Opportunities & challenges

General outlook

Turkish market for footwear, leather and components provide both opportunities and constraints to different extents.

From a macroeconomic perspective, Turkish economy showed a sharp slowing in the third quarter of 2018 on financial and currency market volatility, and soaring inflation.

Annual retail sales growth began to decline as of September 2018 compared to same period in 2017, the decline was at 3.4% level at this month, according to calendar adjusted indexes. Industrial production is also declining. Production in September 2018 was decreased by 2.7% according to same month in 2017. The official expectation was 0.3% and 1.5% increase on monthly and annual basis respectively. In leather industry, industrial production was narrowed by 7.6% in August 2018 and 1.8% in September.

The outlook for 2019 seems not better. Many IBS interviews with leather and footwear sector players suggest that 2019 will be a ‘lost year’ for the whole economy as well as their industries. Further exchange rate volatility, need for foreign finance, and the possibility of renewed geopolitical tensions pose significant downside risks for 2019.

Current economic crisis in Turkey affected many industries in Turkey while the spotlight was on footwear industry as many well-known brands declared concordatum, including Hotiç, Beta, Yeşil and Sabo. The footwear sector was suffering from long term receivables that extended even 18-month cheques. Increasing store rents, particularly in the shopping malls fuelled by depreciated Turkish lira was another headache. However, IBS identified that the most of these firms declared concordatum not for their footwear industry, while it was also suffering, but from other group ventures activities like construction, automotive leasing etc.

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Opportunities & challenges by segments

Leather Footwear Components

Opportunities - When Lira strengthens, importers and traders would be a target for marketing

- Contract manufacturers for luxury ready wear and footwear companies

- Contract manufacturing opportunity with weaker Lira

- M&A opportunities

- increasing tourist numbers particularly from Middle East and Russia

- High income population continue to afford

- Italian positioning is very strong in adhesives, sealants and other chemicals

- Strong and experienced distributors

Challenges - Depreciated Lira against Euro and thus increases raw material cost

- Higher brand perception instead of ‘Made in Italy’ mark

- More limited range collection in high segment

- Depreciated Lira would result in increasing import from Far Eastern sources

Leather

Turkish leather industry imports 58% of the raw leather consumed in the domestic market. Most prominent supply sources are South America and South Asia countries. While there is import from Italy, mostly small sized firms or traders bring Italian leather. Many sector players indicated that current exchange rates with the depreciated Lira make Italian import too expensive for the industry.

However, financially strong leather companies (mostly the larger ones) would be a target for selling Italian leather as IBS identified that when the Turkish lira strengthens against Euro, those companies tend to make import as much as they can largely for stocking keeping in mind that current exchange volatility would hit again.

Italian leather (and components as well) would be used by Turkish contractors when international retailers impose such intermediate goods/materials as per their contracts. Some luxury segment bag, saddler and accessories companies (like SF Leather, Desa, Derimod etc.) use Italian leather to attract the customer base, and particularly when they make contract manufacturing for Italian brands like Armani, Bvlgari, Louis Vuitton etc.

Footwear

Depreciation of Turkish Lira against Euro poses financial advantage in contract manufacturing opportunities with Turkish footwear companies. On the other side, as the Turkish companies felt the economic constriction in the local market, they will tend to be more export-oriented.

Current economic turmoil in Turkey brings merger and acquisition opportunities in Turkey as many footwear companies.

Many sector players IBS met suggested that the economic conditions will recover very slowly, slightly 30% of the companies will be eliminated from the market which will result in more financially strong and well managed companies will be present in the market.

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Even though slowly, increasing tourist numbers particularly from Middle East and Russia (expected to be more than 6 million in 2019) is brings dynamism to mid and high segment footwear and leather products.

High segment Italian footwear still has ground in the market as the high-income consumers continue to pay for luxury brands. However, unlike European or American high-income consumers, Turkish high-income consumers attaches more importance to brand instead of ‘Made in Italy’ mark regardless of the brand. Therefore, any investment to increase brand awareness of Turkish consumers will eventually pay off.

However, the leading footwear retailers IBS met, told that they will continue to sell high-end Italian shoes while the range of collection would be rather limited in the short term with regard to strong Euro against Lira.

Components

While Turkish market is strong in components, Italy is seen as the ‘shadow force’ in this market. While Turkish companies are well placed in producing soles, hills, the raw materials are largely imported from Italy as well as Far East. Particularly, Italian positioning is very strong in adhesives, sealants and other chemicals.

Prominent distributor companies some of whom were introduced throughout the report are well experienced in working with Italian manufacturers. However, as the local capacity in producing such chemicals is limited, depreciated Lira would result in increasing import from Far Eastern sources.

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5 Future projections & evaluation Figure 8: Growth drivers of and challenges for leather industry development

Source: IBS analysis, 2018

5.1 Growth drivers

Key growth drivers for the Turkish leather and footwear sector are as follow:

Increasing exports especially in footwear, bags and luggage as well as leather and fur garments due to diversification of export markets

Increasing number of tourists visiting Turkey

Protective measures of government by additional customs duty especially in against to competitive and cheap imports from Far East countries.

Increasing exports

As IBS identified that due to ongoing downturn in Turkish economy and high devaluation of Turkish Lira most of the footwear producers will shift their focus from domestic market to foreign markets and they will target to increase their exports. In addition to their traditional export markets such as EU countries, Russia and East European countries as well as Middle East countries, Turkish footwear producers now targets to create new business opportunities in Africa, North and South American countries.

The key growth driver for the leather sector in 2017 was the high increase in export of footwear, bags, and luggage as well as leather and fur garments. In addition to increasing demand in Russia, Turkey’s traditional export market, Turkish companies were successful to expand their exports to Bulgaria, India, Iraq, Korea, Japan and USA as well as several African and the Middle East countries.

After experiencing the negative effects of focusing heavily the Russian market due to lack of export market variations, the industry organizations and associations encouraged especially SMEs to seek export opportunities to other countries. As mentioned by the President of the Istanbul Leather and Leather Goods Exporters Union (IDMIB), Mustafa Senocak, the sector organizations and the Turkish government gave high importance in diversification of export markets. As a result, Turkey’s export to Bulgaria almost quadrupled between 2015 and 2017, and export to Romania, Israel, Serbia were doubled in the same period. Although it was not very high, the leather sector export of Turkey to USA, the world largest leather products importer increased 41% during the

Increasing exports Increase in number of incoming tourists Protective measures

Limited supply of raw material Uncontrolled slaughtering Limited R&D and insufficiency branding Lack of international promotion and

marketing Diversification of exports Lack of financial depth of the sector Dominance of small size companies Scarcity of qualified human resource

Growth drivers Challenges

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same period and exports to Australia (another key market) tripled in the same period. The sector authorities expect this increasing trend in exports to continue in the forecast period of 2017-2022 and will be the key growth driver in the future.

The increasing export in especially footwear and bags and luggage segments created a very positive environment in the sector. Footwear export increased to $766 million in 2017 and first time in the last decade exceeded import which was $676 million. Sector companies expect to increase their export 15-20% in 2018. The main reason behind this expectation is the positive developments in the Russian market. According to the sector authorities around ten large Russian ready-wear retailer groups were opened representative offices in Istanbul, Adana and Konya which created an expectation to exceed $1 billion level in export within next two years.

Turkish prominent ready wear retailers like LC Waikiki and Koton plans to expand their retail stores abroad. For instance, LCW plans to open new 150 stores in 2018 and 120 of which to be opened abroad. Such stores have been a lucrative channel for selling footwear, though for mostly cheaper segment.

Increase in number of incoming tourists

The number of foreign visitors decreased from 36.2 million in 2015 to 25.4 million in 2016 due to political unrest, terrorist attacks and the coup attempt in July 2016 as well as political tensions between Russia and Turkey since 2015.

Table 46: Number of incoming tourists by nationalities, 2007-2018 October (top 20 countries)

Growth 2017 2018 Share CAGR 2017-18 2007 2012 2015 2016 2017 10M 10M 2017 2007-17 10M Russia 2.5 3.6 3.6 0.9 4.7 4.6 5.7 15% 6.7% 25% Germany 4.1 5.0 5.6 3.9 3.6 3.3 4.2 11% -1.5% 25% Iran 1.1 1.2 1.7 1.7 2.5 2.1 1.8 8% 9.0% -16% Georgia 0.6 1.4 1.9 2.2 2.4 2.1 1.8 8% 14.5% -13% Bulgaria 1.2 1.5 1.8 1.7 1.9 1.5 2.0 6% 4.1% 28% UK 1.9 2.5 2.5 1.7 1.7 1.6 2.2 5% -1.4% 37% Ukraine 0.6 0.6 0.7 1.0 1.3 1.2 1.3 4% 8.0% 7% Iraq 0.2 0.5 1.1 0.4 0.9 0.8 1.0 3% 17.4% 31% Netherlands 1.1 1.3 1.2 0.9 0.8 0.7 1.0 2% -2.7% 27% Azerbaijan 0.4 0.6 0.6 0.6 0.8 0.7 0.7 2% 5.8% 13% S. Arabia 0.0 0.2 0.5 0.5 0.7 0.6 0.7 2% 31.7% 14% Greece 0.4 0.7 0.8 0.6 0.6 0.5 0.5 2% 3.4% 8% France 0.8 1.0 0.8 0.6 0.6 0.5 0.7 2% -2.8% 26% Romania 0.4 0.4 0.4 0.4 0.4 0.4 0.6 1% 0.8% 55% Belgium 0.5 0.6 0.6 0.4 0.4 0.4 0.5 1% -2.5% 22% Syria 0.3 0.7 0.8 0.3 0.4 n.a. n.a. 1% 2.0% n.a. Kazakhstan 0.2 0.4 0.4 0.2 0.4 0.4 0.4 1% 7.5% 6% Israel 0.5 0.1 0.2 0.3 0.4 0.3 0.4 1% -2.9% 13% USA 0.6 0.8 0.8 0.5 0.3 0.3 0.4 1% -6.5% 28% Poland 0.3 0.4 0.5 0.2 0.3 0.3 0.6 1% 0.7% 121% Others 5.5 8.3 9.5 6.4 7.4 6.8 9.3 23% 3.1% 37% Total 23.3 31.8 36.2 25.4 32.4 29.1 35.6 100% 3.3% 22% Source: TUIK Departing Visitors Survey, IBS analysis,

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The most dramatic decrease was in number of Russian tourists which decreased from 3.6 million visitors in 2015 to 0.9 million visitors in 2016. However, Turkey has restored relations with Russia after downing a Russian warplane in 2015. The number of Russian visitors reached its peak in 2017 with 4.7 million. According to ten month statistics of 2018, there was 25% increase in Russian tourist volume. In the year total of 2018 the number of Russian tourists visiting Turkey will be around 6 million.

There was also significant increase in German tourist visiting Turkey. In the first ten month of 2018, there was 25% increase in the number of German tourists. In 2018, the volume of German tourist will reach around 4.5 million people which is close to the level before 2015.

There are also considerable increased in tourist numbers from Belgium, France, Netherlands, UK etc.

In 2018, the number of incoming tourists is expected to reach around 40 million.

In the next five years, the number of incoming tourists is forecasted to be around 53 million with a CAGR of 6.2% between 2018 and 2023.

Increasing tourist numbers and especially the Russian tourist directly affect the leather sector production and exports because Turkish companies made significant sales to tourists especially in leather and fur garments, bags and luggage and footwear sales in tourist destinations like Antalya, Istanbul, Izmir and Mugla (Marmaris and Bodrum).

The increasing tourist volume from former CIS countries like Georgia, Azerbaijan, Kazakhstan and Iran will also stimulate the demand for leather sector products. Particularly tourists mostly from the Middle East countries (such as Saudi Arabia, Jordan, Kuwait, Qatar) are the largest buyers of luxury leather and footwear products.

With the increasing tourist volume, the domestic sales is forecasted to increase at least $100 million in bags and luggage and $150 to 200 million leather and garments in the forecast period of 2018-2023.

Protective measures

The protective measures applied by the Turkish government through imposing additional customs duty to far East countries including China, India, Vietnam was another key driver for the increasing investments in especially footwear, bags and luggage segments and the increasing local production in leather sector. Government’s protection policy is expected to continue during the forecast period and leads further increase in investments and domestic production. These measures are not expected to impact import from Italy.

Thanks to such measures some foreign-origin footwear manufacturers like Deichmann plans to produce in Turkey instead of importing from Far East countries. This will eventually support development of relevant industries within Turkey as well as supporting Turkey based export capacity.

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Expansion at abroad of some companies like FLO (Ziylan Footwear) will support local brand development and local production in international standards.

5.2 Market forecasts and projections – 2017-2023

Key industry players expect that sector production would grow by 30% in US dollar terms in next five years. Export will be the key growth driver in the future growth of the sector production. The relatively slow growth in domestic demand is attributable to the fact that the leather garments are regarded as prestigious and expensive products compared to the textile items, and the sector experts think it will take some time to overcome this prejudice. For many years, a leather promotion initiative has been trying to trigger domestic demand through various campaigns; however, the success of the campaigns was not at the expected level. The second key growth driver of the increase in domestic production in leather sector will be the continuing protection polices of the government by additional customs duty against cheap and competitive imports from Far East countries. These policies are expected to continue in the new future. In addition, the diversification of exports will be the key driver in the future growth of exports.

In the forecast period, between 2017 and 2023, the leather sector (in broad definition) is projected to grow at a CAGR of 3.6% in US dollars terms, compared to the CAGR of 1.9% between 2007 and 2017.

Table 47: Leather sector production forecast, 2017-2023, $ Million

CAGR 2017 2018 2019 2020 2021 2022 2023 2017-23 Leather garments 334 336 341 365 391 414 435 5.3%

Leather garments & articles 334 336 341 365 391 414 435 5.3% Leather and related products 3,903 3,937 3,974 4,099 4,251 4,450 4,665 3.5%

Processed leather 810 817 825 844 873 904 936 2.8% Saddlery, bags & luggage etc. 430 435 438 449 460 476 490 2.4% Footwear 2,663 2,685 2,711 2,806 2,919 3,070 3,239 3.8%

Leather industry, total 4,237 4,273 4,315 4,464 4,641 4,864 5,100 3.6% Yearly, growth 0.8% 1.0% 3.4% 4.0% 4.8% 4.8% Source: IBS analysis, 2018

On the other hand, domestic market is still stressful. The demand for leather products has continued to be weak and the payment terms in the local market increased up to 18 months. Under this stressful condition in the domestic market, increasing export became a motivation for the domestic leather sector companies. IBS expects the leather sector growth will be only 0.8% in 2018 and 1.0% in 2019.

Although the domestic market continues to be tense because of political unrest, terrorist attacks and the coup attempt in July 2016, the decreasing consumer confidence started to recover gradually in 2017, especially due to increasing government incentives to stimulate the domestic demand.

However, the domestic demand for leather and leather products is also related with the climatic conditions of Turkey. For example, winter in 2017 and 2018 was hotter than

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expected. Therefore, sales of winter leather footwear and jackets were very low during the season. The sector companies declared that most of the companies have very high stock rates due to very low sales volume, and this led high decrease in domestic price levels.

Common to many industries including textile, ready wear and leather the consumer has a developing spending awareness, branded products are preferred in an increasing trend against unbranded and counterfeit products. Fashion weeks and shopping festivals resulted in encouraging foreign shoppers and tourists to buy leather apparel, saddler products and footwear from Turkey. Depreciation of Turkish Lira against foreign currencies led leading companies to be more conservative to expand their outlets and shops, sometimes led to decrease the number of shops in an attempt to sustain the current business and ensure efficiency. Developing construction industry, renewal of buildings, new centres of attraction accompanied with exchange rate fluctuations resulted in increasing rents also led the companies to focus on productivity of shops rather than aggressive expansion.

IBS expects increasing imports of raw hides and skins as well as semi-processed and processed leather products in relation with increasing production and exports. The growth of import in these segments will be around 30% in total; parallel to the increasing production during the forecast period. However, IBS expects that the decline in import of footwear, bags and luggage as well as leather and fur garments will continue due to additional customs duty polices of the government. The import of leather and fur garments will be around $20-25 million, and the import of footwear decreased up to $20-25 million levels. Although decreased half of its size in 2007, the import of bags and luggage will be largest segment amounted between $200-250 million in the forecast period.

5.3 Challenges

Presented in various sector analyses by the leather sector associations as well as government strategy papers, the key challenges of the Turkish leather sector are as follows as:

Limited supply of raw material (raw hides and skins)

Uncontrolled slaughtering and poor quality domestic crude production

Limited R&D and insufficiency branding and insistence on contract production

Lack of international promotion and marketing activities

In exports dependence on small number of markets and absence from large markets; dependence especially on Russia and CIS markets in leather sector exports.

The lack of financial depth of the sector and therefore no major investments

Dominance of small size companies and low number of large size companies especially in footwear, bags and luggage as well as scattered industrial structure

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Limited educated and experiences human resource as well as decreasing interest of young generation in leather sector employment

Limited supply of raw material

Turkey is a net importer of raw hides and skins. Leather production capacity is almost twice the local supply of raw hides and skins. Weaknesses in raw material and input supplies of leather and leather goods industry include decreasing level of animal availability, external dependence in raw hide.

Import decreased significantly between 2007 and 2017 due to decreasing export and production volume, however it is expected to increase again due to expected increase in export and production volume.

Although in decreasing trend, Italy is the eight largest supplier of raw hides and skins to Turkey accounted 8% share in total imports (value terms) of Turkey in 2017. Italy’s export of raw hides and skins to Turkey decreased from $20 million to $9 million in 2017 with a CAGR of -7.7% and in volume terms around 5,000 tonnes to 3,500 tonnes. In addition, Italy was the second largest supplier of Turkey in processed leather after Azerbaijan. Although the imported volume was only 1,771 tonnes in 2017, the share of Italy in Turkey’s processed leather imports was 8% in volume terms. Italy’s processed leather export to Turkey was $38 million in 2017 where it was $93 million in 2007. IBS expects that both raw hides and skins and processed leather export of Italy to Turkey will be stable around $50 million or increased very little in the short-run but it is expected again increase up to $80-100 million level in the 2020-2023 period.

Uncontrolled slaughtering

Apart from the bottlenecks in availability of domestic raw hides and skins, production of hides and skins is further affected by the slaughtering, flaying and storage problems. There are roughly 700 integrator abattoir installations at different capacities, having facilities like conveyor systems, health controls and proper storage space. However, the most widespread type of abattoir is the small rural slaughterhouses where animals are killed on the ground and flaying is done by hooking up. This leads to low quality of flay with flay cuts and score marks often observed. The initial processing problems like improper application of salt and other preserving chemicals cause putrefaction.

Government and the sector have common efforts to improve the physical conditions in slaughterhouses and try to increase consciousness of the citizens especially for the animals to be slaughtered during the Feast of Sacrifice.

Limited R&D and insufficiency branding

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Limited research and development activities in product development and quality, limited branding and limited design capacity in leather and fur garments, bags and luggage as well as footwear industry are also regarded as weak aspects.

Despite being able to produce to good quality standards, the Turkish footwear industry does not have its own brands so sustainable export to European countries and key high-end export markets like USA, Canada, Japan etc. are still difficult.

There are a few companies very successful in their branding such as Desa, Derimod, Flo, Matras, YDS etc.

Lack of international promotion and marketing

One of the key weaknesses of the leather sector was lack of international promotion and marketing. Marketing and promotion activities of the sector companies did not develop properly due to dependence to limited export markets, the high share of imitation leather product sales to incoming tourist, and high share of less qualified SMEs in each segment of the sector.

Government and the sector associations started to give more importance for international promotion activities and developed several incentive schemes and international promotion programmes especially focusing SMEs in several segments of the leather sector.

There are various organizations such as the Union of Leather Exporters, DETEK, the Leather Promotion Group etc. in Turkey. In 2005, Union of Istanbul Leather and Leather Products Exporters (IDMİB) and the Union of Aegean Leather and Leather Products Exporters (EDMIB) were founded with the support from the companies acting in the leather industry and under the coordination of the Foreign Trade Under secretariat to introduce the Turkish leather to domestic and foreign markets. In the same year, the Leather Promotion Group (DTG) was founded through the cooperation of Foreign Trade under Secretariat with the Turkish leather industry in order to realize a marketing campaign that would accelerate export.

The non-governmental organizations of the leather industry in Turkey are highly scattered. Some of these organizations are also represented internationally. For example, Turkish Leather Industrialists Association (TDSD) is a member of ICT (International Council of Tanners) and DETEK is a member of International Union of Leather Technologists and Chemists (IULTCS). These organizations represent Turkish Leather industry at international forums and commissions.

These organisations are willing to make the Turkish leather a world brand, while the efforts conducted in this regard are inadequate. Such organizations prepare kits, etc. (Euroleather online shop) but these kits are inadequate for promotion compared to the associations of the countries which have become brands like China, Hong-Kong, India, Italy and Spain.

Diversification of exports

IBS 101

One of the most important problems of leather industry exports of Turkey is lack of market variations. Sector has followed a strategy primarily focused on Russia and CIS countries for long years. Dependence to a single market and lack of diversity caused current problems which the sector as a whole tries to overcome.

Historically around one fourth of the Turkish leather export was to Russian market and when there are serious problems in this market, the sector affected tremendously from these developments. In addition, Turkey’s export to its second-largest export market Germany has been declining since 2007. For this reason, expanding the sector's export markets is one of the main challenges of Turkey. In recent years, in line with the studies made by the sector on export market diversification, some positive developments have started in alternative markets. Exports to Canada, India, Israel, Korea, USA is on the rise.

Lack of financial depth of the sector

Leather and leather goods industry shows weakness in terms of low profitability, limited financial resources and high financing costs. The sector is weak in capital stock.

The leather sector is experiencing severe financial difficulties as well. The fact that the level of credit costs is not parallel to that of competing countries is another negative factor. On the other hand, the leather sector, which consists of small and medium sized companies, does benefit from government support and opportunities.

Dominance of small size companies

Majority of the companies are small scale companies employing less than 10 people. This creates some flexibility in production but leads significant inefficiency in the production, lack of branding, insufficient number of institutionalized companies, grey economy and unfair competition are additional weaknesses.

Scarcity of qualified human resource

Well-educated and qualified human resources are inadequate in the sector. Domestic and educational opportunities abroad cannot be assessed and communication and cooperation between producers is not enough to handle with these problems.

In terms of productivity and human resources, leather sector demonstrates incompatibility with education institutions over curriculum and shows weakness in practical training and infrastructure whereas footwear industry has relatively experienced but uneducated labour force.

IBS 102

6 Regulatory environment

6.1 Customs duties, tariffs and taxes

Since August 2014, Turkish government has started to take protective measures to support the local industry in the leather sector. Turkey applies these additional customs duties for the import from least developed countries, special incentive regulation countries, developing countries, other countries categories. (See the full list of these country groups used in the tables and text of this section in Annex 1)

First in August 2014, Turkish government started to apply additional customs duty for the import of footwear products for the above-mentioned country groups. With the decree of the Council of Ministers of 2014/29076, Turkey started to impose additional 50% customs duty for genuine leather footwear products or minimum $5 per pairs and 30% additional customs duty for artificial leather or textile footwear products or minimum $3 per pairs. In addition, Turkey started to impose 20% additional customs duty for semi-finished parts of footwear.

Afterwards, the Turkish government applied additional customs duty for the import of bags, luggage, and leather accessories products. In June 2015 with the decree of the Council of Ministers of 2015/7722, Turkey started to impose 30% additional customs duty for the products under HS 42.02 code for country groups 6-7 and 8 including India as well as China, Vietnam, Indonesia etc.

Finally, in November 2016, Turkish government started to apply additional customs duty for imports of leather and fur garments as well as leather and fur gloves, belts, articles as well as saddlery and harness products with the decree of the Council of Ministers of 2016/9640. With this decree, the additional customs duty for saddlery products was 20% and for leather and fur garments, leather gloves, belts and accessories were 30%.

These protective measures resulted in sharp decreases in import of leather sector products especially from group 6-7 and 8 countries including Far East trade partners like China, Vietnam, and Indonesia etc.

Related with export, Turkey currently applies export taxes on three different tariffs in leather sector. With these taxes Turkey targets to protect its leather sector due to scarcity in raw skin and hides production of the country. Turkey’s argument for this protection to the World Trade Organisation (WTO) as follows:

“As a traditional sector in Turkey, leather and fur manufacturers are in need of continuous supply of raw skin and hide. Therefore, export tax is a tool to ensure the continuation of the needed supply.”

6.1.1 HS 41 – Raw, semi-processed and finished leather products

In the HS41 group which includes raw hides and skins (between HS 4101 to HS 4103), there is no customs duty and additional customs duty in imports for all countries. This

IBS 103

is mainly because of limited raw hides and skins production in Turkey. In each sub-product groups there is no duty for EU and EFTA countries.

However, for the semi-processed and finished leather products categorized under HS 4104 - HS 4115 there are customs duties varying between 2% to 6.5% for the country groups 6-7 and 8. These country groups are beneficiary countries of special incentive arrangements countries (Group 6), developing countries (Group 7) including India, Indonesia, Vietnam and other countries (Group 8) including China.

There is no additional customs duty for these products. The customs duty for HS 41 tariff heading by country groups are as follows as of January 2018.

Table 48: Customs duty for HS 41 group by country groups, 2018

HS Code Tariff Codes (four digits)

Customs Duty (%)

Country groups

1 2 3

4

8 5 6 7

4101 0 0 0 0 0 0 0

4102 0 0 0 0 0 0 0

4103 0 0 0 0 0 0 0

4104 0 0 0 0 0 - 6.5 0 - 6.5 0 - 6.5

4105 0 0 0 0 0 - 2 0 - 2 0 - 2

4106 0 0 0 0 0 - 2 0 - 2 0 - 2

4107 0 0 0 0 0 3 6.5

4112 0 0 0 0 0 0 3.5

4113 0 0 0 0 0 0 2 - 3.5

4114 0 0 0 0 0 0 2.5

4115 0 0 0 0 0 0 0-2.5

Source: Ministry of Economy, Import regime 2018

6.1.2 HS 42 – Saddlery, bags and luggage, and leather garments

For HS 42 tariff group includes saddlery and harness (HS 4201), bags and luggage (HS 4202), leather garments, gloves, belts etc. (HS 4203) and other leather products HS 4205 and HS 4206. The standard customs duty applied for imports varies between 1.5% and 5.5% for developing countries group (Group 7).

In all sub tariff groups of HS 42 heading, the customs duty varies between 1.7% and 9.7% for other countries group (Group 8) which is slightly higher compared to Group 7 countries.

There is no customs duty for Group 1 countries including EU member countries, EFTA (European Free Trade Area) countries (Iceland, Liechtenstein, Norway, Switzerland) etc., South Korea (Group 2) (excluding some tariff lines of HS4202), Malaysia (Group 3) and least developed countries (Group 5).

The following table presents the customs duty for HS 42 tariff lines by country groups as of 2018.

IBS 104

Table 49: Customs duty for HS 42 tariff heading by country groups, 2018

HS Code Tariff Codes (four digits)

Customs Duty (%)

Country groups

1 2 3

4

8 5 6 7

4201 0 0 0 0 0 0 2.7

4202 0 0-1.6 0 0 0 2.3-3.3 2.7-9.7

4203 0 0 0 0 0 1.5-5.5 4.0 - 9.0

4205 0 0 0 0 0 0 2.0-3.0

4206 0 0 0 0 0 0 1.7

Source: Ministry of Economy, Import regime 2018

As mentioned in the introduction, since June 2015 there is additional customs duty for the imports of HS 4202 and since November 2016 there is additional customs duty for imports of HS 4201 and HS 4203 tariff group from Group 6, 7 and 8 countries. The additional customs duty for saddlery and harness (HS 4201) is 20%, for bags and luggage (HS 4202) 30% and for leather garments, belts, and gloves etc (HS 4203) is again 30%.

Table 50: Additional customs duty for HS 42 tariff heading by country groups, 2018

HS Code Tariff Codes (four digits)

Additional Customs Duty (%)

Country groups

1 2 3

4

8 5 6 7

4201 0 0 0 0 20 20 20

4202 0 0 0 0 30 30 30

4203 0 0 0 0 30 30 30

4205 0 0 0 0 0 0 0

4206 0 0 0 0 0 0 0

Source: Ministry of Economy, Import regime 2018

The following table presents the total import charges with additional customs duty for HS 42 tariff heading by sub-tariff lines and by country groups.

Table 51: Total customs duty for HS 42 with additional tax by country groups, 2018

HS Code Tariff Codes (four digits)

Total import charges with additional customs duty (%)

Country groups

1 2 3

4

8 5 6 7

4201 0 0 0 0 20 20 22.7

4202 0 0-1.6 0 0 30 32.3-33.3 32.7-39.7

4203 0 0 0 0 30 31.5-35.5 34.0-39.0

4205 0 0 0 0 0 0 32.0-33.0

4206 0 0 0 0 0 0 1.7

Source: Ministry of Economy, Import regime 2018

IBS 105

6.1.3 HS 43– Raw and processed fur and fur garments and goods

For the HS 43 tariff heading, all countries except other countries group (Group 8) are exempt from customs duty.

The table below presents the import charges for HS 43 tariff with country groups.

Table 52: Customs duty for HS 43 tariff heading by country groups, 2018

HS Code Tariff Codes (four digits)

Customs Duty (%)

Country groups

1 2 3

4

8 5 6 7

4301 0 0 0 0 0 0 0

4302 0 0 0 0 0 0 2.2-2.7

4303 0 0 0 0 0 0 3.7

4304 0 0 0 0 0 0 3.2

Source: Ministry of Economy, Import regime 2018

For raw fur skins, there is no customs duty also for Group 8 countries.

For semi-processed and finished fur skins there is customs duty between 2.2% to 2.7% for Group 8 countries. For fur garments and accessories (HS 4303 and HS 4304 tariff lines) the customs duty is between 3.2% and 3.7% for Group 8 countries.

Since November 2016, there is an additional customs duty for fur garments and accessories. Different form leather garments and leather goods, Turkey applies additional customs duty to least development countries group (Group 5) for fur garments and fur goods.

The additional customs duty for fur garments and products is 30%.

Table 53: Additional customs duty for HS 43 tariff heading by country groups, 2018

HS Code Tariff Codes (four digits)

Additional Customs Duty (%)

Country groups

1 2 3

4

8 5 6 7

4301 0 0 0 0 0 0 0

4302 0 0 0 0 0 0 0

4303 0 0 0 30 30 30 30

4304 0 0 0 30 30 30 30

Source: Ministry of Economy, Import regime 2018

Table 54: Total customs duty for HS 43 with additional tax by country groups, 2018

HS Code Tariff Codes (four digits)

Total import charges with additional customs duty (%)

Country groups

1 2 3

4

8 5 6 7

4301 0 0 0 0 0 0 0

4302 0 0 0 0 0 0 32.2-32.7

4303 0 0 0 30 30 30 33.7

4304 0 0 0 30 30 30 33.2

Source: Ministry of Economy, Import regime 2018

IBS 106

6.1.4 HS 64– Footwear

As underlined in the introduction of this section Turkey has started to apply additional customs duty first in footwear sector as of August 2014. In three to five years, the sector experts and associations expected 40% decrease in import of footwear products with the introduction of additional customs duty in 2015. Between 2015 and 2017 the decrease in Turkey’s footwear imports (categorized under HS 64) was around 18% in value terms. The sector experts are expecting continue in footwear imports in the following years.

The customs duty by sub-tariff lines of HS 64 tariff heading is as follows by the beginning of 2018.

Table 55: Customs duty for HS 64 tariff heading by country groups, 2018

HS Code Tariff Codes (four digits)

Customs Duty (%)

Country groups

1 2 3

4

8 5 6 7

6401 0 0 8.5 0 0 11.9 17

6402 0 0-6.3 4.3-11.3 0 0 11.9 16.8-17.0

6403 0 0-3.0 0-4.0 0 0 1.5-4.5 5.0-8.0

6404 0 0-6.3 8.5-11.3 0 0 11.9 16.9-17.0

6405 0 0 0-11.3 0 0 0-11.9 3.5-17

6406 0 0 0 0 0 0 3

Source: Ministry of Economy, Import regime 2018

Turkey has been applying customs duty for South Korea, Singapore and Iran in addition to Group 7 and Group 8 country groups for footwear imports.

The additional customs duties are applied for Group 5-6-7 and 8 country groups. The additional customs duty is 50% for HS 6401, HS 6403, and HS 6405 groups and 30% for HS 6402, HS 6404 groups. For semi-finished uppers and soles as well as parts of footwear the additional customs duty was 20%, which was 10% at the initial decree.

Table 56: Additional customs duty for HS 64 tariff heading by country groups, 2018

HS Code Tariff Codes (four digits)

Additional Customs Duty (%)

Country groups

1 2 3

4

8 5 6 7

6401 0 0 0 50 50 50 50

6402 0 0 0 30 30 30 30

6403 0 0 0 50 50 50 50

6404 0 0 0 30 30 30 30

6405 0 0 0 50 50 50 50

6406 0 0 0 20 20 20 20

Note: for 30% additional customs duty tariff lines the minimum additional customs duty is $3 per pairs and for %50 tariff lines $5 per pairs. Source: Ministry of Economy, Import regime 2018

Regardless of the customs duty calculated, if the 30% additional customs duty is less than $3 per pairs than a minimum fix customs duty of $3 per pairs to be applied for tariff

IBS 107

lines of 30% additional customs duty. The fixed customs duty is $5 per pairs for the tariff lines of 50% additional customs duty.

Table 57: Total import charges for HS 64 with additional customs duty, 2018

HS Code Tariff Codes (four digits)

Total import charges with additional customs duty (%)

Country groups

1 2 3

4

8 5 6 7

6401 0 0 8.5 50 50 61.9 67

6402 0 0-6.3 4.3-11.3 30 30 41.9 46.8-47.0

6403 0 0-3.0 0-4.0 50 50 51.5-54.5 55.0-58.0

6404 0 0-6.3 8.5-11.3 30 30 41.9 46.9-47.0

6405 0 0 0-11.3 50 50 50.0-61.9 53.5-67.0

6406 0 0 0 20 20 20 23

Note: for 30% additional customs duty tariff lines the minimum additional customs duty is $3 per pairs and for %50 tariff lines $5 per pairs. Source: Ministry of Economy, Import regime 2018

There is no need for a special import document to import shoes. Any natural person or legal person who has a tax number can carry out the import transactions.

IBS 108

ANNEXES

IBS 109

Annex I Top 100 tanneries in Turkey

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

1 Iskefe Deri Istanbul, Bolu, Bursa

T: +90 216 394 02 72 F: +90 216 394 02 70

www.iskefe.com.tr info@iskefe.com.tr

Bulut Kargın Import Specialist bulutkargin@iskefe.com.tr 349

2 Sepiciler Çaybaşi Deri

Izmir T: +90 232 850 50 00 F: +90 232 850 50 92

www.sepiciholding.com info@sepiciholding.com

Metin Bengisu Foreign Trade Manager

metin.bengisu@sepici.com.tr 320

3 Şen Deri -Corlu

Tekirdag, Uşak

T: +90 212 639 78 50 F: +90 212 639 78 59

www.senderi.com.tr senderi@senderi.com.tr

Reyhan Sever Foreign Trade Manager

reyhan.sever@senderi.com.tr 205

4 Uyguner Deri Istanbul T: +90 216 394 15 47 F: +90 216 394 15 51

www.uyguner.com.tr uyguner@uyguner.com

Hasan Çamoglu Import Manager hasan@uyguner.com.tr 155

5 Rodeo Deri Sanayi

Izmir T: +90 232 489 15 00 F: +90 232 489 17 09

www.savranoglugroup.com Ahmet Kandemir Import-Export Manager

ahmet.kandemir@savranoglu.com 151

6 Gündüz Kürk - Corlu

Tekirdag T: +90 282 686 68 36 F: +90 282 686 31 61

www.gunduzgroup.com.tr gg@gunduzgroup.com.tr

Murat Kardaş Import Manager gg@gunduzgroup.com.tr 149

7 Cevahir Deri - Tuzla

Istanbul T: +90 216 394 05 40 F: +90 216 394 05 44

www.cevahirderi.com

Gamze Kartal Serkan Cevahircioglu

Import Department

gamzekartal@cevahirderi.com serkan@cevahirderi.com

135

8 Yilbay Deri Tekirdag T: +90 212 416 07 10 F: +90 212 416 07 24

www.yildizderi.com.tr info@yildizderi.com.tr

Hatice Dülger Import Director haticedulger@yildizderi.com.tr 120

9 Prima Deri Istanbul T: +90 216 394 17 65 F: +90 216 394 20 29

www.primaderi.com.tr prima@primaderi.com.tr

Suat Haşim Import-Export Specialist

suat@primaderi.com.tr 107

10 Teknofin Deri Suni Deri

Istanbul T: +90 212 771 55 10 F: +90 212 771 55 12

www.teknofin.net teknofin@teknofin.net

Ekrem Şahinler Foreign Trade Manager

ekrem.sahinler@teknofin.net 102

11 Deri 2000 Izmir T: +90 232 842 67 67 F: +90 232 842 64 32

www.deri2000.com Bugra Turan Foreign Trade Manager

zeytin@deri2000.com 99

IBS 110

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

12 Uşak Cevahir Deri

Usak T: +90 276 234 02 74 www.usakcevahirderi.com bilgi@usakcevahirderi.com

Yasin Tan Import Director yasin@usakcevahirderi.com 95

13 Yeşiller Deri Sanayi

Tekirdag T: +90 282 686 21 82 F: +90 282 686 33 76

www.yesillerderi.com.tr yesillerderi@yesillerderi.com.tr

Sema İsmail Import-Export Responsible

info@yesillerderi.com.tr 90

14 Desa Deri Çorlu

Tekirdag T: +90 212 473 18 00 F: +90 212 697 97 98

www.desa.com.tr Bülent As Import Manager bulent.as@desa.com.tr 84

15 Platin Deri Tekirdag T: +90 282 686 21 62 F: +90 282 686 21 63

www.platinderi.com.tr platin@platinderi.com.tr

Yigit Kütük Import-Export Specialist

yigit@platinderi.com.tr 79

16 Lider Deri Izmir T: +90 232 376 81 97 F: +90 232 376 80 73

www.liderderi.com Ebru Dengiz Finance Manager ebrud@liderderi.com 71

17 Persu Suni Deri

Gaziantep T: +90 342 337 46 60 F: +90 342 337 46 63

www.persuderi.com.tr info@persuderi.com.tr

Orhan Potuk Partner info@persuderi.com.tr 71

18 Altinok Deri Izmir T: +90 232 441 25 74 F: +90 232 425 89 09

www.altinok.com.tr info@altinok.com.tr

Selçuk Büncü Import-Export Specialist

info@altinok.com.tr 70

19 Bir-Tek Deri Bolu T: +90 374 311 25 52 F: +90 374 320 10 20

www.birtekderi.com birtekderi@windowslive.com

İbrahim Başaran General Manager

birtekderi@windowslive.com 68

20 Mader Deri Istanbul T: +90 216 394 14 18 F: +90 216 414 14 20

www.matras.com info@mader-tanning.com

not disclosed info@mader-tanning.com 67

21 Arpel Deri Giyim

Tekirdag T: +90 212 582 25 21 F: +90 212 558 09 59

www.arpelderi.com info@arpelderi.com

Mehmet Esen Import-Export Specialist

mehmet@arpelderi.com 66

22 Ensari Deri Kürk

Tekirdag T: +90 212 679 02 05 F: +90 212 582 24 82

www.ensarideri.com info@ensarideri.com

Sevda Aksoy Import-Export Specialist

sevda@ensarideri.com 65

23 Aydemir Deri Bursa T: +90 224 487 00 31 F: +90 224 487 00 34

www.aydemirderi.com info@aydemirderi.com

Deniz Aydemir Import Specialist denizaydemir@aydemirderi.com 61

24 Derimsan Deri

Istanbul T: +90 216 394 16 17 info@derimsan.com

Kıymet (surname not disclosed)

Import Specialist info@derimsan.com 61

25 Toprak Kurk Deri

Tekirdag T: +90 282 686 73 73 F: +90 282 686 73 77

www.toprakkurk.com info@toprakkurk.com

Ebru Fatma Özberk Import Specialist ebru@toprakkurk.com 61

IBS 111

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

26 Agartioglu Deri

Izmir T: +90 232 328 19 66 F: +90 232 328 19 65

www.agartioglu.com.tr info@agamoda.com.tr

Berkant Öztuna Marketing Manager

info@agamoda.com.tr 59

27 Sevimli Deri Izmir T: +90 232 842 62 10 F: +90 232 842 62 09

www.sevimlideri.com info@sevimlideri.com

Funda Şensoylar Marketing Specialist

funda@sevimlideri.com 59

28 Göryakinlar Deri

Istanbul T: +90 216 394 11 04 F: +90 216 394 11 07

www.goryakinlar.com.tr goryakinlar@dsl.ttmail.com

Özcan Kalıntaş Import Specialist goryakinlar@gmail.com 58

29 Alpaka Deri Tekirdag T: +90 282 686 71 80 F: +90 282 686 23 28

www.alpakaderi.com Barış Pedük Finance Manager baris@alpakaderi.com 57

30 Çubukçuoglu Deri

Istanbul T: +90 216 394 15 00 F: +90 216 394 14 99

www.cubukcuoglu.com.tr info@cubukcuoglu.com.tr

Sevgi Çevik Finance Manager sevgi@cubukcuoglu.com.tr 55

31 Kadri Ergenç Deri

Usak T: +90 276 234 01 73 F: +90 276 234 01 73

www.ozergencderi.com Sadri Ergenç Partner ergencderi@hotmail.com 55

32 Kopuzlar Deri Istanbul T: +90 216 394 12 24 F: +90 216 394 12 29

www.kopuzlar.com kopuzlar@kopuzlar.com

Barış Kopuz Partner baris@kopuzlar.com 55

33 Beyder Deri Tekirdag T: +90 282 686 18 43 F: +90 282 686 18 46

www.beyderderi.com.tr beyder@beyderderi.com.tr

Turgut Yenici General Manager

beyder@beyderderi.com.tr 53

34 Rg Deri Tekirdag T: +90 212 415 55 22 F: +90 212 582 10 13

www.rgderi.com rgderi@rgderi.com

Evren (surname not disclosed)

Foreign Trade Specialist

ofis@rgderi.com 52

35 Güçlü Deri Tekstil

Istanbul T: +90 216 394 24 81 F: +90 216 394 08 90

www.guclu-group.com info@guclu-group.com

Süleyman Elver Foreign Trade Specialist

export@guclu-group.com 51

36 Interteks Deri Tekirdag T: +90 212 416 07 10 F: +90 212 416 07 24

www.yildizderi.com.tr info@yildizderi.com.tr

Hatice Dülger Import Director haticedulger@yildizderi.com.tr 51

37 Aslan Deri Tekirdag T: +90 282 686 23 17 F: +90 282 686 11 45

www.aslanderi.com info@aslanderi.com

Ayvaz Aslan Partner aslangroup01@hotmail.com 50

38 Onspell Deri Tekirdag T: +90 212 679 02 05 F: +90 212 582 24 82

www.ensarideri.com info@ensarideri.com

Sevda Aksoy Import-Export Specialist

sevda@ensarideri.com 50

39 May Deri Istanbul T: +90 216 394 13 93 F: +90 216 394 00 16

www.mayderi.com.tr tannery@mayderi.com.tr

Korhan Dalgıç Finance Manager tannery@mayderi.com.tr 49

IBS 112

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

40 Öz-Yüksel Deri

Istanbul T: +90 216 394 10 63 F: +90 216 394 10 66

www.ozyuksel.com.tr info@ozyuksel.com.tr

Anıl Şen Partner anil@ozyuksel.com.tr 49

41 Seyhan Deri -Corlu

Tekirdag T: +90 212 679 74 62 F: +90 212 679 74 64

www.marmaraderi.com info@marmaraderi.com

Neşe Şen Import-Export Specialist

nese@marmaraderi.com 49

42 Md Deri Usak T: +90 276 234 01 88 www.mddabbagh.com info@mdddabbagh.com

Karina Hayzullinah Import-Export Specialist

marketing@mdgroup.co 48

43 Berkem Kurk Deri

Istanbul T: +90 216 394 10 29 F: +90 216 394 10 28

www.berkemkurk.com info@berkemkurk.com

Talip Yolcu Partner talip@ertok.com.tr 47

44 Volder Deri Tekirdag T: +90 282 686 43 94 F: +90 282 686 43 78

Tuncay Kaplan Partner volderderi1@hotmail.com 47

45 Adnan Deri Istanbul T: +90 216 394 16 84 F: +90 216 394 16 86

www.adnanderi.com.tr info@adnanderi.com.tr

Haldun Yüksel Partner info@adnanderi.com.tr 45

46 As Erdogan Deri-Ergene

Tekirdag T: +90 212 546 94 90 F: +90 212 546 94 80

www.erdoganderi.com.tr info@erdoganderi.com.tr

Taha (surname not disclosed)

Import Specialist taha@erdoganderi.com.tr 45

47 Çetin Deri Bursa

Bursa T: +90 224 487 01 50 F: +90 224 487 01 00

www.cetinderi.com cetinderi@cetinderi.com

Kuddusi Çetin Owner cetinderi@cetinderi.com 45

48 Kazim Süren Deri

Istanbul T: +90 216 394 81 73 F: +90 216 394 81 77

www.kazimsurenderi.com info@kazimsurenderi.com

Füsun Ateş Finance Manager fusun@kazimsurenderi.com 45

49 Dabbagh Deri Usak T: +90 276 234 01 88 www.mddabbagh.com info@mdddabbagh.com

Karina Hayzullinah Import-Export Specialist

marketing@mdgroup.co 44

50 Lifli Rulo Levha

Istanbul T: +90 216 394 18 18 F: +90 216 394 18 19

www.liflirulo.com info@liflirulo.com

not disclosed export@liflirulo.com 44

51 Desmo Kürk Tekirdag T: +90 282 686 71 50 F: +90 282 686 48 77

www.desmokurk.com.tr info@desmokurk.com.tr

Onuç Çelik General Manager

onur_kurk@hotmail.com 43

52 Enes Deri -Usak

Usak T: +90 212 665 70 55 F: +90 212 679 96 63

www.enesderi.com.tr enesderi@hotmail.com

Kadir Güçlü Import-Export Specialist

enesderi@hotmail.com 43

53 Ahmet Kanay Deri

Usak T: +90 276 234 03 34 F: +90 276 234 03 34

www.anilderi.com info@anilderi.com

İlker Manas Import-Export Specialist

ilker@anilderi.com 42

IBS 113

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

54 Simena Kürk Deri

Tekirdag T: +90 282 686 32 00 F: +90 282 686 33 00

not disclosed 42

55 Albes Dericilik Istanbul T: +90 216 394 24 25 not disclosed 41

56 Ozderi Dericilik

Istanbul, Balıkesir

T: +90 216 394 13 80 F: +90 216 394 13 79

www.ozderi.com ozderi@ozderi.com

Amir Eşter Import-Export Specialist

ozderi@superonline.com 40

57 Birdallar Deri Tekirdag T: +90 282 686 20 75 F: +90 282 686 19 03

www.birdallar.com birdallar@birdallar.com

Serdar Birdal Partner birdallar@birdallar.com 39

58 Ikon Deri Sanayi

Tekirdag T: +90 282 686 61 02 F: +90 282 686 61 03

www.ikonderi.com info@ikonderi.com

Musa Şahin Partner info@ikonderi.com 39

59 Order Deri Bolu T: +90 374 311 77 73 F: +90 374 311 77 74

not disclosed 39

60 Furnova Kurk Tekirdag T: +90 212 547 90 93 F: +90 212 547 90 83

www.furnova.com.tr info@furnova.com.tr

Tayfun Polat Import-Export Specialist

ofis@furnova.com.tr 38

61 Alderi Istanbul T: +90 216 394 25 79 F: +90 216 394 06 24

www.alderi.com.tr alderi@alderi.com.tr

Turgay Abdullah Partner alderi@alderi.com.tr 37

62 Aspells Deri Tekirdag T: +90 282 686 59 01 F: +90 282 686 58 01

www.aspells.com info@aspells.com

not disclosed 36

63 A.Z.D. Deri Izmir T: +90 232 842 62 55 F: +90 232 842 62 37

Meral Ugur Import-Export Specialist

a.z.d.deri@hotmail.com 35

64 Emelda Deri -Corlu

Tekirdag T: +90 212 546 42 43 F: +90 212 664 17 91

www.emelda.com.tr emelda@emelda.com.tr

Hülya Ardalı Procurement hulyaardali@emelda.com.tr 35

65 Halici Deri Manisa T: +90 236 714 35 78 F: +90 236 714 35 78

www.halicideri.com not disclosed 35

66 Beysa Deri Tekirdag T: +90 282 686 36 48 F: +90 282 686 73 44

www.beysaderi.com beysa@beysaderi.com

Sinan Kanber Import-Export Specialist

beysa@beysaderi.com 34

67 Denizler Deri Balikesir T: +90 212 546 23 23 F: +90 212 582 04 21

www.denizlerleather.com Erdem Özden Finance Manager info@denizlerderi.com 34

IBS 114

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

68 Finitek Deri Istanbul T: +90 216 394 11 55 Feride Temel Import-Export Specialist

feridetemel@finitek.com 34

69 Nigiz Deri Tekirdag T: +90 282 686 46 06 F: +90 282 686 39 04

Koray Nigiz Partner koray_nigiz@hotmail.com 34

70 Vaketa Dericilik

Bursa T: +90 224 487 02 10 www.vaketa.com.tr vaketa@vaketa.com.tr

Ercüment Duran Import-Export Specialist

e.duran@vaketa.com.tr 33

71 Hira Deri -Usak

Usak T: +90 212 665 98 21 F: +90 212 665 99 70

www.hiraderi.com info@hiraderi.com

not disclosed 32

72 Çelikoglu Dericilik -Corlu

Tekirdag T: +90 212 582 34 34 www.derisarayi.com Ali Çelikoglu Partner derisarayi@hotmail.com 31

73 Efeler Deri Bolu T: +90 374 311 89 64 F: +90 374 311 89 65

www.efelerderi.com.tr efelerderi@hotmail.com.tr

30

74 Ensar Deri Balikesir T: +90 212 679 17 33 F: +90 212 664 90 38

www.ensarderi.com info@derayderi.com

Kadir Aytekin Import Specialist kadir@derayderi.com 30

75 Şahin Baykal-Baykal Deri

Usak T: +90 276 234 02 69 Yusuf Çuhadar Plenipotentiary yusufcuhadar64@hotmail.com 29

76 Soydan Deri Tekirdag T: +90 212 679 47 47 F: +90 212 679 46 56

www.soydan.com Cenk Soydan Partner accounts@soydan.com 29

77 Cihan Deri Istanbul T: +90 216 394 18 60 F: +90 216 394 10 38

www.cihanderi.com info@cihanderi.com

Kübra Atay Foreign Trade Specialist

info@cihanderi.com 28

78 Lale Deri Balikesir T: +90 266 762 59 95 F: +90 266 772 83 90

not disclosed 28

79 Atalay Deri Usak T: +90 276 234 00 22 F: +90 276 234 00 54

www.atalayderi.com.tr atalayderi@hotmail.com

not disclosed 27

80 Calisganlar Deri

Bolu T: +90 374 311 77 24 F: +90 374 311 51 97

www.calisganlarderi.com.tr info@calisganlarderi.com.tr

Hüseyin Özmen Foreign Trade Specialist

calisganlar@hotmail.com 27

IBS 115

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

81 Güven Karaca Deri Tuzla

Istanbul T: +90 216 394 22 66 F: +90 216 394 02 24

www.guvenleather.com Nursemin Şen Foreign Trade Specialist

nursemin.sen@guvenleather.com 27

82 Baykallar Deri -Corlu

Tekirdag T: +90 212 510 88 73 F: +90 212 510 88 75

www.baykallargroup.com info@baykallargroup.com

Yalçın (surname not disclosed)

Foreign Trade Specialist

yalcin@baykallargroup.com 25

83 Caliskanoglu Deri

Bolu T: +90 374 311 91 28 F: +90 374 311 91 27

Şerafettin Çalışkan Partner caliskanogluderi@hotmail.com 25

84 Kupon Grup Deri

Bursa T: +90 232 436 28 32 F: +90 232 436 51 27

Görkem Güler Foreign Trade Specialist

info@kuponleather.com 25

85 Özküplemez Deri

Usak T: +90 276 234 01 96 F: +90 276 234 03 96

www.egedamladeri.com info@egedamladeri.com

Ali Türkücü Foreign Trade Specialist

info@egedamladeri.com 25

86 Fazlioglu Deri Bolu T: +90 374 311 6376 www.fazliogluderi.com.tr fazlioglu@fazliogluderi.com.tr

not disclosed 24

87 Kursunoglu Deri

Balikesir T: +90 212 664 69 70 F: +90 212 679 98 98

www.kursunoglu.com.tr Mustafa Kurşunoglu Partner mustafa@kursunoglu.com.tr 24

88 Orkir Deri -Usak

Usak T: +90 276 234 03 09 F: +90 276 234 03 43

Hakan (surname not disclosed)

Foreign Trade Specialist

orkirderi@hotmail.com 24

89 Derisay Deri Balikesir T: +90 212 679 2706 F: +90 212 547 1752

www.derisay.com Emrah Bölükbaşı Foreign Trade Specialist

derisay@derisay.com 23

90 Yateks Yakut Tarim

Izmir T: +90 232 842 62 82 www.yateks.com.tr info@yateks.com.tr

Pınar Keçeci Import-Export Specialist

pinar@yateks.com.tr 23

91 Ersel Deri Balikesir T: +90 212 665 87 20 www.erselleather.com info@erselleather.com

Ersel Kar Company Owner erselderi@hotmail.com 22

92 Işiksan Deri -Usak

Usak T: +90 212 416 4570 F: +90 212 416 37 43

www.isiksanderi.com Seyit Işık Company Owner info@isiksanderi.com 22

93 Kuzey Deri Istanbul T: +90 212 697 38 81 Bülent (surname not disclosed)

Partner kuzey_deri@hotmail.com 22

94 Sembol Deri Ve Ayakkabi

Istanbul T: +90 212 576 18 73 F: +90 212 576 18 75

Emre Muratoglu Finance Manager emremuhasebe31@gmail.com 22

IBS 116

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

95 Aka Deri Istanbul T: +90 538 824 78 88 F: +90 212 430 60 83

www.akaderi.com.tr info@akaderi.com.tr

Hasan Aka Partner info@akaderi.com.tr 21

96 Atay Deri Usak T: +90 276 234 00 52 www.atayderi.com info@atayderi.com

not disclosed 21

97 Bekir Güzeller-Bg Deri

Usak T: +90 276 234 00 25 21

98 Ihsan Yildiz Deri

Bolu T: +90 374 311 32 77 F: +90 374 311 50 98

Yusuf Yıldız Partner yildizderi1@hotmail.com 21

99 Kose Deri Bursa T: +90 224 487 00 47 F: +90 224 487 00 49

Hasan Köse Partner hasankosederi@hotmail.com 21

100

Uşak Selim Deri (Former Taşcanlar Deri)

Usak T: +90 276 234 00 85 www.tascanderi.com Eyüp Taşcan Partner usakselimderi@gmail.com 21

IBS 117

Annex II Top 100 footwear manufacturers

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

Turnover* $Mn, 2017

1 Gezer Istanbul, Bolu

T: +90 212 886 51 52 F: +90 212 886 51 55

www.gezer.com Korhan Kürklü Deputy General Manager

kkurklu@gezer.com 2500 >250

2 Flo Istanbul, Sanliurfa

T: +90 212 446 22 88 F: +90 212 446 22 55

www.flo.com.tr info@flo.com.tr

Dursun Rençber Cüneyt Celbiş

R&D and BDM R&D and BDM

Dursun.rencber@flo.com.tr Cuneyt.celdis@flo.com.tr

1500 150-200

3 YDS Ankara T: +90 312 398 12 13 F: +90 312 398 08 78

www.ydsboots.com info@yakupoglu.com.tr

Can Kahraman Board Member info@yakupoglu.com.tr 1200 100-150

4 Kavsan (Greyder)

Çorum T: +90 212 495 4283 www.greyder.com Şükran Aydın Purchasing Manager

sukran.aydin@greyder.com 1200 100-150

5 Çiftçiler Ayakkabi

Istanbul T: +90 212 445 67 67 F: +90 212 446 34 03

www.ciftcilerayakkabi.com.tr info@conever.com.tr

Serdar Akay Manager serdar@conever.com.tr 524 40-60

6 Muya Istanbul T: +90 212 855 73 73 www.muya.com info@muya.com

Erkan Yavuztürk

Purchasing Manager

planlama@muya.com 475 40-60

7 Özdallar Ayakkabi

Istanbul, Malatya

T: +90 212 671 24 45 F: +90 212 671 24 47

www.marcomen.com.tr info@marcomen.com.tr

Cem Ateş Purchasing Manager

cem@marcomen.com.tr 400 40-60

8 Akinal Ayakkabicilik

Gaziantep T: +90 342 337 43 32 F: +90 342 337 43 31

www.akinal.com.tr akinal@akinal.com.tr

Fatih Palta Foreign Trade Manager

sales@akinal.com.tr 392 40-60

9 Yeşil Kundura Tekirdag T: +90 212 709 83 00 www.yesil.com.tr info@yesil.com.tr

Serkan Aykutlu Purchasing Manager

info@yesil.com.tr 292 20-35

10 Mekap Trabzon T: +90 212 853 94 96 F: +90 212 853 94 99

www.mekap.com.tr Erdem Yılmaz Purchasing Manager

erdemyilmaz@mekap.com.tr 287 20-35

11 Ceyo Istanbul T: +90 212 432 94 94 F: +90 212 432 95 95

www.ceyo.com.tr Engin Ege Purchasing Manager

ceyo@ceyo.com.tr 275 20-35

12 Tristep Çorum T: +90 364 250 14 14 www.tristep.com.tr iletisim@tristep.com.tr

Fatma Demir Administrative Manager

fatma.demir@tristep.com.tr 202 20-35

13 Ersin Ayakkabi

Istanbul T: +90 212 475 99 14 F: +90 212 475 99 18

www.ersinshoes.com Esen Yanpınar Export Sales Representative

esen.yanpinar@ersinshoes.com 179 20-35

IBS 118

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

Turnover* $Mn, 2017

14 Macro Ayakkabi

Istanbul T: +90 212 858 02 12 F: +90 212 858 02 65

www.macro.com.tr scooter@macro.com.tr

Gökberk Koçur Foreign Trade Manager

gokberk@macro.com.tr 176 20-35

15 Alkan Ayakkabi

Istanbul T: +90 444 2 804 F: +90 212 637 7595

www.forelli.com.tr destek@forelli.com.tr

Cem Ahmet Foreign Trade Manager

cemahmet@forelli.com.tr 175 20-35

16 Panda Ayakkabicilik

Istanbul T: +90 212 886 94 50 F: +90 212 886 94 54

Osman Çalışkan

Procurement Manager

cerenacar@pandaayakkabi.com 174 20-35

17 Hayrettin Ögünmez

Konya T: +90 444 8 968 F: +90 332 346 45 46

www.wanetti.com.tr wanetti@wanetti.com.tr

Osman Tera Procurement Manager

osmantera@hotmail.com 166 10-19

18 Zimaro Ayakkabıcılık

Bartin T: +90 378 233 26 27 F: +90 378 233 29 92

Okan Ulaş Sales & Marketing

o.ulas@zimaropro.com 166 10-19

19 Nursace Istanbul T: +90 212 428 69 69 F: +90 212 428 66 10

www.nursace.com info@nursace.com

Halim Özdemir Foreign Trade Manager

ozdemir@nursace.com 155 10-19

20 Kavasoglu Ayakkabi

Istanbul T: +90 212 886 48 00 F: +90 212 886 48 29

www.kavasogluayakkabi.com info@kavasogluayakkabi.com

Gülümser Özdemir

Procurement Manager

gulumser@kavasogluayakkabi.com 144 10-19

21 Samsun Akin Rejenere

Samsun T: +90 362 266 57 00 F: +90 362 266 57 07

www.arisanlastik.com.tr arisan@arisanlastik.com.tr

Mesut Serdar Finance and Procurement

mesut.serdar@arisanlastik.com.tr 144 10-19

22 Özkan Kundura

Istanbul T: +90 212 522 38 39 F: +90 212 516 62 79

www.ozkanshoes.com info@ozkanshoes.com

Arif Özkan Partner info@ozkanshoes.com 140 10-19

23 Topbaş Kundura

Manisa T: +90 236 266 43 88 F: +90 236 266 40 24

www.topbas.com.tr info@topbas.com.tr

Ahmet Topbaş Partner ahmet@topbas.com.tr 127 10-19

24 Aslanlar Ayakkabi

Istanbul T: +90 212 549 01 50 F: +90 212 549 94 33

www.letoonsport.com info@letoonsport.com

Mehmet Sıddık Demir

Foreign Trade Manager

msdemir@letoonsport.com 121 10-19

25 Özerler Ayakkabi

Afyon T: +90 272 217 66 66 www.ozerler.com info@ozerler.com

Mehmet Özer Plant Manager mehmet@irarubber.com 121 10-19

26 Efe Ayakkabi Istanbul T: +90 212 495 27 81 F: +90 212 495 27 83

www.efeayakkabi.com.tr

Mehmet Ali Meriç

General Manager mehmetalimeric@efeayakkabi-tr.com

119 10-19

27 Ender Plastik Gaziantep T: +90 342 357 06 60 F:+90 342 357 06 63

www.enderplastik.com.tr info@enderplastik.com.tr

İskender Babacan

Finance Manager info@enderplastik.com.tr 118 10-19

IBS 119

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

Turnover* $Mn, 2017

28 Emek Lastik Plastik

Samsun T: +90 362 266 62 22 F: +90 362 266 66 99

www.emeklastik.com.tr emek@emeklastik.com.tr

112 10-19

29 Anatomik Ayakkabi

Istanbul T: +90 212 615 45 52 F: +90 212 578 45 78

Orhan Karadaş Finance Manager info@anatomikayakkabi.com 110 10-19

30 Poletto Deri Istanbul T: +90 212 637 79 61 F: +90 212 637 79 62

Yavuz Altınok Procurement Manager

satinalma@polettoshoes.com 109 10-19

31 Trumar Ayakkabi

Istanbul T: +90 212 549 00 98 F: +90 212 549 47 59

www.trumar.com.tr Cengiz Kurt Procurement Manager

cengizkurt@trumar.com.tr 109 10-19

32 Oruç Etem Ayakkabi (ETOR)

Istanbul T: +90 212 517 50 24 F: +90 212 517 20 59

www.etor.com.tr info@etor.com.tr

Ahmet Etem Partner info@etor.com.tr 108 10-19

33 Nevzat Onay Ayakkabi

Izmir T: +90 232 479 64 87 F: +90 232 479 12 10

www.nevzatonay.com Erhan Onay Partner erhan@nevzatonay.com 107 10-19

34 Polat Ayakkabi

Istanbul T: +90 212 671 61 60 F: +90 212 671 60 37

www.oggi.com.tr Fevzi Alpaydın Sales Manager fevzi@oggi.com.tr 106 10-19

35 Çigir Kimya Tekirdag T: +90 282 655 50 50 F: +90 282 655 59 90

www.silvershoecare.com silver@new-silver.com

Cemile Selen Procurement Specialist

cemile.selen@silvershoecare.com 105 10-19

36 Depar Group Istanbul T: +90 212 889 25 25 F: +90 212 886 41 71

www.depargroup.com.tr info@depargroup.com.tr

Kadri Dinç Procurement Specialist

info@depargroup.com.tr 101 10-19

37 Opak Ayakkabi

Gaziantep T: +90 342 337 11 50 F: +90 342 337 17 52

www.opak.com.tr opak@opak.com.tr

Mustafa Öztürk

Procurement Specialist

mustafa.ozturk@asnonwovens.com.tr

99 10-19

38 Mustafa Koç Ayakkabi

Izmir T: +90 232 281 65 70 F: +90 232 281 65 67

İbrahim Çakıcı Procurement Specialist

ibrahim.cakici@marcha.com.tr 98 10-19

39 Öztürk Terlik Izmir T: +90 232 436 00 79 F: +90 232 436 00 79

www.lorenayakkabi.com info@lorenayakkabi.com

98 10-19

40 Eresin Ayakkabi

Istanbul T: +90 212 656 60 06 F: +90 212 656 60 06

www.conteyner.com info@conteyner.com

97 10-19

41 Doguş Suni Deri

Bilecik T: + 90 228 216 04 44 F: + 90 228 216 04 47

www.dogussunideri.com.tr info@dogussunideri.com.tr

Metin Unver Procurement Manager

metinunver@dogussunideri.com.tr 96 10-19

IBS 120

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

Turnover* $Mn, 2017

42 Seray Ayakkabi

Balikesir T: +90 266 281 12 15 www.terlikseray.com info@terlikseray.com

Avni Özbıçakçı Finance Specialist

muhasebe@carleverde.com.tr 95 10-19

43 Soylu Terlik Gaziantep T: +90 342 290 22 22 F: +90 342 290 22 25

www.soyluterlik.com info@soyluterlik.com

91 10-19

44 Koşak Ayakkabicilik

Gaziantep T: +90 342 337 31 52 F: +90 342 337 31 55

www.kosak.com kosak@kosak.com.tr

Ugur Abbas Koşak

Company Owner kosak@kosak.com.tr 90 10-19

45 Urgan Istanbul T: +90 212 886 81 84 F: +90 212 886 81 88

www.urgan.com.tr info@urgan.com.tr

Kayhan Kanbolat

Procurement Manager

kayhan.kanbolat@urgan.com.tr 90 10-19

46 Sultani Ayakkabi

Istanbul 88 10-19

47 Sevinçer Ayakkabicilik

Istanbul 85 10-19

48 Erbay Pazarlama

Istanbul 84 10-19

49 Venüs Ayakkabicilik

Istanbul 81 5-9

50 Alpino Istanbul 80 5-9

51 Çagdaş Ayakkabicilik

Bartin 80 5-9

52 Koç Kundura Izmir 79 5-9

53 Zensan Istanbul 78 5-9

54 Kristal Ayakabıcılık

Gaziantep T: +90 342 238 34 56 F: +90 342 238 13 43

www.relaxshoes.com.tr info@relaxshoes.com.tr

Deniz Paksoy Partner info@relaxshoes.com.tr 76 5-9

55 Denizler Ayakkabi

Istanbul 75 5-9

IBS 121

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

Turnover* $Mn, 2017

56 Tmt Tibbi Medikal

Izmir 73 5-9

57 Akar Deri Ayakkabi

Istanbul T: +90 212 637 82 70 F: +90 212 637 82 71

www.akarshoes.com info@akarayakkabi.com

Dogan Özünal Sales & Marketing

info@akarayakkabi.com 72 5-9

58 Beta Ayakkabi

Istanbul 71 5-9

59 Lüks Ayakkabicilik

Gaziantep T: +90 342 235 16 43 F: +90 342 235 16 45

www.luksayakkabbi.com.tr Hakan Çelik Partner hakan@luksayakkabbi.com.tr 70 5-9

60 Eser Ayakkabicilik

Istanbul 69 5-9

61 Basha Ayakkabicilik

Istanbul 67 5-9

62 Damla Ayakkabi

Istanbul 66 5-9

63 Desi Deri Ayakkabi

Istanbul 66 5-9

64 Dona Ayakkabicilik

Kirklareli 66 5-9

65 Ortaklar Ayakkabicilik

Istanbul 66 5-9

66 Pati Ayakkabicilik

Istanbul T: +90 212 549 35 27 F: +90 212 549 36 23

www.pati.com.tr info@pati.com.tr

Bahadır Berkün Sales & Marketing

bahadir@pati.com.tr 66 5-9

67 Alaz Kundura Istanbul 64 5-9

68 Çagdaş Adam Ayakkabi

Istanbul 64 5-9

69 Özdallar Ayakkabi

Istanbul 64 5-9

IBS 122

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

Turnover* $Mn, 2017

70 Poli Aabo Plastik

Gaziantep 64 5-9

71 Erfe Ayakkabicilik

Istanbul 63 5-9

72 Sebata Alyasan Kundura

Istanbul 63 5-9

73 Akort Ortopedik

Karabük 61 5-9

74 Bülent Aksin Ayakkabi

Gaziantep 61 5-9

75 Selçuk Kauçuk

Konya 60 5-9

76 El-Di Poliüretan

Gaziantep 59 5-9

77 Rifat Sari Üçel Ayakkabi

Manisa 59 5-9

78 Beha Ayakkabi

Istanbul 58 5-9

79 Lodos Ayakkabi

Istanbul 58 5-9

80 Altinbaş Ayakkabi

Istanbul 57 5-9

81 Öbaş Ayakkabicilik

Istanbul 57 5-9

82 Prend Ayakkabi

Istanbul 57 5-9

83 Kare Ayakkabicilik

Istanbul 56 5-9

IBS 123

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

Turnover* $Mn, 2017

84 Cihan Ayakkabi

Konya 55 5-9

85 Penta Spor Gaziantep 55 5-9

86 Varan Plastik Gaziantep 55 5-9

87 Cabani Ayakkabi

Istanbul T: +90 212 549 29 09 F: +90 212 549 29 13

www.cabani.com.tr Hakan Durmaz Foreign Trade Manager

hakan@cabani.com.tr 54 5-9

88 Demir Makine

Istanbul 54 5-9

89 Güzel Ayakkabi

Izmir 53 5-9

90 Karetta Ayakkabi

Izmir 53 5-9

91 Klas Taban Gaziantep 53 5-9

92 Ulusal Ayakkabi

Istanbul 53 5-9

93 K.B Ayakkabi Istanbul 52 5-9

94 Ladin Ithalat Denizli 52 5-9

95 Sari Vadi Iş Güvenligi

Manisa 52 5-9

96 Sarikaya Ayakkabi (Ali Sarikaya)

Denizli 51 5-9

97 Kolej Suni Deri

Istanbul 51 5-9

IBS 124

# Company name Location Tel / Fax Web / Email Contact person Position Email

# of employees

Turnover* $Mn, 2017

98 Karar Ayakkabicilik

Istanbul 50 5-9

99 Serka Ayakkabi

Istanbul 50 5-9

100 A. Osman Avşar Ayakkabi

Konya 49 5-9

Source: Union of Chambers (TOBB) 2018 Industry database – companies having capacity certificates from Union of Chambers. There are addititonal 517 companies in the list. * Turnover calculation/estimation was made upon footwear production activity of the companies

IBS 125

Annex III Top Turkish footwear distributors

Key footwear retailers & ready wear retailers selling footwear in Turkey, 2016-2017

Footwear retail market share Selling Italian

Company 2016 2017 brands*

1 FLO (Ziylan) 9.4% 10.7% x

2 Adidas Group 4.2% 4.6% 3 LC Waikiki* 2.6% 2.8% 4 Deichmann 2.8% 2.7% x

5 Nike Inc. 2.6% 2.3% 6 Tamer Tanca 2.0% 2.0% xxx

7 Beymen* 1.6% 1.8% xxxx

8 Inci 1.5% 1.5% 9 Boyner* 1.2% 1.5% xxxxx

10 Ayakkabi Dunyasi 1.1% 1.5% x

11 Hotic 1.4% 1.5% 12 Kavsan 1.4% 1.6% 13 Marka Park 1.0% 1.1% xxx

14 Koton 0.6% 0.8% 15 Beta 0.6% 0.8% x

16 Derimod* 0.5% 0.6% x

17 Elle 0.5% 0.6% 18 Ay Marka* 0.5% 0.6% xx

19 Defacto* 0.5% 0.6% 20 Camper Turkey 0.5% 0.5% 21 Ozdilek* 0.3% 0.4% 22 Deriden 0.4% 0.5% xxx

23 Vakko* 0.3% 0.4% xxx

24 Aydınlı* 0.3% 0.4% 25 Desa* 0.3% 0.3% 26 Landmark Group* 0.3% 0.3% 27 Orka (Damat Tween)* 0.3% 0.3% 28 Mavi* 0.2% 0.3% 29 Hugo Boss* 0.2% 0.2% xxx

30 Kigili* 0.1% 0.1%

Total of top 30 39.3% 43.2%

Others 60.7% 56.8%

Total 100.0% 100.0% * x: cheapest segment; xxxxx: high-end segment Source: IBS desk and Internet research, company annual reports and top 100 retailers list by Perapost magazine (January 2018)

IBS 126

# Company name Location Tel / Fax Web / Email Contact person Position Email

1 FLO (Ziylan) Istanbul T: +90 212 446 2288 www.flo.com.tr

Dursun Rençber Cuneyt Celbiş

Men category -R&D and BDM Women category -R&D and BDM

Dursun.rencber@flo.com.tr Cuneyt.celdis@flo.com.tr

2 Adidas Group Istanbul T: +90 212 355 36 00 www.adidas.com.tr Ahmet Yıkar Senior Manager Distribution Center & Purchasing ahmet.yikar@adidas-group.com

3 LC Waikiki Istanbul T: +90 212 675 55 55 www.lcwaikiki.com Omer Ozpolat Footwear Sourcing Manager Omer.ozpolat@lcwaikiki.com

4 Deichmann Istanbul T: +90 212 373 70 00 www.deichmann.com/TR Ercan Uzun Head of Sales Operations Ercan_uzun@deichmann.com

5 Nike Inc. Istanbul T: +90 212 365 04 04 www.nike.com/tr Caner Soytas Sourcing Manager, MEEA caner.soytas@nike.com

6 Tanca Magazacilik

Istanbul T: +90 212 253 40 00 www.kemaltanca.com.tr Yılmaz Yeşilırmak General Manager yilmaz.yesilirmak@tanca.com.tr

7 Beymen Istanbul T: +90 212 335 65 00 www.beymen.com

Burak Turan Funda Mumcuoglu

Men category -Buying Manager Women category -Buying Manager

Burak.turan@beymen.com Funda.mumcuoglu@beymen.com

8 Inci Deri Istanbul T: +90 212 437 81 55 www.incideri.com Hasan Gorkan Supply Chain Manager Hasan.gorkan@incideri.com

9 Boyner Buyuk Magazicilik

Istanbul T: +90 212 335 75 00 www.boyner.com.tr Tamer Gürler Brand Manager Private Label Shoes & Bags Tamer.gurler@boyner.com.tr

10 Ayakkabi Dunyasi Istanbul T: +90 212 465 36 65 www.ayakkabidunyasi.com.tr Mine Akçe Corporate Sales Manager Mine.akce@ayakkabidunyasi.com.tr

11 Hotic Istanbul T: +90 212 294 59 00 www.hotic.com.tr Gökay Atasoy Product Management Director Gokhan.atasoy@hotic.com.tr

12 Kavsan (Greyder) Istanbul T: +90 212 495 42 83 www.greyder.com/ Sukran Aydin Purchasing manager - footwear sukran.aydin@greyder.com

13 Marka Park Istanbul T: +90 212 213 11 11 www.markapark.com

IBS 127

# Company name Location Tel / Fax Web / Email Contact person Position Email

14 Koton Istanbul T: +90 212 331 33 00 www.koton.com Burçin Turgut Buying Manager (Footwear/Saddlery) Burcin.turgut@koton.com.tr

15 Beta Istanbul T: +90 212 671 40 71 www.betashoes.com Lale Çaglayaner Supply Chain Manager lale@betashoes.com

16 Derimod Istanbul T: +90 212 547 16 04 www.derimod.com.tr

Canberk Akkaya Zeynep Celik

Men category -Sourcing & Buying Manager Women category -Sourcing & Buying Manager

canberkakkaya@derimod.com.tr zeynepcelik@derimod.com.tr

17 Elle Istanbul T: +90 2012 886 87 02 www.elleshoes.com Hakan Ozan Purchasing manager Hakanozan@elleshoes.com

18 Ay Marka Magazacilik

Istanbul T: +90 212 386 20 00 www.aymarka.com.tr

Nergiz Gokcan Özlem İkiışık İpek Terzioglu

Men category -Buying Manager for Network Women category -Buying Manager for Network Purchasing Manager for Divaresse

Nergiz.gokcan@aymarka.com.tr Ozlem.ikiisik@aymarka.com.tr Ipek.terzioglu@aymarka.com.tr

19 Defacto Istanbul T: +90 212 705 12 12 www.defacto.com.tr Nedim Bahar Category Manager Nedim.bahar@defacto.com.tr

20 Camper Turkey Istanbul T: +90 212 319 10 40 www.camper.com Ulaş Divarcı Country Manager Turkey&Russia&Ukraine at Camper

-

21 Ozdilek Bursa T: +90 224 219 60 00 www.ozdilek.com.tr Onur Kupeli Purchase Specialist Onur.kupeli@ozdilek.com.tr

22 Deriden (Markapark)

Istanbul T: +90 212 213 11 11 www.deriden.com.tr Burak Dirhian General Manager burak.dirhian@markapark.com

23 Vakko Istanbul T: +90 216 554 07 00 www.vakko.com Gökmen Hoşer Buying Director Gokmenh@vakko.com.tr

24 Aydınlı Istanbul T: +90 212 863 46 80 www.aydinli.com.tr Gamze Kömür Buying Manager (Footwear/Saddlery) Gamze.komur@aydinli.com.tr

25 Desa Istanbul T: +90 212 473 18 00 www.desa.com.tr Meltem Tokel Purchasing Manager for footwear and accesories Meltem.tokel@desa.com.tr

26 Landmark Group (Aldo, Nine West)

Istanbul T: +90 212 403 57 00 www.landmarkgroup.com

IBS 128

# Company name Location Tel / Fax Web / Email Contact person Position Email

27 Orka (Damat Tween)

Istanbul T: +90 212 314 23 23 www.damattween.com Hakan Mandaci Buying Manager (Footwear/Saddlery) hakan.mandaci@dsdamat.com.tr

28 Mavi Istanbul T: +90 212 371 20 00 www.mavi.com Benan Kizilkaya Buying Manager (Footwear/Saddlery) benan.kizilkaya@mavi.com

29 Hugo Boss Izmir T: +90 232 298 30 00 www.hugoboss.com Dilek Demirci Retail Merchandiser Team Leader Dilek_demirci@hugoboss.com

30 Kigili Kocaeli T: +90 262 658 13 01 www.kigili.com Ayşe Çay Buying Manager (Footwear/Saddlery) aysecay@kigili.com.tr

31 Ipekyol (Ayaydın Miroglio)

Istanbul T: +90 212 368 01 01 www.ipekyol.com.tr Ebru Ögün Buying Manager (Footwear/Saddlery) ebruo@ipekyol.com.tr

32 Mudo Istanbul T: +90 212 456 07 07 www.mudo.com.tr Onur Çokbaş Purchasing Manager Onur.cokbas@mudo.com.tr

33 Sarar Istanbul T: +90 222 236 04 00 www.sarar.com Ersin Canbazgil Buying Manager (Footwear/Saddlery) ersin.canbazgil@sarar.com

34 Gürmen Group Istanbul T: +90 212 484 04 84 www.gurmen.com.tr Tümay Yaman Buying Manager (Footwear/Saddlery) tumay.yaman@gurmen.com.tr

35 Koray Spor Bursa T: +90 444 28 41 www.korayspor.com İsmail Türkkan Trade Director satinalma@korayspor.com

36 Avva (Ido Group) Istanbul T: +90 444 28 82 www.avva.com.tr Hayriye Aykut Executive Supply Chain Manager havvaaykut@avva.com.tr

37 Kfidis Istanbul T: +90 212 296 83 03 www.kifidisdukkan.com Ayça Beken Buying Manager (Footwear/Saddlery) ayca@kifidis.com.tr

38 Yargıcı Istanbul T: +90 212 234 34 00 www.yargici.com Saadet Muyan Procurement Executive smuyan@yargici.com.tr

IBS 129

Retailers & distributors of high-end Italian footwear and readywear brands

# Company name Brands Location Tel / Fax Web / Email

Contact person Position Email

1 Derique Tod's, Hogan Istanbul T: +90 212 231 73 00 www.derique.com.tr Erdal Ayaydın Partner erdala@derique.com.tr

2 Barners Group

Alberto Guardiani Armani Group Ice Iceberg Moschino

Ankara T: +90 312 426 56 00 www.barners.com.tr info@barners.com.tr

Baris Tuncer Owner info@barners.com.tr

3 Demsa Group Gucci, Salvatore Ferragamo, Roberto Cavalli

Istanbul T: +90 216 651 73 80 Zeynep Tümay

zeyneptumay@demsagroup.com

4 Dillasima Group

Cesare Paciotti, Furla, Max Mara (and Max Co.) and selling various Italian brands with Vetrina stores

Istanbul T: +90 212 236 70 75 F: +90 212 236 71 66

www.dilasima.com info@dilasima.com

Betül Gürel Commerical and Marketing Executive

bgurel@dilasima.com

5 Dogus Retail Group

Armani, Gucci Istanbul T: +90 212 354 99 50 F: +90 212 288 00 16

www.dogusgrubu.com.tr info@dogusperakende.com.tr

IBS 130

Annex IV Top Turkish footwear components/materials producers & distributors

# Company name

Product group Location Tel / Fax Web / Email Contact person Position Email

1 Duyar Group Materials, chemicals

Izmir T: + 90 232 700 08 00 F: + 90 232 436 21 75

www.duyar.com.tr info@duyar.com.tr

Tugçe Diril Procurement Specialist tugce.diril@sotas.com.tr

2 Palamut Group Materials, chemicals

Istanbul T: +90 212 549 80 34 F: +90 212 671 41 98

www.palamutgroup.com.tr info@palamutgroup.com.tr

Gülderen Başkan Corporate Communication Executive

marketing@palamutgroup.com.tr

3 Erdogdu Group Materials, chemicals

Istanbul T: +90 444 9 373 F: +90 212 671 81 27

www.erdogdu.com Bülent Bekret Sales Manager bulent.bekret@erdogdu.com

4 COIM Turkey Materials, chemicals

Istanbul T: +90 212 217 66 07 F: +90 212 217 66 01

www.coimgroup.com www.coimturkey.com

Ergün Turan Sales Manager ergun.turan@coimgroup.com

5 Saip Foreign Trad

Materials, chemicals

Istanbul T: +90 212 444 05 61 F: +90 212 369 40 60

www.saip.com.tr info@saip.com.tr

Ferhat Latifi General Manager info@saip.com.tr

6 Muzaffer Shoe Materials

Materials, chemicals

Istanbul T: +90 212 671 05 59 F: +90 212 671 05 60

Muzaffer Şahin General Manager muzaffershoes@hotmail.com

7 Sabancı Shoe Materials

Materials, chemicals

Izmir T: + 90 232 436 36 20 www.sabanciltd.com.tr info@sabanciltd.com.tr

İsmail Sabancı Partner ismail@sabanciltd.com.tr

8 ABS Foreign Trade

Materials, chemicals

Istanbul T: +90 212 518 64 64 F: +90 212 518 64 85

www.abskimya.com abs.web@hotmail

Ahmet Şakir Dogan Francesco Cappelli

Partner Italian representative

abs.web@hotmail

9 Birtug Foreign Trade Inc.

Materials, chemicals

Istanbul T: +90 212 407 03 67 F: +90 212 407 03 63

www.birtug.com.tr info@birtug.com.tr

Burcu Yazıcıoglu Foreign Trade Manager burcu@birtug.com.tr

10 Ziylan Taban Sole, insoles

Istanbul T: +90 212 689 08 58 F: +90 212 689 08 58

www.ziylantaban.com info@ziylantaban.com

İlker ÖZMEN Import and Export Manager iozmen@ziylantaban.com

11 Aktif Ayakkabı (Akform Soles)

Sole, insoles

Istanbul T: +90 212 671 72 02 F: +90 212 671 72 06

www.akform.com.tr info@akform.com.tr

Elif Coşkun Gençer Customer Engagament Manager elifc@akform.com.tr

12 GKS Taban Sole, insoles

Istanbul T: +90 212 549 64 38 F: +90 212 549 64 39

www.gkstaban.com info@gkstaban.com

Elena Çeliker Planning Manager planlama@gkstaban.com

13 Interneo Group Sole, insoles

Istanbul T: +90 212 540 22 27 www.interneogrup.com info@interneogrup.com

Taner Sevim Manager info@interneogrup.com

14 İşyapan Taban Sole, insoles

Izmir T: + 90 232 436 01 35 F: + 90 232 436 46 56

info@isyapantaban.com Batur İşyapan Partner info@isyapantaban.com

15 Fatih Ökçe Heels, lasts Istanbul T: +90 212 698 19 00 F: +90 212 698 19 05

www.fatihokce.com.tr info@fatihokce.com.tr

Faruk Ekmekçi Corporate Sales Responsible faruk.ekmekçi@fatihokce.com.tr

16 Flokser Technical leather

Istanbul T: +90 212 549 07 31 F: +90 212 671 35 94

www.flokser.com.tr kimya@flokser.com.tr

Mesut Tektaş Sales Manager mesut.tektas@flokser.com.tr

IBS 131

Annex V Top 10 company profiles

Following companies were qualified for a detailed profiling with regard to sectoral coverage of this study. Final list was agreed with ITA as per below:

# Company Name Sub-sector

1 İskefe Deri Tanneries

2 Sepiciler Deri Tanneries

3 Cevahir deri Tanneries

4 Deri 2000 Tanneries

5 Tamer Tanca Footwear distributors

6 Boyner Group Footwear distributors

7 Marka Park (Deriden) Footwear distributors

8 Duyar Shoe Materials Footwear component distributor

9 Erdogdu Group Footwear component distributor

10 Palamut Group Footwear component distributor

IBS 132

Company profile 1: ISKEFE TANNERY

Company İskefe Deri San. Tic. A.Ş. Web www.iskefe.com.tr Email info@iskefe.com.tr Tel +90 216 394 02 72 Fax +90 216 394 02 70 Executives: Mr. Bulut Kargın Import specialist, bulutkargin@iskefe.com.tr Mr. Fatih Genç Sales and Marketing Executive, fatihgenc@iskefe.com.tr Mr. Sadık Göneş Kazlıçeşme R&D Lab General Manager, sadikgones@kazlicesme.com.tr

General presentation

İskefe Deri has a daily capacity of 200 tonnes cattle hides processing in its five plants at Istanbul, Gerede, Bursa and Nigde. By this means; the company both provided high quality External Source (contract manufacturing) usage services and also provided the accessibility of traceable raw materials by generalizing the splitting technology from liming which is the most basis of cattle gelatine production.

Apart from the domestic shoe manufacturers, İskefe Deri is also producing leather for the international shoe and handbag manufacturers as well. The capacity of finished leather is five million sqf per month.

To conclude, İskefe Deri is the largest Turkish tannery by supplying semi-finished and finished leather to the tanneries, shoe and hand bag manufacturers worldwide. Iskefe Deri is estimated that it has 50-60% market share leather processing and sales in Turkey.

Kazlıçeşme R&D Centre, a group company in Iskefe Group, is the first and only independent laboratory providing test and assessment services to the leather industry and accredited by TURKAK.

Group companies include:

İskefe Deri (Tannery)

Kazlıçeşme R&D Lab

Derivative Kimya (Chemicals used in leather industry)

Halavet Gıda Sanayi (Gelatine manufacturing)

Bereket İlaç Kimya (Collagen hydrolysates and collagen derivatives)

Şeffafiyet Kimya Sanayi (Industrial animal origin amino acid production)

Letafet Uluslararası Pazarlama (Marketing organization of group companies)

IBS 133

Iskefe tannery sales:

Source: Iskefe Tannery in-depth interviews, 2018

Iskefe tannery leather procurement:

Iskefe largely procure raw leather from local sources directly.

Imported leather is mainly originated from Dominic republic and Cuba

There is no leather procurement from Italy due to higher cost.

No future plans to import from Italy

Source: Iskefe Tannery in-depth interviews, 2018

Technology

Italian machinery is largely used in various processes including flesh and fat treatment, splitting, squeeze, vacuum drying, stretcher, sandpaper. Higher quality machinery specifically purposed at leather processing and on-time and adequate technical support are the main reason for deploying Italian machinery.

99%

1% by industry

Shoe industry

Bag & saddlery20%

90%

by product

Semi-processed

Final product

95%

5% raw leather

Local

Import

IBS 134

Company profile 2: SEPİCİ TANNERY

Company Sepici Holding Web www.sepiciholding.com Email info@sepiciholding.com Tel +90 232 850 50 00 Fax +90 232 850 50 92 Executives: Mr. Metin Bengisu Foreign Trade Manager, metin.bengisu@sepici.com.tr

General presentation

Sepici tannery started tanning in 1930. It moved to Torbalı, İzmir in 1974. Its capacities include:

Chrome retanning: 4000 m2 wet blue capacity

Vegetable tannery: 20 tons daily sole leather capacity

Chrome and vegetable finishing: 6000 m2 daily finishing capacity

Cut-sole department: cut-sole and in-sole production

Today, Sepici exports to over 30 countries. It has a sales company and warehouse in USA. The company was the Europe winner in the 2013 competition of the Tannery of the Year.

The company has its own in-house quality and RSL control system as well as pristine chemical management conditions. It could provide leather grading with SATRA standards.

Sepici is the first Turkish company to become a member of Leather Working Group. It built the first effluent treatment plant in the leather industry with a daily 1,000 m3 capacity. Its tannery sludge composting plant, built in 2009, was also first of its kind. It makes aerobic stabilization and continues to R&D for fertilizer production.

Group companies include:

Sepici Enerji (Solar Plant 12 MW Power)

Kaya shoe material (cut and ready sole production)

IBS 135

Sepici tannery sales:

Source: Sepici Tannery in-depth interviews, 2018

Sepici tannery leather procurement:

Sepici completely procure raw leather from local sources directly.

There is leather procurement through import either raw or semi-processed.

Sepici directly procures from slaughterhouses which open bids randomly.

Imported ovine and bovines are fed in the country for nearly one year and then slaughtered. Those leathers are considered local.

No future plans to import leather

Source: Iskefe Tannery in-depth interviews, 2018

Technology

Italian machinery is largely used in various processes of Sepici. The company considers Italian machinery as unrivalled. Company management has also personal ties in Italy, as one of the board members spent several years in Italy and has direct contact with machinery and equipment suppliers.

40%

40%

20%

by industry

Shoe industry

Bag & saddlery

Saddlery &accesories

100%

by product

Semi-processed

100%

raw leather

Local

IBS 136

Company profile 3: CEVAHİR TANNERY

Company CEVAHİR DERİ SANAYİ VE TİCARET LTD. ŞTİ. Web http://cevahirderi.com Email Tel +90 216 394 05 40 Fax +90 216 394 05 44 Executives:

Import department Serkan Cevahircioglu, serkan@cevahirderi.com Gamze Kartal, gamzekartal@cevahirderi.com

General presentation

Cevahir Deri was founded in Gerede, Bolu at 1935. In 2015, it moved to its new production facility in Tuzla Organized Leather Industry Zone, in Istanbul. Cevahir is specialized in leathers for shoes, boots, fantasy shoes, bags, saddlery, garment and upholstery. Cevahir has 40 tons capacity production per day with 135 workers, and has four large retail stores in different cities of Turkey (2 of them in Istanbul, Izmir, Konya).

Cevahir Deri did not prefer to participate the interview/questionnaire during the study.

IBS 137

Company profile 4: DERİ 2000 TANNERY

Company DERİ 2000 Web www.deri2000.com Email sales@DERI2000.com Tel +90 232 842 67 67 Fax +90 232 842 64 32 Executives: Foreign Trade Manager

Bugra Turan, zeytin@deri2000.com

General presentation

Deri 2000 is specialized in producing chamois leather and skiver leather since the 1960’s. The company’s production process uses 100% fish-oil and modern tanning and finishing equipment in its factory in Izmir.

Deri 2000 has an international management team consisting of experienced professionals from the UK, USA, and New Zealand.

The company started international trade in 2000 and it represents many brands in the USA and across Europe. Its main clients are international retailers, leading international car care brands and trade and chamois finishers.

Its chamois leather products include:

Regular Cut or Area Cut

French Cut

Full Skins

Chamois Patchwork Cloth

Chamois Ring Mop

Chamois Demister Pad

Chamois Mitt

Deri 2000 also provides skiver leathers (from top grain split of a sheepskin) for the use of fashion industry for garments, handbags and shoe uppers. Its suppliers for sheepskin are from Europe and New Zealand.

Deri 2000 did not prefer to participate the interview/questionnaire during the study.

IBS 138

Company profile 5: TAMER TANCA

Company Tamer Tanca Magazacilik Sanayi Ve Ticaret Anonim Sirketi Web www.tamertanca.com.tr Email Tel +90 212 253 40 00 Fax Executives: General Manager Yılmaz Yeşilırmak, yilmaz.yesilirmak@tanca.com.tr

General presentation

Kemal Tanca is one of the oldest luxury footear brands of Turkey. In 2002, the company was split between the family members and Tamer Tanca holds all the shops (slightly 130 stores) with additional brands including Tanca Plus, Tanca Kids.

In 2015, Tanca signed partnership agreement with three Italian footwear manufacturers and negotiations with others are underway. Some of Tanca shoes are produced in Italy by Italian manufacturers with Tanca brand. 90% of Tanca shoes are manufactured in Turkey by over 150 sub-contractors, and remaining 10% isw imported from Italy and Spain.

High segment Tanca shoes along with Italian brands are sold in a number of luxury segment shopping malls.

Tanca has shown a remarkable growth as of 2001 as the shopping malls became widespread across the country. Before 2001, Tanca had only 4-5 shops in Turkey.

The share of Internet sales of the company was 10% as of 2017. Tamer Tanca reached $96 million turnover in 2017 through selling 1.5 million pairs of shoes.

Tamer Tanca sold also several Italian brands in its selected high-end stores as well as online including: Alberto Guardiani, Dolce & Gabbana, Franceschetti, Giuseppe Zanotti, Gutteri, Mocassini, Moreschi, Prada, Luco Line, Valentino.

Tanca is planning expand to international markets in the next years. While it has distributorship agreements in Azerbaijan, the Netherlands, Kosovo and South Africa, it also plans to open a shop in Los Angeles, the USA.

Tanca currently plans to expand the Middle East, Turkic Republics and Europe in order of priority.

In 2015 Tanca’s total operating revenue was TL 239 million (~$88 Mn) which was 16% growth according to the previous year.

Tamer Tanca did not prefer to participate the interview/questionnaire during the study.

IBS 139

Company profile 6: BOYNER GROUP

Company Boyner Perakende ve Tekstil Yatırımları A.Ş. Web www.boyner.com.tr Email Tel +90 212 335 75 00 Fax Executives:

Brand Manager Tamer Gürler, tamer.gurler@boyner.com.tr (Private Label Shoes & Bags)

General presentation

Boyner Group has a nearly 50 years of retail experience in Turkey particularly in mid and high segment ready wear and footwear. It approximately has a portfolio of over 900 brands in total. It has 2,107 staff (including sales agents and personnel in the shops) as of 2017.

Below is the general corporate structure of the Boyner Group:

Boyner Group operates in five main sales channels:

Multi-brand shops

Mono-brand shops

Beymen Club shops

E-trade

Outlet shops

BOYNER PAZARLAMA

Ay Marka

Mağazacilik

Boyner Büyük

Mağazacilik

BeymenMağazacilik

Nişantaşı Turizmİşletmeleri A.Ş.

(Nişantaşı BrasserrieRestaurant)

İzkar Giyim Ticaret ve Sanayi

(İzmir Konak & İzmir Mavibahçe multi-

brand shops)

Beymen İç ve Dış Ticaret

(inactive)

Christian Louboutin

Mağazacılık

(Nişantaşı andİstinyePark shops)

Altinyildiz Tekstil ve Konfeksyion

100% 100% 100% 100%

30%100%74.6%75%

IBS 140

91.5% of the company turnover was generated from directly operated retail sales channels while the remaining 8.5% was generated from wholesale sales channels.

22% of the turnover was from its own brands while the remaining 78% is from foreign brands.

Boyner turnover by channels:

Source: Boyner Group, 2018

As of 2017, the group has 86 shops with a net sales area of 56,700 m2.

Below is the table for turnover for each sales channel and share in net sales.

Table 58: Beymen turnover by sales channels, 2015-2017

2015 2016 2017 Mn. TL % Mn. TL % Mn. TL %

Directly operated retail sales channel 801 85.8 922 89.9 1,203 91.5 Multi-brand stores 596 63.9 652 63.6 808 59 Beymen Club stores 73 7.9 88 8.6 131 10.1 Mono-brand stores 82 8.8 81 7.9 102 7.9 E-trade 46 5.0 82 8.0 118 9 Outlet stores 2 0.3 18 1.8 42 3.3

Wholesale sale channels & others 132 14.2 103 10.1 111 8.5 TOTAL* 933 100 1,026 100 1,315 100

* Excluding foreign partnerships Source: Boyner Group, 2018

Concentrated in high income provinces, Boyner Group has shops in 15 provinces and it reaches 55% of the total population and 69% of the total national income.

SALES CHANNELS

Beymen multi-brand stores

Flagship multi-brand shops are in İstanbul Zorlu Center and İstinye Park malls. These two stores accounted for 30.6% of overall turnover. It has contracts until 2027 for Istinye Park, 2029 for Zorlu Centre.

It generally does not sign long term contracts for brands in the multi-brand stores, rather works with seasonal orders that give it a flexibility in shifting brands

91,5%

8,5% by sales

Directly operatedretail sales

Wholesale sales

22%

78%

by brands

Own brands

Foreign brands

IBS 141

Beymen mono-brand stores

All mono-brand stores are in Istanbul: Dolce & Gabbana” (3 stores), “Valentino”, Brunello Cucinelli, Etro, Bottega Veneta, Celine, Saint Laurent, Tod’s (2 stores), Dsquared2, Stella McCartney, Tory Burch (2 stores) and Christian Louboutin (2 stores)

Contracts with mono-brands are generally for five-year terms, corresponding to 10 seasons.

Turnover from mono-brand stores are equivalent to 31.6% of overall net retail sales turnover (excluding Christian Louboutin)

95% of the mono-brand store turnover was generated from the stores in the malls. 95% of the mono-brand store turnover was generated from the tourists.

Beymen Club stores

A total of 44 shops in 15 provinces

69% of the Beymen Club turnover was generated from the Beymen Club stores in Istanbul. All Beymen Club turnover constitutes 10% of group turnover.

E-Trade channel

Started in 2010, Boyner Group’s e-trade channels has a combined 79% market share in luxury fashion segment sites (according to OC&C data)

Fastest growing sales channel of the group, slightly at 60% CAGR. Only 32% of the e-trade turnover came from mobile application.

E-trade channel accounts for 9% of group turnover with 65 staff. 11% of Beymen customers make online shopping.

In 2017, Beymen.com had 28.6 million visitors according to Google Analytics

Online luxury fashion and footwear market is estimated at $41 Mn and 78% of this market is dominated by Beymen.

Outlet stores

5 outlet stores in Istanbul sells the season-end inventory that occurs at 10% level at the end of each season

PRODUCTS AND BRANDS

Beymen works on firm sales contract model. Only 3.6% of the sales turnover was generated from consignment sales.

The company has five main product categories:

o Global fashion brands (72.9%)

o Beymen private fashion brands (21.1%)

o Cosmetics (3.2%)

o Home and gift (2.0%)

o Child (0.9%)

IBS 142

In these categories there are six main product groups: ready wear, footwear, bag, accessories, cosmetics and home.

Table 59: Beymen share of product groups sales per sales channels, 2017, %

Multi-brand stores

Mono-brand stores E-Trade

Beymen Club

Ready wear 49.9 46.6 43.2 85.6 Footwear 23.8 25.1 34.9 5.7 Bag 13.2 23.7 13.2 3.5 Accessories 6.5 4.4 5.6 5.1 Cosmetics 4.3 0.2 1.8 0.0 Home 2.4 0.0 1.4 0.0 TOTAL 100.0 100.0 100.0 100.0

Source: Boyner Group, 2018

Brands

Beymen has around 900 global brands in its portfolio

72.9% of the sales turnover was from global brands while the rest was from Beymen private brands.

Global brands only sold in Beymen stores accounts for 62.6% of overall global brand sales of the company.

Within the global brands, share of product group’s net retail sales:

o Ready wear (48.5%)

o Footwear (29.2%)

o Bag (16.5%)

o Accessories (5.8%)

60.2% of the net retail sales of the global brands were for women products and the remaining 39.8% was from men products.

Beymen private brands include Beymen Club, Beymen Collection and Academia. Additionally, it has Beymen brands for bag, home products, gifts, chocolate and scarf.

Beymen private brands accounts for 21.4% of the net retail sales of the company.

Relatively affordable prices of Beymen private brands is a strategy to win new customers. In 2017, 53.7% of the new Internet customers purchased firstly Beymen private brands.

Within the Beymen private brands, share of product group’s net retail sales:

o Ready wear (80.6%)

o Footwear (7.5%)

o Bag (4.6%)

o Accessories (7.3%)

SUPPLY CHAIN

IBS 143

As of 2017, the company works with 60 ready wear and 90 footwear suppliers

66.9% of the product portfolio was imported.

Company’s warehouse in Gebze Kocaeli will be operative in 2019

CUSTOMERS

The group had 1.6 million customers which grew at a CAGR of 22.5% between 2015 and 2017

Average age of active customers that made shopping in the last two years is 40 and 59.6% of this customer base are women.

As of end 2017 the company had 495,195 customers. Breakdown of these customers per sales channels are as follows:

o 258,590 from multi-brand stores

o 228,800 from Beymen Club

o 99,476 from e-trade

o 35,013 from mono-brand stores

The company gained 170,000 new customers in 2017

IBS 144

Company profile 7: MARKAPARK (DERİDEN)

Company MARKAPARK MAGAZACILIK VE PAZARLAMA A.Ş. Web www.markapark.com Email Tel +90 212 213 11 11 Fax +90 212 347 73 19 Executives: General Manager Burak Dirhian, burak.dirhian@markapark.com

General presentation

MarkaPark was founded in 2005. The company's line of business includes the wholesale and retail distribution of footwear. Markapark is the sister company of Deriden Group, one of the largest footwear manufacturers and distributors in Turkey.

Markapark is currently placed in 15 provinces with 24 stores 12 of which are in Istanbul. It had 33 stores in 2016. Deriden, the sister company, has also 17 stores 11 of which are in Istanbul.

Its brand portfolio covers 60 brands including Calvin Klein, Tommy Hilfiger, Camper, Buffalo, Moon Boot, Birkenstock, Skechers, Superga, Toms, Nomadic Republic and People.

Markapark has been a distributor of Italian Moon Boot brands. Markapark also developed its own brand, Vronsky. It is currently manufacture in Italy and Spain.

Markapark did not prefer to participate the interview/questionnaire during the study.

IBS 145

Company profile 8: DUYAR SHOE MATERIALS

Company DUYAR KİMYA VE MAKİNA SANAYİ VE TİCARET A.Ş. Web www.duyar.com.tr Email info@duyar.com.tr Tel +90 232 700 08 00 Fax +90 232 436 21 75 Executives: Procurement Specialist

Tugçe Diril, tugce.diril@sotas.com.tr

General presentation

With its facilities in İzmir Işıkkent, İstanbul İkitelli, Aliaga and Gaziantep, Duyar offers a wide range of supply chain to its customers in a total area of 20,000 m2. It offers more than 6,000 products of eight global brands for nearly 80 years for many industries.

DUYAR Kimya supplies a wide variety of products including adhesives and mastics for the shoe-making, automotive, marine, construction and furniture industries.

DUYAR Kimya acquired SOTAŞ in 2009. Sotaş produces aerosol chemicals for automotive industry as well as adhesives and mastic products for the shoe-making, automotive, marine, furniture and construction industries. Sotaş also sells the products of the German adhesive producer Kömmerling as a licensed manufacturer. Products of Sotas include:

- Solvent-based PU and CR adhesives,

- Water-based PU and CR dispersions,

- PU,

- Hybrid and MS Polymer mastics,

- Silicones,

- PSA,

- EVA-based hotmelts,

- Aerosol products,

IBS 146

Below is a description of the brands/products delivered by Duyar:

Brand Origin Description

Sotaş Turkey Joined Duyar Group in 2009, produces adhesives and sealants for footwear, automotive, marine, furniture and construction industries along with aerosol chemicals for the automotive industry as a licensed manufacturer of Kömmerling. Products include:

Solvent Based PU and CR Adhesives

Water Based PU and CR Adhesives

PU Sealants

Hybrid and MS Polymer Sealants

Silicone Sealants

PSA Adhesives

EVA based hot-melts

Aerosol Products

ACI Italia ACI finishing products, supplied by Duyar, from the Italian brand ACSA Chimica. Products include:

Creams

Polishers

Sole Finish

Waxes

Derby Turkey Adhesive and sealants

Moenus Germany A long- established German brand, in cooperation with British IVI is the world's leading producer of nails for the shoe industry. The products delivered by Duyar include:

Nail for lasting machine

Heel nails

Heel screws

Kommerling Germany Duyar brought Kömmerling, a German adhesive manufacturer founded in 1897, into the Turkish industry in 1999. Sotaş, a licensed manufacturer of Kömmerling, supplies adhesives and sealant products for various industries.

- Adhesives and Primers

- Sealants

Nastrotex-Cultra

Italy Elastic bands for upper produced by Italian Nastrotex-Cultra are delivered by Duyar.

Salamander Germany Duyar delivers the bonded leather from Salamander, the inventor and leader of the product that includes:

Bonded leather for welt

Bonded leather for counter

Bonded leather for belt

Bonded leather for insole and outsole

Bonded leather for furniture

Bonded leather for bookbinding

Elastic bands for upper

TecnoGI Italy Duyar delivers Italian firm TecnoGI, a world leader in toe-puffs and counter, as per below:

Toe puffs and counters

Reinforcement Materials

The company has two branches in Istanbul and Gaziantep.

Duyar did not prefer to participate the questionnaire during the study.

IBS 147

Company profile 9: ERDOGDU GROUP

Company ERDOGDU AYAKKABI MALZEMELERİ SAN. TİC. LTD. ŞTİ. Web www.erdogdu.com Email bilgi@erdogdu.com Tel +90 444 9 373 Fax +90 212 671 81 27 Executives: Sales Manager Bülent Bekret, bulent.bekret@erdogdu.com

General presentation

Established in 1968, Erdogdu Group provides a wide range of products include neolite, cellulosic lining, fort, bombe, fusspet, latex, shoe polish, finishing materials, EVA, reinforcement wire, leather, artificial leather, lining, leather and leather goods, fiber, salver, adhesive and work safety materials.

The group delivers more than 3,000 products of the global brands, mostly Italian, including Davos / Thunit, Beltex, Tecnogi / Tecnogi Plast, Sipol, Iexi, Selasti, Luigi Carnevali, Lamonti, Giardini, Freudenberg, Tallonit, Valle Esina, Micro-Pak, Henkel, Pranem and Meltonian.

Group companies include:

Erbil, and Erdogdu Group company, namely Erbil Orthopaedic Sole Inc. established in 2008, manufactures fusspet, a sort of orthopaedic insole.

Erteks, established in 2014, is an artificial leather manufacturing company.

Below is the short description of each brand Erdogdu delivers:

Brand Origin Description

Henkel Germany UV primers and adhesives

Lamonti Cuoio Italy high quality leather for shoes

Meltonian USA Meltonian provides high quality paint and care products including shoe cream, leather lotion, color sprays, waterproofing products and suede care products.

Giardini Italy Giardini, a leading manufacturer of artificial leather industry, provides synthetic leather with microfiber and polyurethane structure

LDM (Latex Del Mediterraneo S.L.)

Italy LDM (Latex Del Mediterraneo S.L.) is active in all areas where Latex can be used and in the production of thermo-molded polyethylene insoles, EVA, polyurethane, shoe cleaner sponge.

Davos Italy Davos, a member of ARS Arpel Group, is the leading brand in the production of rubber sheet and base.

Tallonit Italy Tallonit, a brand of Valle Esina S.p.a produces recycled fibreboard designed for the assembling of high quality footwear.

IBS 148

Tecnogi Italy Tecnogi manufactures impregnated plastic materials used in the making of fort and toe box in shoes, reinforcing materials used in footwear and leather products and hot melt adhesives.

Valle Esina Italy Valle Esina is a bonded leather manufacturer by recycling industrial waste.

Luigi Carnevali Italy Luigi Carnevali is a manufacturer of thermosetting or self-adhesive lining fabric and reinforcement wire for footwear and leather products.

Micro-Pak Hong Kong

Micro-Pak is a manufacturer to prevent mold growth on your packaged products.

Sipol Italy SIPOL SPA Società Italiana Polimeri manufactures a wide range of thermoplastic polyamides and polyesters, pre-assembled, back-mounted and granular silte adhesives. It also provides solutions for bonding textile products.

Beltex Italy Beltex is the only company that produces cellulosic materials for shoes in Italy.

Freudenberg Germany Freudenberg manufactures non-woven, woven and weft materials for footwear and leather products.

Pranem Italy Pranem, manufactures non woven and sponge in the footwear sector for 30 years.

Erdogdu did not prefer to participate the questionnaire during the study.

IBS 149

Company profile 10: PALAMUT GROUP

Company Palamut Group Web www.palamutgroup.com.tr Email info@palamutgroup.com.tr Tel +90 212 549 80 34 Fax +90 212 671 41 98 Executives: Corporate Communication Executive

Gülderen Başkan, marketing@palamutgroup.com.tr

General presentation

Palamut Group has been in components industry since the early 1960s. While being a manufacturing company, it has obtained distributorship agreements with leading brands as of 1990s for many industries including footwear, textile and automotive. Palamut’s business and solution partnerships include:

- Bartoli / ITALY,

- Texon INTERNATIONAL / Germany – ITALY,

- Kenda FARBEN / ITALY,

- Garde / ITALYA,

- Overmec / ITALY

- ESPUMAS Tex /SPAIN,

- Q&Q / Thailand

Below is the short description of each brand Erdogdu delivers:

Brand Origin Description

TEXON Lining Group Germany – Italy

Footwear materials including non-woven saturated felts, extruded filmic materials, wet-web saturated cellulose paperboard, technical fabrics and consumables.

Armanex Macedonia Artificial leather

Costchem Italy Hot melt adhesives:

Water emulsions adhesives:

Solvent based adhesive:

Puntalifiore Italy Adhesives for footwear

Polichloroprene solvent based adhesives

Polyurethane solvent based adhesives

Polichloroprene adhesives in aqueous dispersion

Natural rubber solvent based adhesives

Auxiliary products

IBS 150

Materials for toe-puffs and counters

Kenda Farben Italy Adhesives, paints and varnish

Overmec Italy Water-based adhesives.

QQ Holding Thailand Resin Rubber Soling Sheet

Rubber Compound

Rubber For Belt

Unit Sole

Röchling Germany Thermoplastics and composite materials

Bartoli Italy Fibreboards, shankboards

Garde Italy Garde, a Kenda Farben Group company, makes reinforcement materials used for toe puff and counter in shoes, or reinforcement in bags and leather goods.

Espumas Spain Gel latex

Paper sticky latex

Neotex Spain Artificial leather

Technical textile

Erdogdu did not prefer to participate the questionnaire during the study.

IBS 151

Annex VI Country Groups in import regime tables

Country Group (1): EU member countries, EFTA countries (Iceland, Liechtenstein, Norway, Switzerland), Israel, Macedonia, Bosnia-Herzegovina, Morocco, Western Bank and Gaza strip, Tunisia, Egypt, Georgia, Albania, Jordan, Chile, Serbia, Montenegro, Kosovo, Mauritius, and Moldova.

Country Group (2): South Korea

Country Group (3): Malaysia

Country Group (4): Generalised system of preferences countries

Country Group (5) – Least developed countries: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cape Verde, Djibouti, Chad, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Cambodia, Kiribati, Comoros, Democratic Republic of Congo, Lao People's Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Myanmar*, Nepal, Niger, Central African Republic, Rwanda Samoa, São Tomé and Príncipe, Senegal, Sierra Leone, Solomon Islands, Somalia, Sudan, Tanzania (United Republic of), Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, and Zambia.

Country Group (6) - Beneficiary Countries of Special Incentive Arrangements: Bolivia, Cape Verde, Mongolia, Paraguay.

Country Group (7) - Developing Countries: Cook Islands, Indonesia, Ivory Coast, Philippines, Ghana, India, Kenya, Kyrgyzstan, Congo, Micronesia, Nigeria, Nauru, Niue, Uzbekistan, Pakistan, Sri Lanka, Swaziland, Tajikistan, Tonga, Ukraine, Vietnam.

Country Group (8) – Other countries: All other countries

IBS 152

Annex VII Trade fairs and events (11/2018-2019)

START DATE FINISH DATE

FAIR NAME MAIN PRODUCT GROUPS VENUE PROVINCE EVENT

ORGANIZER WEB E-MAIL

06-11-2018 09-11-2018

6.Eksposhoes İstanbul Footwear Garments Fashion Fair

Footwear, bags, belt, wallet, sectoral publications

Pullman Airport Hotel Convention Center

Istanbul EKS Fuarcılık A.Ş.

www.eksfuarcilik.com info@eksfuarcilik.com

22-11-2018 24-11-2018

LESHOW İstanbul Leather Fair

Leather products, bags, paint and zipper, leather fabrics, leather suppliers, footwear and outfit

İstanbul Kongre Merkezi

Istanbul Türkel Fuarcılık A.Ş.

www.turkel.com.tr info@turkel.com.tr

28-11-2018 01-12-2018

Aysaf 21. International Footwear and Sub Industry Fair

Footwear sub industry products, footbed, leather, artificial leather, accessories, machinery

İstanbul Fuar Merkezi Yeşilköy

Istanbul Pozitif Fuarcılık A.Ş.

www.cnrexpo.com kaan.oksuz@cnr.net

04-12-2018 06-12-2018

Leather and Fur Garments Fair

Leather and fur outfit Maritime Pine Beach Otel Belek

Antalya Artı Fuarcılık Organizasyon Ltd. Şti

www.artifuar.com info@artifuar.com

12-12-2018 15-12-2018

Gapshoes 28. International Footwear, Slippery and Sub Industry Fair

Footwear, slipper sub industry OFM Ortadogu Fuar Merkezi

Gaziantep

Akort Tanıtım Organizasyon ve Fuarcılık Ltd. Şti.

www.akort.com akort@akort.com

12-12-2018 17-12-2018

14.Uluslararası Dossodossi Fashion Business Fair

Ready wear, fashion, fabric and garments sub industry

Antalya Fuar Merkezi

Antalya Dossodossi Fuarcılık A.Ş.

www.dossodossifuarcilik.com merkez-1@hotmail.com

2019

22-01-2019 24-01-2019

Leather and More Leather and leather outfit Fuar İzmir Alanı - Gaziemir

Izmir İZFAŞ İzmir Fuarcılık

www.izmirfair.com.tr info@izmirfair.com.tr

24-01-2019 26-01-2019

LESHOW İSTANBUL

Leather products, bags, paint and zipper, leather fabrics, leather suppliers, footwear and outfit

İstanbul Kongre Merkezi

Istanbul Türkel Fuarcılık A.Ş.

www.turkel.com.tr info@turkel.com.tr

IBS 153

START DATE FINISH DATE

FAIR NAME MAIN PRODUCT GROUPS VENUE PROVINCE EVENT

ORGANIZER WEB E-MAIL

03-04-2019 06-04-2019

AYMOD 22. International Footwear Fashion Fair

Footwear, bags, belt, wallet İstanbul Fuar Merkezi Yeşilköy

Istanbul Pozitif Fuarcılık A.Ş.

www.cnrexpo.com kaan.oksuz@cnr.net

24-04-2019 26-04-2019

SHOEXPO İzmir 45. Footwear adn Bag Fair

Footwear and bags Fuar İzmir Alanı - Gaziemir

Izmir İZFAŞ İzmir Fuarcılık

www.izmirfair.com.tr info@izmirfair.com.tr

20-05-2019 23-05-2019

Leather and Fur Garments Fair

Leather and fur outfit Maritime Pine Beach Otel Belek

Antalya Artı Fuarcılık Organizasyon Ltd. Şti

www.artifuar.com info@artifuar.com

12-06-2019 15-06-2019

Aysaf 22. International Footwear Sub Industry and Leather Fair

Footwear sub industry products, footbed, leather, artificial leather, accessories, machinery

İstanbul Fuar Merkezi Yeşilköy

Istanbul Pozitif Fuarcılık A.Ş.

www.cnrexpo.com kaan.oksuz@cnr.net

02-10-2019 05-10-2019

AYMOD 23. International Footwear Fashion Fair

Footwear, bags, belt, wallet İstanbul Fuar Merkezi Yeşilköy

Istanbul Pozitif Fuarcılık A.Ş.

www.cnrexpo.com kaan.oksuz@cnr.net

23-10-2019 25-10-2019

SHOEXPO İzmir 46. Footwear adn Bag Fair

Footwear and bags Fuar İzmir Alanı - Gaziemir

Izmir İZFAŞ İzmir Fuarcılık

www.izmirfair.com.tr info@izmirfair.com.tr

20-10-2019 23-10-2019

Aysaf 23. International Footwear Sub Industry and Leather Fair

Footwear sub industry products, footbed, leather, artificial leather, accessories, machinery

İstanbul Fuar Merkezi Yeşilköy

Istanbul Pozitif Fuarcılık A.Ş.

www.cnrexpo.com kaan.oksuz@cnr.net

03-12-2019 05-12-2019

Leather and Fur Garments Fair

Leather and fur outfit Maritime Pine Beach Otel Belek

Antalya Artı Fuarcılık Organizasyon Ltd. Şti

www.artifuar.com info@artifuar.com

IBS 154

Annex VIII List of investment incentives granted to the leather industry companies

Date of incentive certificate

Place of investment Company name

Type of investment

Fixed investment (TL)

Imported machinery ($)

Expected employment

Origin of capital

Product subject to incentive

Capacity subject to incentive

02-01-18 BURSA BALKANOGLU AYAKKABI NEW INVESTMENT

1,018,194 254,000 28 DOMESTIC Rubber/plastic base shoe

500,000 piece/year

05-01-18 MALATYA FAMMARK MAGAZACILIK NEW INVESTMENT

6,600,000 0 200 DOMESTIC Shoe and boot 540,000 pair/year

31-01-18 MALATYA MUSTAFA ÖZDAL NEW INVESTMENT

775,275 0 15 DOMESTIC Footbed 400,000 piece/year

12-12-17 İSTANBUL EYMES TEKSTİL NEW INVESTMENT

14,820,000 2,798,800 45 DOMESTIC Artificial leather 24,000,000 M2/year

14-12-17 GAZİANTEP DEFA TERLİK VE AYAKKABI NEW INVESTMENT

2,280,000 404,500 20 FOREIGN Rubber/plastic base shoe

594,000 pair/year

15-12-17 BALIKESİR DERİSAY DERİ SANAYİ NEW INVESTMENT

3,340,000 352,361 20 DOMESTIC Tanning 1,025,000 kg/year

18-12-17 BALIKESİR HERSA KİMYA DERİ NEW INVESTMENT

14,890,000 2,405,000 80 DOMESTIC Artificial leather 5,443,200 m2/year

10-11-17 BURSA ALLİANZ DERİ MAMÜLLERİ NEW INVESTMENT

9,606,000 0 20 DOMESTIC Tanning 9,000 tonnes/year

17-11-17 İSTANBUL ELİT EVA KAUÇUK PLASTİK NEW INVESTMENT

15,900,000 2,474,600 45 DOMESTIC Footbed 306,000 tonnes/year

29-11-17 İSTANBUL DERİMSAN DERİ MODERNIZATION 12,270,000 2,199,600 12 DOMESTIC Calf leather 6,793,800 kg/year

04-10-17 KARABÜK AKORT ORTOPEDİK AYAK BAKIM ÜRÜNLERİ

EXPANSION 9,136,698 646,000 89 DOMESTIC Shoe parts 70,336,000 piece/year

23-10-17 BİLECİK DOGUŞ SUNİ DERİ MODERNIZATION 610,000 79,620 DOMESTIC Artificial leather 3,600,000 kg/year

IBS 155

Date of incentive certificate

Place of investment Company name

Type of investment

Fixed investment (TL)

Imported machinery ($)

Expected employment

Origin of capital

Product subject to incentive

Capacity subject to incentive

26-10-17 GAZİANTEP KYK KİMYA NEW INVESTMENT

1,800,000 0 25 DOMESTIC Slipper/shoe blanket and upper

20,000,000 pair/year

26-10-17 MANİSA SARI VADİ İŞ GÜVENLİGİ MALZEMELERİ

EXPANSION 4,080,000 909,600 6 DOMESTIC Rubber/plastic base shoe

951,043 pair/year

14-09-17 GAZİANTEP ERAT SPORT AYAKKABICILIK EXPANSION 9,600,000 2,366,500 10 DOMESTIC Footbed, slipper 1,750,320 pair/year

22-09-17 GAZİANTEP YILDEM TERLİK VE AYAKKABI NEW INVESTMENT

4,776,220 0 120 DOMESTIC Polyurethane sole slipper

2,000,000 pair/year

22-08-17 İSTANBUL MAY DERİ SANAYİ EXPANSION 1,820,000 334,546 3 DOMESTIC Tanning 5,835,720 kg/year

04-07-17 İSTANBUL GÜNHAN TABAN SANAYİ EXPANSION 4,690,000 196,000 13 DOMESTIC Shoe parts 1,123,200 pair/year

11-07-17 KIRKLARELİ NAPA GRUP SUNİ DERİ NEW INVESTMENT

3,903,318 526,000 35 DOMESTIC Leather mixtures 3,240,000 m2/year

13-07-17 ŞANLIURFA YEŞİL KUNDURA SANAYİ NEW INVESTMENT

29,320,000 0 642 FOREIGN Shoe 1,500,00 pair/year

09-06-17 TEKİRDAG MERGER AYAKKABI NEW INVESTMENT

1,130,000 206,000 50 FOREIGN Shoe sole 4,320,000 pair/year

14-06-17 İSTANBUL HAKTEKS TEKSTİL MODERNIZATION 3,750,000 190,000 20 DOMESTIC Leather mixtures 5,184,000 m2/year

03-05-17 İSTANBUL TEKNOFİN DERİ EXPANSION 6,000,000 670,000 6 DOMESTIC Artificial leather 6,091,200 m2/year

25-05-17 İSTANBUL BREY İŞ GÜVENLİGİ NEW INVESTMENT

1,200,000 27,500 17 DOMESTIC Shoe 240,000 pair/year

31-05-17 İSTANBUL VANEDA AYAKKABI NEW INVESTMENT

5,500,000 1,147,859 72 DOMESTIC Shoe 240,000 pair/year

14-04-17 ANKARA GHENT AYAKKABI NEW INVESTMENT

3,300,000 0 30 DOMESTIC Shoe 500,000 pair/year

08-03-17 İSTANBUL EROGLULAR SPOR AYAKKABICILIK

PRODUCT DIVERSIFICATION

1,151,649 256,000 34 DOMESTIC Sport shoes 288,000 pair/year

IBS 156

Date of incentive certificate

Place of investment Company name

Type of investment

Fixed investment (TL)

Imported machinery ($)

Expected employment

Origin of capital

Product subject to incentive

Capacity subject to incentive

13-03-17 SİNOP EYÜP TAŞDEMİR NEW INVESTMENT

4,210,000 0 80 DOMESTIC Shoe 510,000 piece/year

31-03-17 ÇANKIRI KAŞGARLI İNŞAAT AYAKKABI EXPANSION 860,000 146,000 20 DOMESTIC Rubber/plastic base shoe

1,000,000 pair/year

09-02-17 İSTANBUL MAYSS AYAKKABI VE TABAN NEW INVESTMENT

2,680,000 429,969 10 DOMESTIC Footbed 300,000 piece/year

18-01-17 GAZİANTEP POLİ OSN PLASTİK NEW INVESTMENT

1,083,000 0 8 FOREIGN Polyurethane sole slipper

4,000,000 piece/year

07-12-16 MARDİN MURAT DEMİR FEYZA TEKSTİL NEW INVESTMENT

1,471,000 0 150 DOMESTIC 75,000 piece/year

14-12-16 DİYARBAKIR STARK MENÜ DERİ ÜRÜNLERİ NEW INVESTMENT

1,953,000 0 80 DOMESTIC Leather products 2,555,000 piece/year

20-12-16 ÇORUM LSY AYAKKABI EXPANSION 17,000,000 3,337,580 500 DOMESTIC Shoe 9,600,000 piece/year

10-11-16 TEKİRDAG GÜNDÜZ KÜRK EXPANSION 2,300,000 501,333 10 DOMESTIC Leather products 3,401,818 piece/year

23-11-16 GAZİANTEP GÜLSOY PLASTİK EXPANSION 3,620,000 945,000 8 DOMESTIC Rubber/plastic base shoe

5,107,976 piar/year

04-08-16 TEKİRDAG TURKUAZ SUNİ DERİ NEW INVESTMENT

7,000,000 0 80 DOMESTIC Artificial leather 1,728,000 piece/year

31-08-16 TOKAT ÜÇEM AYAKKABI NEW INVESTMENT

1,640,000 0 75 DOMESTIC Rubber/plastic base shoe

265,000 piece/year

31-08-16 ZONGULDAK MEKAP DERİ VE AYAKKABI NEW INVESTMENT

1,975,000 134,223 30 DOMESTIC Shoe from leather 300,000 pair/year

09-05-16 TEKİRDAG GÜRLE SUNİ DERİ EXPANSION 1,860,000 583,100 5 DOMESTIC Artificial leather 6,660,000 m2/year

25-05-16 SİNOP İLDA İNŞAAT MALZEMELERİ EXPANSION 582,650 0 22 DOMESTIC Shoe from textile 399,920 pair/year

14-03-16 İSTANBUL FLOKSER TEKSTİL MODERNIZATION 6,780,000 1,805,079 15 DOMESTIC Artificial leather 18,489,600 m2/year

IBS 157

Date of incentive certificate

Place of investment Company name

Type of investment

Fixed investment (TL)

Imported machinery ($)

Expected employment

Origin of capital

Product subject to incentive

Capacity subject to incentive

17-03-16 GAZİANTEP ABOUD AYAKKABI EXPANSION 590,000 0 10 FOREIGN polyurethane sole shoe

2,754,000 piece/year

05-02-16 TRABZON MEKAP İSKENDER AYAKKABI EXPANSION 2,240,000 659,659 10 DOMESTIC Rubber/plastic base shoe

1,842,000 pair/year

29-02-16 İSTANBUL 3GEN TABAN VE AYAKKABI NEW INVESTMENT

3,520,000 707,500 30 DOMESTIC Footbed 2,350,080 pair/year

29-02-16 ÇORUM LSY AYAKKABI EXPANSION 17,410,000 3,867,680 360 DOMESTIC Sport shoes 10,500,000 pair/year

15-01-16 ANTALYA BEKTAŞ SARACİYE NEW INVESTMENT

1,320,000 364,200 15 DOMESTIC Luggage 12,240 piece/year

19-01-16 İSTANBUL GKS AYAKKABI TABANI EXPANSION 33,040,000 5,065,000 10 DOMESTIC Rubber/plastic base shoe

3,052,400 pair/year

29-01-16 BURSA LADER DERİ EXPANSION 4,320,000 797,740 8 DOMESTIC Calf leather 3,978,125 kg/year

14-12-15 KONYA HAYRETTİN ÖGÜNMEZ EXPANSION 2,337,000 706,904 6 DOMESTIC Shoe from leather 216,000 pair/year

24-12-15 KONYA ÇELİK SANDALET AYAKKABI EXPANSION 1,950,000 436,000 10 DOMESTIC Shoe from leather 71,000 pair/year

24-12-15 SAMSUN SAMSUN AKIN REJENERE KAUÇUK

EXPANSION 1,866,000 601,200 8 DOMESTIC Shoe from PVC 911298 pair/year

30-12-15 İSTANBUL ZİYLAN TABAN EXPANSION 50,600,000 10,488,770 125 DOMESTIC Rubber/plastic base shoe

17,723,360 pair/year

10-11-15 İSTANBUL MEKİN SARACİYE EXPANSION 1,084,839 309,277 25 DOMESTIC Leather saddlery 400 set/year

19-10-15 GAZİANTEP PERSU SUNİ DERİ EXPANSION 555,437 179,000 15 DOMESTIC Artificial leather 10,287,360 m2/year

21-10-15 AMASYA EGEMEN AYAKKABI NEW INVESTMENT

7,568,077 1,728,052 70 DOMESTIC Rubber/plastic base shoe

4,500,000 pair/year

10-09-15 HATAY ANTİK AYAKKABI TEKSTİL NEW INVESTMENT

1,020,950 0 9 DOMESTIC Rubber/plastic base shoe

42,000 pair/year

IBS 158

Date of incentive certificate

Place of investment Company name

Type of investment

Fixed investment (TL)

Imported machinery ($)

Expected employment

Origin of capital

Product subject to incentive

Capacity subject to incentive

05-08-15 SİİRT LAMİNO AMBALAJ NEW INVESTMENT

14,236,530 209,000 150 DOMESTIC Leather saddlery 22,000,000 piece/year

23-07-15 TEKİRDAG VİNTEKS NEW INVESTMENT

5,607,710 1,196,446 10 DOMESTIC Artificial leather 3,225,600 m2/year

27-05-15 TEKİRDAG SALDER SUNİ DERİ NEW INVESTMENT

5,978,980 737,642 40 DOMESTIC Artificial leather 4,560,000 kg/year

24-04-15 MARDİN ŞV AYAKKABICILIK DERİ MAMÜLLERİ

NEW INVESTMENT

1,050,958 63,600 25 DOMESTIC Shoe from leather 270,000 pair/year

29-04-15 İSTANBUL AKEL DERİ NEW INVESTMENT

1,342,545 374,763 9 DOMESTIC Leather products 1,344,000 piece/year

13-03-15 İSTANBUL SERT TABAN SANAYİ NEW INVESTMENT

1,522,140 72,783 10 DOMESTIC Rubber/plastic base shoe

6,000 pair/year

19-03-15 ÇANKIRI HATİPOGLU AYAKKABI NEW INVESTMENT

2,294,536 768,500 40 DOMESTIC Shoe from leather 360,000 pair/year

03-02-15 ÇORUM LSY AYAKKABI NEW INVESTMENT

18,278,151 3,992,080 800 DOMESTIC Rubber/plastic base shoe

7,500,000 pair/year

16-02-15 İSTANBUL SARILAR AYAKKABI NEW INVESTMENT

3,773,000 0 20 DOMESTIC Rubber/plastic base shoe

1,200,000 piece/year

25-02-15 İSTANBUL ZÜLBAHAROGLU TEKSTİL SARACİYE

NEW INVESTMENT

1,105,912 358,150 15 DOMESTIC Leather saddlery 900 tonnes/year

29-01-15 BARTIN ZİMARO AYAKKABICILIK NEW INVESTMENT

1,259,414 0 50 DOMESTIC Shoe from leather 300,000 pair/year

IBS 159

Annex IX Stakeholders in the leather industry

Organization name Webpage/Email/Tel Background/Activities

ITKIB – Istanbul Textile and Apparel Exporters Associations

www.itkib.org.tr info@itkib.org.tr +90 (212) 454 02 00

Active since 1937, serves to multiple industries in multiple provinces to support export promotion and development. It is an umbrella organization comprising export promotion unions for ready wear, textile, carpet and leather.

IDMIB – Istanbul Leather and Leather Products Exporters' Association

www.idmib.org.tr info@idmib.org.tr +90 (212) 454 02 00

Acts with the aim of increasing the market and exports potential and helping its members to improve B2B and multilateral trade relations.

EDMIB – Aegean Leather and Leather Products Exporters' Association

www.eib.org.tr/birlikler-deri-birlik-detay.asp eib@eib.org.tr +90 (232) 488 61 00

The organization was constituted under Aegean Exporters’ Union in 1991 and currently has 352 member companies. The Union’s general scope of services include informing the members on issues such as export procedures, regulations, national and international fairs and exhibitions and import requests from abroad; Establishing and developing relations with international organizations.

TSDS - Turkish Leather Industrialists Association

www.tdsd.org.tr tdsd@tdsd.org.tr +90 (216) 394 07 40

Founded in 2005 with the purpose of promoting Turkish leather brands in domestic and international markets.

TDKD – Turkish Leather Garment Manufacturers' Association

www.tdkd.org.tr tdkd@tdkd.org.tr +90 (212) 665 27 47

Supporting leather garment companies mostly for fairs and branding. It has close relations with the Russian market.

ASD – Footwear Industrialists Association of Turkey

www.tasd.com.tr info@tasd.com.tr 0850 214 63 80

Established in Istanbul in 1985, the Turkish Footwear Industry Association is an institution which has been working to help the technical and economical development of this industry.

SSD – Turkish Leather Goods Association

www.saraciye.org.tr ssd@saraciye.org.tr +90 (212) 543 39 07

Turkish Leather Goods Association (Saraciye Sanayicileri Dernegi), established in Istanbul in 2003, association provides a common ground for communicating in the leather industry. It provides incentives to its members such as design incentives and machine buying incentives. We organise collective fair participation for our members.

TÜRDEV – Turkish Leather Foundation

www.turdev.org info@turdev.org +90 (212) 558 23 02

Established in 1999, the foundation has 32 members 29 of which are founding members. The foundation aims at supporting and developing Turkish leather trade and production through providing scholarships to students studying leather, supporting training institutions and events specialized in leather to develop talent base.

DETEK - Leather Technologists and Chemists Association

www.detek.org.tr detek@detek.org.tr +90 (216) 394 01 03

Founded in 1995, DETEK aims at developing technical and scientific infrastructure of the leather industry, supporting leather industry for technical integration to international standards. It is a member of IULTCS (Union of International Leather Technologists and Chemists Associations) in order to prepare, approve and update of international leather standards and tests.

LASIAD – Laleli Manufacturers and Businessmen Association

www.lasiad.org.tr lasiad@lasiad.org.tr +90 (212) 516 90 52

LASIAD was established in 1997 and active in ready wear and leather industries with its ca 1,000 members. Its name comes from a negihborhood in historical centre of Istanbul, Laleli, famous for its shuttle trade carried out by Middle Eastern, Russian and Central Asian traders. Laleli today hosts ca 7,000 companies and 20,000 employees.

IBS 160