Pilot Project: Target Market USA USA Aims of the Pilot Project

INTERNATIONAL COMPETITIVENESS AND COOPERATION CONFERENCEJUNE 4-5, 2013

ANKARA

Pilot Practices in Regions

"Gaziantep Weaved Carpet Production Sector Target Market:

USA”

I) Aims of the Pilot Project

II) Approach towards the Pilot Project

III) Training and Guidance Outcome of the Pilot Project for Export Supervisors of Gaziantep Carpet Firms

IV) Market Analysis Outcomes of the Pilot Project V) Potential Client Analysis Outcomes of the Pilot Project

VI) Advertisement Activities of the Gaziantep Carpet Cluster to USA Market Outcomes of the Pilot Project

Pilot Project: Target Market USA

USA

Aims of the Pilot Project

Gaziantep Machine Weaved Carpet Production Sector, is the leading producer of the 75% of the mass production in Turkey and the production is exportation oriented.

90 % of the exportation of Turkish weaved carpets is carried out by Gaziantep carpet producers and most of the exportation is made to Saudi Arabia and Iraq, countries with inconsistencies in marketing. Gaziantep Carpet Cluster,

needs to diversify its current market and be more present in consistent markets such as the USA and EU.

To carry out a market research for USA target market.

Trainings concerning market research and foreign advertisement by including recent graduates as well as foreign trade specialists within the firms to pilot action plans.

Attemps of interviews with prospective buyers and attendance in a fair or a mutual activity in USA to be decided as a result of Pilot action plans.


Coordinator Senior Specialist: Dr. Binhan OĞUZ BERKSOYSenior Specialist: Bilal EKMEKÇİGaziantep Cluster – info Spot Coordinator : Serap GÜLTEKİNTeam Leader: Michael B. Dan

Pilot Project Team

II) Approach towards the Pilot Project





«How to Make the Pilot Project Efficient for Both the Participants and the Cluster

in General?»

Are the Firms Ready for USA?

Which segment within USA market would be more profitable and

sustainable for the firms?Are the fairs chosen appropriate for the firms?

Which alternative activities offered would be most efficient in enhancing the

exportation of the firms

• Would they act together? Which field would be appropriate for acting together?

• It is clear that the firms individually need support in marketing and advertisement within USA and majority of the firms look for individual support rather than acting as a cluster.

• As indicated under the assumptions concerning the project, the participants were large firms in exportation in Gaziantep to USA rather than firms with a goal or potential of exportation to USA.

Through Introduction Meetings and Firm visits, opinions on the

USA market were obtained

How to bring added value to the firms?

Largest Market of the World

It is our 3rd most important

market but…

The customer finds us!

We ship to the client by adding everything with the tag and the price!

We were able to meet all the conditions but we

gave up!

It is a lot of burden!

There aren’t 5 firms in total, which would

comply with these criteria within Gaziantep!

Belgium has 250,

Gaziantep has 900

weaving looms!!!

China is not a

competitor, their

products lack quality

and are expensive!!!

10 out of 100

carpets in USA

market are from

Gaziantep!!!

Considering what the firms said:“We Would Like to Export to the

USA! BUT!”

• We assessed the situation of Gaziantep Cluster and the situation of the competitors within USA market

• We are strong within a market affected by the economic crisis but we do have competitors: Belgium is still within a profitable segment, China “might become stronger and become a competitor»

• The share of our exporters is increasing within the market but our profit is low

What did we set as priorities after firm visits? What actions did we

take?

• Our firms are within price competition especially with each other

• Same firms go to same clients and apply a “firm follow up pf the client policy”

• An important reason of the lack of trust in mutual action is that the differentiation strategy is not adopted by the firms

• We made a SWOT analysis of the Gaziantep Cluster compared to the USA market





Training and Guidance Outcome of the Pilot Project for Export

Supervisors of Gaziantep Carpet Firms

2 different trainings were given to groups of 10 concerning Market Analysis Methods and Exportation Determination Methods and a handbook of 10 pages was prepared. This handbook and the detailed report was prepared by the SAEA to be distributed to all Weaved Carpet Exporters whether included or not within the analysis which will serve the purpose of increasing exportation to USA

Trainings were carried out for the Exportation Supervisors of the Pilot Project in Gaziantep Carpet Firms and Guidelines were prepared.

KOBİ İşbirliği ve Kümelenme Projesi

Kümeler için İhracat Teşhisi El kitabı

Mayıs 2013

IV) Market Analysis Outcomes of the Pilot ProjectA) Qualities of USA Carpet MarketB) Competition in USA Carpet MarketC) Potential Provided by the USA Market for the Participant Firms of the Pilot Project: Determining the Exportation Potential of the Firms through Cluster ApproachD) Conditions concerning Regulation within the USA Market for participant firms of the Pilot Project V) Potential Client Analysis Outcomes of the Pilot Project


Transfer to Active Marketing

EXPORTATİON MARKET RESEARCH/ İDENTİFİCATİON / ACCREDİTATİON

CHARACTERİSTİCS OF USASTATE OF THE CARPET MARKETUSA CARPET EXPORTATIONUSA CARPET SALES/DISTRIBUTION CHANNELS

EXPORTATION

IDENTIFICATI

ON

Characteristics of the USA Market

In 2012 there is a great number of purchase higher than prior to the great fall in 2009

Starting from 2006, two most prominent partners of the USA, Canada and Mexico are no longer important

China predominantly settled in

USA exportation

WITHIN 10

YEARS

Economic Condition Reflected at the Carpet Sector in USA

Market

USA carpet market has narrowed by 4% within the last 4 years.

After the crisis of 2009, the carpet market narrowed by 21% however in 2012 the volume went back up to 22,3 billion dollars.

Household purchases make up to 71% of the total purchase within USA.

During the term of 2006-2012 unemployement in USA rised up to 9,3 % to 4,6 %; therefore expenses diminished by 14% compared to 2006.

Reflections of the Improved Economic Relationships between USA and Turkey on

Carpet Market

Dual foreign trade of Turkey has 8,5 billion dollars deficit in favor of

Turkey USA Strategic

Partnership!

BUT!

Target Activities in USA Market for Exportation from Turkey

Share in Carpet

Importation %

Carpet Importation

from Turkey

General Importation

from Turkey

States 2011 2011 2011

Georgia 31,4 25.735.192 235.699.418

New York 13,0 10.536.736 502.915.142

California 7,2 6.237.664 451.662.691

Texas 6,4 5.666.808 514.212.378

Illinois 3,5 2.827.682 193.710.818

Florida 1,0 598.092 231.104.056

Total 100 107.806.410 5.219.840.135

11% of the Exportation from Turkey to Georgia is made up of exportation of carpet. Exportation of the sector is 2,3% of the total exportation to New York.

Competition in USA Carpet Sector

Competition between the players in USA Carpet Sector is developing within a negative environment.

With the effect of crisis number of firms operating within the sector diminished by 24%.

Despite crisis carpet exportation in USA increased by % 6,24 and competition between countries have been ignited.

Value chain evaluates the structure of the firms within 4 main fields through the efficiencies of the sector activities:• Access to Raw materials• Production- Product Development• Marketing and Sales• Services

…

KURUMSALLAŞMAYAN Yönetim, Muhasebe, FinansFAALİYETLER İK

Eğitim, mesleklerALT YAPI

Kalite kontrol, bilgi sistemleri

HAMMADDE ÜRETİM PAZARLAMA HİZMETLERİç Piyasa İhracat

ANA FAALİYETLER Kimya Sanayi Ar-Ge/desen Toptancıya ToptancıyaZamanında teslim

İplik Teknoloji Örnek iletimLatex Enerji Perakendeye Perakendeye Esnek Çalışma

İK yeterlilik e-Ticaret e-TicaretHatalı ürün geri çekme

Exportation Evaluation: Value Chain Method

There are about 800-100o weaving looms in Gaziantep Carpet Cluster.

The least number of looms included in the analysis is 3 and the most goes up to 50. 2 firms have a much bigger capacity than the average;

When the number of employees for each loom is considered it is anticipated to have a number close to 18; a research made in 2011 for 137 firms shows that this number is 14,29.

Key Success Factors: Production and Product

Development

3< 3 İLE 5 5 İLE 30 30>0

0.5

1

1.5

2

2.5

3

Firmaların tezgah sayısına göre kapasiteleri

tezgah sayısı

Fir

ma

sayı

sı

It is hard to build a one mutual strategy.

C) Potential Offered by the USA Market By Participant Firms of the Pilot Project : Exportation Potential Identification will be carried out with a Cluster Approach

Quality certificates are not in priority…

Most important market for the firms included in the evaluation is Middle Eastern region which includes Iraq and Saudi Arabia but 41% also makes sales in USA market. Research completed in 2011 done for 137 firms indicates that EU countries follow Middle Eastern and Arabic countries.

Key Success Factors : Marketing and Sales

Firms are mostly exportation based and there is an domestic market-foreignl market balance.

Expanding the brand market share in domestic market makes up a strong base for exportation

Most vulnerable parts of the sector for exportation is exporting the same product, to same markets…

Firms concentrate on the same kind of products.

Key Success Factors: Marketing and Sales

Regulation Constraints in USA Market for the Firms in Pilot Project

Tariff Obstacles

Obstacles not Related to Tariff

Because the products imported by USA are products that are needed and that do not bother the domestic producer, there is a duty tax

exemption or low rates of duty are applied.

Whether the products are appropriate for the environment and human health, or issues such as employing child workers which may

create obstacles not related to the tariff are determined by commercial/scientific associations, technical organisations,

profesional unions, scientific societies, Federal Government and institutions such as National Institute of Justice.


II) Approach to the Pilot Project





USA

Potential Client Analysis Outcomes of the Pilot Project

Exportation Does Not Only Mean That The Product leaves Turkey and enters another country; exportation is to sell the product to the buyers in target company in the most profitable and effective way.

Market Research was carried out.

Competitor Research was carried out.

The idea is to sell the weaved carpets exported from Gaziantep to the buyers in the USA in the most profitable and effective way.

Potential Client Analysis Outcomes of the Pilot Project

Advertisement concerning the Exporter/ Wholesaler profile in USA Market was suggested.

“Additionally, establishing a logistic base in USA was deemed as adventegeous for competition and an enterpreunership plan that the whole cluster would benefit was suggested.

Instead of exportation the Agencies were recommended to open a Liaison Office of our firms in USA.


II) Approach to the Pilot Project





USA

• Within this context, it is required that activities other than fair participation that would be heard and that would increase the exportation of the cluster as a whole shall be planned and right partners and right action plans shall be chosen.

.

• Contrary to Europe, fairs in the USA show that the wholesalers participate, therefore participants do not wish to exhibit their products in fairs

• Aditionnally, as for the wholesalers/exporters who are the direct buyers of the firm, exhibiting for them does not seem reasonable.

.

Problems in Applying the Pilot Project

Thank You

Documents

Pilot Project: Target Market USA USA Aims of the Pilot Project