Country Report: Turkey by nicolette.c.brown

Tu r k e y Country Report

Global Sourcing nicolette.c.capizzo

TURKEY

THE PURPOSE Ottössöns aims to make business in Turkey. This report will give a detailed look at Turkey and its luxury leather shoe industry. We aim to find the truth in outsourcing our product in Turkey, looking at all aspects of the Turk’s culture, politics, economy and lifestyle, we will assess whether Turkey is the place for Ottössöns to source our men’s leather shoe products. The truth in outsourcing our manufacturing is due to the modern textiles and technologies used in the production along with the quality workmanship. With intentions in creating lasting relationships and producing a design that redefines our business, we have examined the countries overview from start to finish, trade agreements and laws, business etiquette, sourcing guidelines, the countries traits, culture, lifestyle, costing, benefits and the risks involved with doing business with Turkey. We have made Turkey a transparent business partner and while seeing their success in past years through infrastructure, economy, and developments, Turkey is a country that is willing and eager to grow. However, Ottössöns has taken a detailed look into the truths in outsourcing our product from Turkey. While assessing whether Turkey is the place for Ottössöns sourcing and manufacturing of men’s luxury leather shoe products, we found the risk soutweigh the opportunities, it is in Ottössöns best interest to invest elsewhere.

Ottössöns strives to design for the established man with a creative style. This philosophy allows us to create a rare premium product that redefines the idea of art in footwear.

TA B L E O F CO N T E N T S

PAG E :

THE PURPOSE

INTRODUCTION

CO U N T RY OV E R V I E W

BUSINESS ETIQUETTE

G LO B A L S O U R C I N G OV E R V I E W

CO N C LU S I O N

117

APPENDIX

124

INTRODUCTION More international investors are recognizing Turkeys beneficial geographical location and large domestic market. There is a growing awareness that is helping to drive foreign direct investment (FDI). Turkey encompasses 56 countries, a region with 74 million people and an export potential of US $10 trillion. Turkey’s strength in location and large domestic market are helping Turkey to become a center of operations for multinational companies. Turkey holds many promising cities under her wing, with strong expectation for growth in Izmir, Ankara and Bursa along with an already growing market in Istanbul who benefits from their geographical location, reasonably well-developed infrastructures and educated workforce.

With an administration that consists of 81 provinces and 8 bordering countries, Turkey lies at the junction of Europe, Asia and the Middle East. The strategic location, combined with massive domestic market and a stable macroeconomics. Turkey has become the 16th largest economy in the world in terms of GDP. Turkey is now offering one of the highest risk-reward ratios to foreign investors and is now recognized as an economy with very high potential. The country is expected to grow at 3.5% in 2013 with a GDP growth of 5% [Ernst and young’s].

Yet with advancement comes risk and challenges. Red flags for foreign direct investment (FDI) in Turkey are; proximity to the political instability in neighboring countries, an ongoing account deficit, the need to accelerate its innovation, a constitution that needs extensive reform, a restructured judiciary and de-militarized the political system are factors that create a red flag for foreign direct investment (FDI). Businesses are more likely to invest in Turkey if they improve their education system, boost innovation and make the tax administration more efficient. Turkey’s future looks bright but they need to remove some barriers for investors and small and medium sized business, like Ottössöns.

CO U N T RY R E V I E W PAG E :

Geography

History

Politics Socio-Economic-Political Economy

Labor & Labor Laws

State of Textile and Shoe Industry

Textile & Shoe Associations

Trade Agreements & laws

GEOGRAPHY

LOCATION Southeastern Europe and Southwestern Asia (the portion of Turkey west of the Bosporus is geographically part of Europe), bordering the Black Sea, between Bulgaria and Georgia and bordering the Aegean Sea and the Mediterranean Sea between Greece and Syria. Due to its geographical location, Turkey is a natural bridge between East-West and North-South, thus a massive cost effective trade center. Turkey offers a unique geographical location that situates it between the biggest hydrocarbon producers and their major markets, rendering it the ultimate energy corridor. 70% of the worldâ&#x20AC;&#x2122;s energy resources are located to the east and south of Turkey, while one of the largest consumers, Europe, is adjacent to the west. Because of its inimitable location and stable political conditions, Turkey hosts the Nabucco pipeline. Turkey also acts as an international hub with access to multiple markets. Turkeyâ&#x20AC;&#x2122;s location at the crossroads of Europe and Asia makes it a country of significant geostrategic importance. 9

Capital: Ankara population size 4,233,125 [2012]

Coastline:

7,200km 4,474 miles

Highest Pointe:

Mount Ararat at 16,949 feet (5,166m)

Maritime Claims

Territorial sea: 6 nm in the Aegean Sea; 12 nm in Black Sea and in Mediterranean Sea exclusive economic zone: in Black Sea only: to the maritime boundary agreed upon with the former USSR

Natural Hazards Earthquakes; especially in northern Turkey, along an arc extending from the sea of Marmara to Lake Van. Volcanism; limited volcanic activity; its three historically active volcanoes; Ararat, Nemrut Dagi, and Tendurek Dagi have not erupted since the 19th century or earlier Environment; water pollution from dumping of chemicals and detergents; air pollution, particularly in urban areas; deforestation; concern for oil spills from increasing Bosporus ship traffic

Climate Turkey has a temperate and it has high, dry summers and mild wet winters. The more inland one gets however, the harsher the climate becomes. Turkeys capital, Ankara, is located inland and has an average August high temperature of 83 ˚F (28˚C) and January average low of 20˚F (-6˚C).

Economic Land use in Turkey Turkey’s economy is currently growing and it is a large mix of modern industry and traditional agriculture. According to the CIA World Factbook, agriculture consists of about 30% of the country’s employment. The main agricultural products; tobacco, cotton, grain, olives, sugar beets, hazelnuts, pulse, citrus and livestock. Turkey’s main industries; textiles, food processing, autos, electronics, mining, steel, petroleum, construction, lumber and paper. Mining in Turkey consists mainly of coal, chromate, copper and boron. Major Seaports Aliaga, Diliskelesi, Eregli, Izmir, Izmit, Mersin, Limani, yarimca Time Zone Two hours ahead of Greenwich Mean Time (GMT) Major Cities 10

Istanbul, Ankara, Izmir, Burza, Adana

H ISTO RY Turkey: a junction point of two continents, a land bridge, a meeting point and a battleground. Turkey has become a mixing bowl, peoples have been moving in all directions between Europe and Asia throughout their history. The human traffic has left historic monuments, debris and lasting cultural impact and legacies that have left the groundwork for what Turkey has become today.

TURKEY’S PAST REFLECTS THAT OF CONSTANT TRANSITION Turkey’s history is a rich patchwork of overlapping eras, empires, events and phenomenon’s, which has truly contributed to the modern day lifestyle.

TAKING A LOOK INTO THE PAST After turmoil, instability, intermittent rulings and finally a foundation for democracy mixed with a secular state view, Turkey had set the stage for present day. As a new nation, Turkey remained neutral during World War II, although as a ceremonial gesture, they engaged in on the Allies side in 1945 becoming a charter member of the United Nations. This would be there first foreign relationship a foundation that would spiral. In 1952, Turkey joined the North Atlantic Trade Organization (NATO), after taking part in the Korean War, which they stood side by side with the United Nations (UN) forces. Turkey would become a barrier against the Soviet expansion into the Mediterranean. This would set the importance of there geographical location. During this time on Turkish soil, government was experimenting with multi-party politics. The country would soon be led to the 1950 election, which drew victory for the Democratic Party. Since then political parties have multiplied, creating clashing ideals, forcing periods of instability, and intermittent military takeovers, yet the country has continuously fallen back to the political power of civilians. Through it all the levelheaded people of Turkey prevailed, and in recent years the government has undertaken many reforms to strengthen both the democracy and economy.

Today Turkey is populated with around 74 million people making Turkey a large middle-income country. Its economy is composed of modern industry and commerce along with a traditional agricultural sector that still accounts for about 30 percent of employment in the country [turkey review 2013]. Turkey has become a EU (Europe) candidate country in 1996 and in line with EU requirements went on to introduce substantial human rights and economic reforms. It is the hopes of Turkey to eventually join the European Union in the near future.

Turkish pride has been a leading driver of success across the country from the start until present day. FO OTW E A RandHFootwear ISTOR Y The history Leather Industry The history of Leather is as old as human history, with the learning how to hunt, first men also learned to use the skin. When the Turks conquered Istanbul in the year 1453, the place where the Sultan stayed had plenty of good water, which was suitable for leather tanning, therefore after the conquest of Istanbul, the Ottoman Emperor Fatih Sultan Mehmet, reserved this zone for the leather industry. The first leather industrial zone, Kazliceme, just outside of the Topkapi city walls, was established and had lived about 500 years. Initial efforts to modernize the leather industry began in the 70s but significant progress on a real industrial scale only began in the mid 80s. The sector has developed very quickly in recent years.

At present, there are three organized leather industry zones in Turkey and wastewater

treatment plants for these zones have been completed. In addition, eight organized leather industry zones are under construction. The sector produces according to international standards and is becoming more sensitive to health and the environment

Parallel to the enlargement of the Russian market, Turkish leather sector transferred its earning to investment. Thus in 1990â&#x20AC;&#x2122;s, this sector had increased its capacity and productivity by entering the Russian market. 13

Turkish leather products has a unique position among the world markets with its high quality, product variety and strong infrastructure. Turkey is one of the

most important producers of leather garments in the world. High

quality leather goods are produced by the industry by the help of advanced know-how and new technologies. This has led to new developments in the quality of raw materials which has positively affected production and export.

It is obvious that the footwear

industry is extremely dependent on the leather industry in the country. With that being said, the shoe industry, which began to appear as a small size industry in 1950, is now a well developed industry. Especially in the 1980s significant investments in machinery parks were made and now over industrialization process. About

70 %

15 %

of the sector has completed its

of the production in the sector is carried out

by semi mechanized production processes and almost

15 % of production is handmade.

Turkeyâ&#x20AC;&#x2122;s footwear industry has developed at a rapid pace due to modern manufacturing processes, and the availability of major quality rw materials. Today the Turkish footwear industry has a strong position among exporters of high quality fashion goods. Another sign of positive development is the increase in foreign investments in the sector.

pol i t ica l The politics of Turkey take place in a strictly secular parliament representative democratic republic. The prime Minister of Turkey is the head of government and of a multi-party system. The president of Turkey is the head of state that holds a largely ceremonial role but with significant reserve powers. The political system is based on separation of powers. The executive power is covered by the Council of ministers, the legislative power is held under the Grand National Assembly of Turkey, as the judiciary is independent from the executive and the legislature.

â&#x20AC;&#x153;A country proud to serve as a bridge between Europe and Asia yet unable to bridge itsâ&#x20AC;&#x2122; own differences. This became apparent for the whole world to see during the Gezi Park protests. The uprising came about not as power struggle nor as demands for political freedoms; not as an ethnic struggle or one for democracy. Ours is a deep disagreement between progress and tradition -- a disagreement which has been going on for centuries. It is our cultural divide,â&#x20AC;? a quotes given by Safak Pavey a member of the Turkish parliament. The statement states the true struggle that Turkey is facing a changing more invested country with more and more foreign trade is being faced with change.

PROS A D C O N S political system, after a period of union Today Turkey is facing change, a Nchanging

ionized government from 1991 to 2002, which was marked by two financial crises in 1994 and 2001, a military intervention that sheltered the government in 1997, and a political instability and economic chaos in the early 2000. These political issues that have interrupted the history of economic growth for Turkey helped bring about the grand electoral victory of the Justice and Development Party (AKP) then a new and anti establishment party that where uninfluenced by the political and economic 16

scandals of the time. Now, today Turkey is on a successful growth a result of political self-presentation as a counter force to the establishment of alternatives, the AKP government is the longest serving democratically elected government in the history of Turkey. The AKP leadership is expected to continue this streak of governing by eliminating altogether the possibility of union politics and replacing the current parliamentary system of government with a presidential one.

With the changes today the currently redrafted constitution would provide a replacement of the parliamentary system, which was adapted in the founding of the Republic of Turkey, and convert it to a presidential form of government. The political and systemic implications of the changes suggested by this proposal are so profound that they will or could fundamentally impact not only the redrafting process but also the whole course of politics in Turkey in 2013.

The redrafting process is in full running due to soon upcoming

Turkeys Leaders 2013

electoral elections: March 2014 the local elections, August 2014 the

Head of state: President Abdullah Gül (since August

Presidential Election, and Fall 2015 the Parliamentary Elections. The

2007)

redrafting process is bringing a sound democracy to action. The call

Head of government: Prime Minister Recep Tayyip

for presidential system of government is understandable in Turkey; it

Erdogan (since March 2003)

will allow a more adequate system of checks and balances between

Nature of regime: Republican parliamentary de-

branches of government and a guaranteed protection of individual and

mocracy and secular state. The armed forces still

political rights and freedoms. This change would allow a more civilian

have large political influence.

government; it would change the puppet image of Turkey that has fallen under military rule. Thus far, the AKP government has been successful

in gradually curbing the army’s political powers and increasing democratic control over the courts. A comprehensive reshuffle of the top military leadership has further strengthened the position of civilian rule: and especially that of prime minister Erdogan. Egemen Bagis a minister for EU affairs and Chief Negotiator, “While Turkey is firmly attached to its destined course of integration with the European Union, we are equally involved with our Eastern and Southern neighbors. Turkey’s attachment and alliance with the West is complemented with its historic and cultural roots in the East. This combination makes Turkey a strategic asset for the EU. Similarly, Turkey’s unique position in Eurasia makes us a key global actor. Turkey is the most Eastern part of the West and the most Western part of the East whereas Istanbul is the most European City of Asia and the most Asian City of Europe.”

This statement clearly highlights the growing future and importance of Turkey. With a equally involved way of life, economy, and government and a strong networking partnership with neighbors and other foreign countries Turkey is truly placing themselves 17

A LIGHT AT THE END OF A TUNNEL in the direct and perfect position for a growing relationship between foreign markets and investors. This position is allowing Turkey to become the central location for connection

between east and west a true hub for foreign markets and a perfect dropping point for Ottössöns, if all goes well.

For the

United States

the spread of democracy brings greater peace, prosperity, and

pluralism. Yet Democracies often have conflicting priorities and while creating a common ground PPO R T U at N the ITY in government is not a solution or Ocure. Looking United States and Turkey there ideals TURKEY IS MARKING ITS WAY TO A SUCCESSFUL AND STRENGTHENING ECONOMY.....

today do not look eye to eye. Yet there is a

“good strategic reason for

the

bilateral

relationship

to grow and mature into a

mutually

beneficial

partnership that can manage a complex set of security, ECONOMIST INTELLIGENCE UNIT (EIU), INTERNATIONAL MONETARY FUND (IMF)

economic, humanitarian and environmental problems.” (Task Force)

However, “what democracy grows upon is stability from political leadership, being built upon consensus and peacefulT competition. This statement H E R E A” (Mark R E SP Tlagon, R O Council N G DonO foreign U B T relations) S puts into question whether Turkey has fostered a stable government in which a strong democracy needs to grow upon. Concerns have been raised about the “prosecution and detention of journalists, the seemingly open-ended and at times questionable pursuit of military officers and other establishment figures for alleged conspiracy against the government, the apparent illiberal impulses of some Turkish leaders, the still unresolved Kurdish Issue, and the Lack of progress on a new constitution.” (Bipartisan Task Force) It seems that in recent activities Turkish government maybe calling bluff yet American Task Force is seeking “to promote a better understanding of the new Turkey - its strengths, vulnerabilities and ambitions - in order to assess its regional and global 18

role and make recommendations for a new partnership of improved and deepening U.S. - Turkey ties.” What needs to be looked at is the equality and mutual respect for

critical importance, avoidance of foreign policy surprises and recognition and management of inevitable difference between Turkey and the Untied States.

each others interest those of United States and Turkey, confidentially and trust, close and intensive consultations to identify common goals and strategies on issues of

FINAL OUTLOOK For Ottössöns, we look to the future. With a reforming government in Turkey a democratic nation would provide a civic attitude, a middle ground that provides a buffer against the use of extremist tactics. Democracy would bring strength in protection and serve the minority as well as the majority and would improve the weak system of checks and balances on the political platform that exists today in Turkey. Democracy would also diminish the violent implications of Turkey’s current political situations. Turkey can take a step forward with a rising economy it is time the government jumps on board. They have become a prosperous and politically influence around the world, yet domestic development raises strong question of true intentions. With an open democratic reign it would allow a way of life that would enable the Turkish citizens to live in peace. Today, protest movements continue it is hard to see the end of the dispute between citizen and government. For a new business like Ottössöns, we question our safety and with such governance restrictions where does our opportunity lie for business and our practice of fostering a civil society look like in the future.

SOCIO-ECONOMICP O L I T I C A L C L I M AT E QUICK RE-CA Turkey, the third most populous nation in Europe and with one of the fastest growing economies in the world. The country sits between both western and eastern countries, geographically falling in the middle of several conflicting regions. Which have contributed to the up and down socioeconomic and political climate of Turkey. In the past decade, Turkey has overcome a series of political and economic challenges while supposedly re-establishing a peaceful economic relationship through an adopted Zero Problems Policy with neighbors, those including Iran, Iraq, Syria, Lebanon, Greece, Eastern Europe and Russia. Turkey seemed to have found the elusive formula for foreign policy success with a fairly newly-adopted philosophy, “zero problems with neighbors,” which won praise both at home and abroad for the 2002 elections. The policy initially cultivated a good neighborly relationship, which ideally eradicating all the problems that Turkey was trying to overcome in its neighborhood. The Justice and Development Party (AKP) (the party rose 18 months after its foundation with strong Islamic credentials) implied that good neighborly relations would be one of there priorities of their party’s foreign policy, which would help back up the 2002 election philosophy. The policy received widespread attention from the international public that was already scrutinizing the foreign affairs of the AKP, yet the party promised to follow a more “cooperative track” with its neighboring countries through the development of economic interdependence which geared towards the demilitarisation of the political regime as well as the discretization of dominant political decisions. During which reengaged opinion while expanding business and trade links with Arab states, as well as Iran, lifted visa restrictions with neighboring 20

countries, and even helped mediate some of the region’s toughest disputes, brocading talks between Syria and Israel, Fatah and Hamas, and Pakistan and Afghanistan. (Gencer Özcan, department of international relations, Istanbul) Furthermore the policy was in line with the European Unions policies which Turkey was/is trying to jump on board with. From the time the policy was implemented, Turkey was growing in popularity with an innocent appearance. PAST-PRESENT-POST With a strong political image and innocent

by the overthrown Egyptian President Mohamed

stance who wouldn’t want to improve relationships

Morsy, and started a war of words with Israel

with such strong growing world power? Turkey

for having a hand in the overthrow that removed

has created the largest free-market economy and

Morsy from power. The truth of the matter is that

greatest industrial power in the region between East

it was always only a matter of time before Turkey’s

Europe and East Asia, during the last decade. While

foreshadowed “zero problems” policy failed. Having

exporting more goods in 2012 than ever before with

zero problems meant keeping out of other countries’

a valued amount of US $152.6 billion to over 241

domestic affairs. So where is Turkey standing? With

countries and regionally worldwide. (Ernst & Young)

a perception of an “excellent model” or as many put

Turkey has strengthened there attractive image while

it,

attracting a number of investors. With expectations

a decade ago.” There is a certain amount

and implementations of new investment incentive

of truth, under the AKP and the allure of Erdogan,

schemes and continued reform programs continue to

record numbers of Turks have become politically

boost investors’ confidence in the countries growing

mobilized and prosperous. Turkish economy tripled

future. However, just a few years later, in the wake

in size from 2002 to 2011, and 87 percent of Turks

of the Arab Spring which brought protests and riots

voted in the most recent parliamentary elections,

and its aftermath, that once-reliable formula of ‘zero

compared with 79 percent in the 2002 election that

problems’ starting to look like an experimentation.

brought the AKP to power. The new political, cultural,

Prime Minister Recep Tayyip Erdogan has now

and economic openness helped Erdogan ride an

burned his bridges with the military regime in Egypt,

alliance of religious Muslims, Kurds, cosmopolitan

fought with Gulf monarchies for refusing to stand

elites, big business, and average Turks to re-election

“more democratic than it was

with 47 percent of the popular vote in the summer of 2007, the first time any party had gotten more than 45 percent of the vote since 1983. And in 2011, the prime minister reinforced his political mystique with 49.95 percent of the popular vote. This was unprecedented in Turkish politics. Turkey, it seemed, had arrived, by 2012, Erdogan controlled over the 17th largest economy in the world, becoming an influential

“Turkey is becoming one of the most attractive investment destinations for foreign investors” actor in the Middle East.

a quote given by Zafer Caglayan L O O Ka IMinister N G SofT Economy R O N Gfor the Republic of Turkey. Turkey alone has increased US investment flow from $18 million 33 years ago to today’s 138.3

political and economic” environment.

billion dollar investment increase. This shows

Today, with strong economy strengthens,

Turkey is meaning business and by business I

Turkey’s platform to fashion a more independent

mean Turkey is now playing a significant role in the

and Islamic-leaning foreign policy puts the

global economy and world market of the United

nations economic interest squarely in the

States. Standing out as a promising emerging

forefront. (Washington times) “Now one of the

market alongside competitors; Brazil, Russia,

objectives of Turkish foreign policy is to ensure

India and China. There growing “robust local

that Turkish exporters get new export markets

market and young population” is offering another

and that the country receives more foreign direct

layer of opportunity by serving as a frontier to

investment,” according to Sinan Ulgen a scholar at

other regions. Investing in Turkey means access

the Carnegie Endowment for international peace

to markets in Europe and the Middle East. Turkey

and a partner at Istanbul Economics. However, in

is benefiting from a unique strategic location in

the recent months socioeconomic and political

terms of a young, dynamic workforce and a “stable

climate have taken a tumble.

LOOKING WEAK AGAIN... With recent events putting question to Turkey’s truths and intentions. Turkey’s image in the West took a beating this summer with protests in Gezi Park and Prime Minister Recep Tayyip Erdogan’s decision to put 22

down the demonstrations with riot police, tear gas and water cannons. Erdogan has come under scathing

criticism in the American press and has undermined his relationship with the European Union. Today, the country risks returning to the mind-set of the 1990’s, with tension with Arab and European countries, conspiracy theories poisoning the political debate, demeaning actions of government leaders and Turks convinced they are a country under siege by military and government. Turkey deviating far from there most recent “zero problems policy”, a quote highlights it all

friend but the Turk.”

“The Turk has no

Erdogan, it seems, has taken his country from “zero

problems” to international headaches. While Turkey’s foreign policy struggles in the Middle East may have been inevitable, its isolation elsewhere seems self-inflicted. The AKP and Prime Minister Erdogan might have been elected with an increasing share of the popular vote over the last decade, but the government’s actions increasingly make it seem as if Turkish democracy does not extend farther than the voting booth. HOLDING ONTO HOPE Yet despite all dispute Turkey is continuing to

their citizens with ways in which to express their

look to becoming one of the top 10 economies in

desires and frustrations beyond periodic elections.

the world by 2023. To do this they are targeting

And while the handed AKP party is undertaking

an export volume of US $500 billion with a GDP

massive

of US $2 Trillion and a GDP per capita of US

including the renovation of Taksim Square, the

$25,000, to accomplish such goals they plan to

building of a new airport, and the construction of

have US investment of $250 billion in energy and

a third bridge over the Bosphorus all which are

transportation. (Ernst & Young) According to the

creating new investment incentives, which offer

Foreign investment writer STEVEN A. COOK and

attractive local and international investments.

MICHAEL KOPLOW ‘The Turkish prime minister

Yet are disapproved by Turkish citizens, these

was a trusted speaker with the president of the

events will not bring down the government, but

United States.’

it will reset Turkish politics in a new direction;

construction

projects

Istanbul,

the question is whether the AKP will learn some With a leader who masks the

reality of

a ‘promised democracy government’

while failing to provide

important lessons from the people collecting in the streets or will they continue to double down on the theory that elections allow the government the right to do anything it pleases. 23

The lacking care for social and political climate that is being presented by the government of

Turkey poses strong questions for whether Turkey is the market Ottössöns wants to delve into. A strong reliable and trustworthy relationship is worth questioning with recent activities that have been occurring in Turkey. Building not only a relationship between supplier (Turkey) and buyer (United States) it is a bonus for Ottössöns to foster company values in and around the culture they decide to work into. It is ideal to connect two large markets and create a relationship for increased international investment opportunities but fostering an honest and reliant relationship comes first.

Currency and Exchange Rate:

Turkey sure has seen their ‘up’s and down’s’ after an inflation rate that tipped 77.5% in the

1990’s and seeing 1,000,000 lira for a Turkish tea, it was time to re look at the currency rates. In January 2005, a currency reform reestablished the Yeni Turk Lira now know as the new Turkish lira or TRY.In August 2008, the exchange rate was about 1.2 new Turkish liras to the U.S. dollar. Yet there is still an influx and inflation still remains, even after falling to 6.5 % in 2011, inflation increased to 10.4 % in 2012. While consumer price increases have tailed off a little in recent months, they remain structurally above the regional average. Turkey is a net energy/commodity importer and very vulnerable to higher world market prices, and this is worsened by the instability of the Turkish lira. In August 2012 inflation was still high at 8.9 % after 9.1 % in July. After decades of extensive inflation, the lira is now at a stable rate in 2013. Today the Yeni Turk Lira is now no longer valid this helps prevent dumping from occurring.

L A B O R & L A B O R L AW S Turkey has one of largest labor force compared to the EU and one of the largest and fastest growing labor forces among the developing countries and emerging economies. Turkey’s young population is an important contributor to labor force growth and has contributed to Turkey’s rank over its competitors, the workforce reflects the wealth of opportunities offered to investors. Employment Regulations: Turkey’s administrative structure is centralized, which means that the sources of law are state-based. These state based Turkish labor laws are founded off of the Constitution, Code of Obligations, and the Labor Law, which govern individual labor relations, and special laws. Two laws regulate collective relations: the law on Unions and the Law on Collective Agreements, Strikes and Lockouts. International treaties also are an important source of Turkish Labor Law.

The Constitution adopted in 1982 sets forth the fundamental characteristics of the republic as “a democratic, secular, and social state governed by the rule of law, safeguarding public peace, national solidarity and justice, respecting human rights.” (Constitution of the republic of turkey) In all social and economic fields, the state is obligated to fulfill its constitutional duties within the limits of its financial resources.

The Code of Obligation covers the individual employment contracts a main source of employment rights, conditions and worker benefits. This is the labor law which implements several contracts. Employment contracts for temporary and permanent work, employment contracts for a definite period or and indefinite period, employment contracts for par-time and full time work, contracts for work-upon-call, contracts with a trial period and employment contacts constituted with a team contract. This law also protects any discrimination amongst employees whether it be gender or an employee, language, race, political opinion, the law prohibits philosophical approach, religion or similar criteria. 25

The Labor law enacted in 2003, governs individual employment relations. However, this labor law does not apply to all workers, some categories of workers are subject to special laws. The law however does regulate all individual employment between a worker and an employer at a workplace, regardless of the nature of the operation.

In addition there are two major laws which govern the collective labor relations. The law on Unions confirms the freedom of association of workers and employers and regulates the functioning and activities of unions. In addition the Law on Collective Labor Agreements, Strikes and lockouts (The collective labor law) regulates collective bargaining and industrial action. Both the law on Unions and the Collective Labor Law are applicable regardless of the activity or size of the workplace. Thus, the right to form and join unions as well as the right of collective bargaining and the right to strike, apply in principle to all workers under private labor contracts. The law requires collective bargaining to have taken place before a strike. In order for a union to become a bargaining agent, the law requires that it must represent â&#x20AC;&#x153;50 percent plus oneâ&#x20AC;? of the employees at a particular work place and 10 percent of all workers in the particular branch of industry nationwide.

Since 1980 the International Labor Organization (ILO) has criticized Turkey for some of the above

restrictions. The government has passed constitutional amendments to allow civil servants, who include central government employees such as teachers, to form unions, but it is still illegal for them to strike or bargain collectively.

Employment Breakdown: WAGES The kind of payments paid are in Turkish Lira (TRY) and are paid into the bank account of employees or at the work place. If wage and salary amounts are not directly paid to the employee’s bank account additional penalties are charged to the employer. The wage is a minimum weekly payment, which maybe agreed to in individual employment contracts and collective agreements.

HOURS Under the Labor law in Turkey employees that exceed the 45 hour limit of working hours will receive ‘overtime hours’ this is time and a half (1.5) of there working salary for every hour of overtime. In addition for hours worked during weekend and public holidays are paid according to one-day holiday and overtime wage. The rates can increase based on personal employment contracts between employees and employers. The total number of overtime hours can never exceed 270 hours per year.

LEAVE There are six paid public holidays per year ( Jan 1st, April 23rd, May 1st, May `9th, Aug 30th, and Oct 29th) in addition to two paid periods of religious holiday a total of eight days. Employees are entitled to be paid annual vacation time as well based on years worked.

Years of work

Minimum paid vacation period

1-5 years = 14 working days, 5-15 years= 20 working days, 15 years or longer = 26 working days

Under the labor law the benefits are set at a minimum level and are open to be increased based on a collective or personal employment contract.

AGE Under the labor laws and constitution of Turkey, workers must be at least 15 years of age to qualify for full-time employment. Children of ages 13 and 14 can work in jobs that are not physically demanding or part-time if they are enrolled in school or in vocational training. Children are also prohibited from working at night or in physically demanding jobs.

What employment looks like today in leather shoe market: What Turkey is looking at today despite the remarkable economic performance? Turkey is not managing to increase employment levels compared to its population. Turkey offers an employment base that covers 47 million people of working age (15-64 years old) and a total population of 74 million. Of those 16-64 year olds only 25 million are economically active. The labor force is dealing with an unemployment rate of about 11.5%. (Invest Gov.) While 45% of Turkeyâ&#x20AC;&#x2122;s population is under 25 years old and unemployment is remarkably high amongst 15-24 year olds. While connecting unemployment rates with educational levels, statistics state: below highschool unemployment 9%, high school unemployment 18%, graduates 19.4%. This can be due to the lack of job market opportunities in technical and creative skilled job positions for graduates of trade schools and universities.

The bowl is to big for the spoon. Yet in retrospect the educational levels are low compared to the EU or other candidate countries. Nearly 60% of the labor force is composed of basic education graduates or people who dropped out from basic education. The average number of years in education is 6.8 for males and 5.3 females. Problems related to access to education by gender, rural/urban and social background still exist. One of the key problems for Turkey is the East-West divide. Western Turkey has good economic conditions, with industries competing at global levels, higher employment rates and better and more balanced access to education and higher educational attainment levels. While the Eastern provinces of Turkey are more rural oriented, with low employment rates and poorer educational attainment.

The SIZE The footwear industry employs 26,954 people with 4,753

a great part of added value is created with the country’s own

companies, which are manufacturing various shoes and

resources. Currently 70% of the production input demand is

slippers. About 50% of the companies are in Istanbul; according

met locally and 30% by imports. With pride that is shown in

to Turkish State Institute of Statistics. The footwear industry

Turkish work and a fundamental tradition that dates back 500

has a share of 1.4% in the total GDP and 2% in total investments.

years the production methods target the image that there

(Turkish Leather Council) The most important characteristic of

product is established on quality. Today, almost 50 % of the

the footwear industry is being labor intensive and depending

total number of shoe industry companies are active in İstanbul.

mostly on small sized companies that account for: 3% of total

Konya, Ankara, Gaziantep, Manisa and Denizli, Adana, Malatya

production is based on technology oriented companies, 63%

and Çorum (İskilip) are the other important shoe production

is based on semi technology oriented companies and 34% in

centers. In addition, there are many small and medium sized

labor oriented companies. Turkey benefits from local sourcing,

establishments in the sector.(TCP.Gov)

The Turkish Leather industry accounts for: 1% of manufacturing industries output, 1.7% of manufacturing industries labor force.

SUMMING IT UP

It is obvious that the footwear industry is extremely dependent on the leather industry in the country. The Turkish leather sector, which has a strong history is becoming a leading center in the leather world. The Turkish leather industry, which occupies a prominent place in the Turkish economy, has been developing rapidly by combining its technology and its historical background. Today, in 13 organized Leather Industrial Zones, production is performed in European standards, and through environment friendly, modern methods. The 70% of leather production activity in Turkey employs environment friendly methods. (Turkish leather council) This market is one that Ottössöns wants to tap into. But skilled labor force is still very important for footwear production as it fundamentally depends on labor. The struggle today for turkey comes with a lack of skilled and educated labor force. Turkey’s offers highly competitive labor cost and productivity compared to the world. The government sets a minimum wage rate, but actual wages are higher than this minimum rate. Today the base hourly salary for the leather labor work force is set at $5.90 compared to the average labor wage of textile production, 29

which is $3.98. While the labor cost in Turkey is considerably lower than in rival countries, the growth rate in labor productivity has been impressively higher in recent years. Lower labor cost with increasing labor productivity creates a highly profitable opportunity for investors in Turkey. However, People in Turkey work 1,877 hours a year, more than the Organization for Economic Co-operation and Development (OECD) average of 1,776 hours. Around 46% of employees work very long hours, much higher than the OECD average of 9%, with 50% of men working very long hours compared with 35% for women. While unfortunately working hard doesn’t guarantee a working position, employees working on temporary contracts are more vulnerable than workers with an open-ended contract. In Turkey, close to 26% of total employees have a contract of 6 months or less.

Small and medium sized businesses like Ottössöns CAN HELP to enhance investment in human capital by increasing the quality of education and training, improving the linkage between education and labor market through a partnership approach. If Ottössöns delves into the Turkish market we will also continue to enforce inspections. We feel the satisfaction and quality of life for our workers is something that we value strongly. We will implement our values because we feel there could be a lack of labor inspections.

“Turkey has created more than 3.5 million new jobs since the onset of the global financial crisis in 2009,” notes Ayci. “This makes Turkey one of the largest employment generating countries in the world.” And one of the leading labor forces 30

for leather production.

stat e o f t h e t e x t i l e a n d s h o e i n d u st ry Market Overview

Turkey’s strong macroeconomics—big population, rising middle class, and credit growth—are

drawing apparel retailers such as Christian Louboutin, Aeropostale, Moncler, Superga, Dirk Bikkembergs, and Galeries Lafayette. Turkey is also in an ideal position as a production and logistics hub, with a 3.6 percent share in global textile and ready-wear exports. It ranks 7th in global cotton production, 4th in global openend yarn production, and 2nd in European footwear production. Turkey’s apparel exports have steadily climbed 22.7 percent since 2009. The industry status of Turkey’s textile exports were valued at a US $7.7 billion and its apparel exports were valued at us $13.3 billion, for a total value of US $21 billion according to a report by Bülent Ba¸ser, a member of the Textile Industry Sector Assembly of Turkey. The Turkish textile employers associations (TÜTSI˙S) reported that Turkey is the second largest sock manufacturer globally, the third largest underwear exporters and fourth largest exporter of both carpet and home textiles along with a leading producer in denim fabric. They are following a close second to the European Unions supplier China in textiles and apparel. Shift in Demand Changes Market Yet, unfortunately there has been a significant change in the service composition and structure of Turkish companies exports in recent years. The share of traditional exports such as textiles and garments has declined while the share of motor vehicles, machinery and equipment has increased. There approach to diversify the export market has been even more successful. Exports to the Middle East, North Africa and Central Asia increased considerably during the decade following the extensive outreach efforts. The market change/expansion cushioned the impact of depressed demand in Europe after the global crises. In addition Turkey has truly embraced all sourcing markets within their country. Exports have come from not only major cities but they have expanded their markets increasing numbers of small and medium sized enterprises (SMEs). Today, Turkey is one of the growing engines of the new global system.

With advanced technological infrastructure and environmentally friendly production policies the market is steadily growing.

Why there is Market Potential

For Ottössön Turkey is a country to look to for

As a team at Ottössöns we then look at the shares

manufacturing our products. In 2010, leather

of product groups of the leather industry in total

and leather products increased their share in the

leather exports, footwear exports stand for 31.3%

overall exports of Turkey by 18.2% compared to

of the total leather export while fur garments for

the previous year. With a growing manufacturer

18.6%, leather garments for 16% and saddlery for

base and large employee base the combination

16.4% of Turkey’s total leather export [Turkish

has enabled, the production capacity of 400

leather and leather goods industry].

thousand tons yearly, 1,300 tanneries whose

Turkey is truly a leading country in terms of

inputs, production processes, process capacities

leather and leather products in both production

and products are different and who employ

and exports. With its high export performance,

approximately 20,000 people. (Turkish leather

Turkish leather industry has taken an important

council) With shoe production at almost 329,000

proportion of the worlds leather trade. But what

pairs a day, almost 26 % of the production consists

makes Turkey a number one manufacturing

of leather shoes. In addition, The footwear sector

destination for Ottössöns and are results from

relies on Turkish-made shoe production machinery

the Leather production Promotion Group who

as well as shoe parts. The share of the shoe parts

found back in 2005 that the United States is the

industry in the total shoe industry production

biggest market for imported leather products,

is around 5% and production is very diversified.

with a spending of $27.9 billion and 23% of the

The soles, heels, casting molds and the welt of

world demand with a share of 28% in shoes, 27%

the shoes are exported. The shoe parts industry

in leather clothing alone.

is located in İzmir and the Aegean region, Konya, Gaziantep and in particular Istanbul. 32

The antique kilims of Anatolia are world renowned, and Turkey is home to one of the largest textile infrastructures in the world. However, it was in the countryside that I found the most surprises.

Turkey is not stopping at the production level with a ranking of third in Europe after Italy and Spain in terms of production capacity Turkey is home to more than

3,000 producer companies

dealing

with exports throughout Turkey. In order to continue to grow and strengthen with a lateral market and position them as a leather world leader, turkey has started to give priority to marketing, research and development (R&D), design and qualified workforce. In addition to domestic fairs and national participation in organized international leather fairs.

Strengths of the leather industry To abide by the time of delivery To have good relations with intermediaries To produce world standard products To provide a multitude of intermediaries in the distribution channel To employ a foreign language speaking staff To conduct research for country information To collect information related with competitors To hold positive approach on closely monitoring the fashion

Weaknesses of the leather industry High input costs Problems in pricing policy Insufficient promotional activities of companies Environmental pressure on production Lack of brand building of companies Insufficient budged allocation for marketing activities Insufficient government support for leather industry Failing to act in cooperation with other companies in determining the export price Low prices Insufficient publicity efforts Lack of developed sales promotion Insufficient public relations Lack of the governments subsidy for sales Delays in VAT rebate payments Lack in differentiating the insurance premiums of exporter companies from that of others.

FIGURES FOR LEATHER PRODUCTS • Turkey’s share is only $1.9 million of $17.9 billion shoe import market of the USA. •

This leather industry accounts for $225 billion dollars while Turkey alone contributes $5 billion (2.2%). This is a large feet for Turkish firms as they have doubled there efforts in the field. • The USA buys $2.1 billion in leather products from other countries and $17.2 million from Turkey.

• The USA imports $320 million in fur annually and Turkey provides $15.8 million of this amount. As for other products, the primary exporting country is China, with a 49.4% share.

Market Future Potential

The global footwear market is expected to reach $195 billion by 2015, according to research from Global Industry Analysts, with volume sales exceeding 13 billion pairs by 2012. Market growth is predicted to rebound as consumer confidence builds in the post-recession economy. Consumers are focusing increasingly on value for money, looking for simple, hard-wearing shoes that last. Designer shoes have borne the brunt of this shift in consumption brought 34

on by the economic recession. Shoe manufacturers and retailers are since forced to compete on price and value.

The Turkish footwear sector takes part in important international fairs and exhibitions abroad.

GSD Shoe Fair-Düsseldorf/Germany, Motexha Spring Fair-Dubai/U.A.E., Mosshoes Moscow/Russia, Micam Shoeevent /Milano and Lineapella-Italy are the most attended ones. As an important footwear producer/ exporter country, many fairs are also held in Turkey in the related sector every year. The Turkish footwear industry, with its increasing product quality, technological and human force substructure day by day, Turkey footwear industry goals for enhancing its share in world market with its branding and designs, fixed its eyes to international markets.

With the goal of brandization and differentiation in Turkish leather, it is far from being the industry’s

only consideration. This summer, the Government of Turkey drafted an action plan to establish logistics centres for the leather sector, as well as equivalent centres for textiles and apparel. Designed to reduce production costs, it will reduce the sector’s overreliance on Istanbul and other ports. By 2017, new centres will have been created in the villages of eastern and western Turkey, rather than merely clustering in cities.

The industry has also developed goals for the next decade and beyond. Speaking at the 15th Leather

Summit, Turkish Exporters’ Assembly president Mehmet Büyükeksi detailed these aims for the future. The country’s total export competency, he said, had improved by 50% within the last three years and now stood at $150 billion. By 2023, the figure is projected to rise to $500 billion, with an impressive $10 billion in leather export alone.

Where we see opportunity lies in Turkeys development in

production techniques, having engineers educated in manufacturing, finding new markets, opportunity of institutionalizing the promotion of leather products, caring for human health in leather production, having leather factories in free trade zones, initiating publicity activities by companies, changes in prices, joining pricing policy application, continuity of exports for brand creations, introduction of Turkish companies to the world.

The Turkish footwear industry has 564 million dollar export and 864 million dollar import in the

United States. The sector contributes 5.2 billion dollars to Turkish economy and has a capacity of 500 million pairs of footwear. This a huge market impact on the footwear industry.

text ile a n d s hoe a s s o c i at i o n s Textile and apparel associations along with shoe associations in Turkey help to govern and regulate the state of the Industry. The important textile and apparel associations like Istanbul Textile and Apparel Exporter Associations (ITKIB), Turkish Clothing Manufacturers Association (TCMA), also referred to as Türkiye Giyim Sanayicileri Derneği’ (TGSD) and Turkish Textile Employers Association (TÜTSİS) help set the industry standards. They foster an environment that helps to grow businesses and create a foundational start to a growing market. In addition to Textile and apparel associations as ottössön we look into the leather production associations such as TASEV (Foundation of Turkish Footwear Sectors’ Research, Development and Education),AYSAD (Association of Turkish Footwear Components Manufacturers),KOSGEB (Republic of Turkey Ministry of Trade and Industry Small and Medium Enterprises Development Organization)

Who

Istanbul Textile and Apparel Exporter Associations (ITKIB) has been operating since 1986 and is a quasi governmental association. Under the umbrella of ITKIB there are more then 16,000 companies. This makes it the largest association by membership. It offers practical help for its members from governmental and trade regulations to international trade advice. With expertise in export performance, and increase market share of textile, apparel, leather and carpet exports of Turkey in international markets and protecting the common interests of these sectors at national and international level It also helps it members to participate in trade fairs and participates promoting the industry at trade events. As an association they host the Istanbul Fashion Week, which gathers together Turkish designers and brands in an organized roof; aims to support the growth of Turkish fashion industry, increase the awareness and commercial potential for brands and designers in local and international markets. ITKIB has a commitment to the development of talent in Design and Fashion. ITKIB has a commitment to the development of talent in Design and Fashion.

To this end each year they promote a Young Designers Contest and Fabric Designers Contest.

They are

also quite involved in Education and Continuing education in the Industry. Istanbul Textile and Apparel Exporter Associations consists of 4 associations in 4 areas: Istanbul Apparel Exporters’ Association, Istanbul Textile and Raw Material Exporters’ Association, Istanbul Leather and Leather Products Exporters’ Association, Istanbul Carpet Exporters’ Association

Turkish Clothing Manufacturers Association (TCMA) and Türkiye Giyim Sanayicileri Derneği’ (TGSD)

has approximately 400 members representing some of the

nicest brands coming out of Turkey. To those who are looking to work with their membership they can help you with sourcing and getting you going with that initial contact. Turkish Clothing Manufacturers Association was founded in 1976 with the purpose of enhancing the environment developing the clothing industry in Turkey, promoting the sector abroad and achieving sectoral cooperation.

Turkish Textile Employers Association (TÜTSİS) has been conducting its activities since February 13, 1962, creating services aimed at common interests of its members and realizing a mutual support that had been yearned for years. TÜTSİS works to achieve several key points: To maintain and improve the common economic and social rights and interests of the member employers active in textile business in their working relations, within the frame of the legislation. Resolve conflicts that arise within the member companies, according to the principles applicable to all its members and with equal applications is one of the fundamental objectives of our Association. They ensure the member employers help one another, by ensuring the work “peace” which is the fundamental task of TÜTSİS. The association conducts surveys, organizes educational meetings within the country and abroad, arranges trips or helps its members to benefit from similar organized activities being aware of the fact that it is necessary for its members to know about all the innovations constantly within Turkey that is growing rapidly and opening out to the world. In addition TÜTSİS works to assist the members to work efficiently and harmoniously. TÜTSİS works to introduce services and create a community for its members in the best way with its conscious and experienced management and specialized staff. While painting a protective eye on common economical interests as well with legal rights of its members, 38

TÜTSİS association represents its members before labor unions, arranges the industrial relations and concludes collective bargaining agreements. TÜTSİS is the first employers’ association in Turkey which concludes group contracts with labor unions without discrimination in terms of working and employing conditions.

AYSAD (Association of Turkish Footwear Components Manufacturers) is an association bringing together the leading elevator companies and component manufacturers in Turkey. Founded in 1972, the Association has made great contributions to the development of the elevator industry in Turkey thanks to its continuous activities. Being part of the European Lift Association (ELA) it has become the main communication vector of the lift, escalator and moving walkways industry to the European Commission, the European Parliament and a range of other institutions and organizations. Its aim is also to help the national associations in their dialogue with their respective governments.

KOSGEB (Republic of Turkey Ministry of Trade and Industry Small and Medium Enterprises Development Organization)

was founded on 20

April 1990 to increase the activity and the rate of the small and medium sized industry enterprises, competition powers and levels and to realize integration in the industry sector according to the economic developments for addressing economic and social needs of Turkey. KOSGEB carries out different programs to provide services and supports to SMEs with its Service Centres which carry out activities in national levels in order to increase competitive power of SMEs. KOSGEB carries out its activities in a planned way while aiming to increase the number and export potential of SMEs dealing with export, to improve technological levels, to support SMEs to develop brand marks, to strengthen the relations of the key and related industries and to increase the competitive power of the SMEs.

TASEV (Foundation of Turkish Footwear Sectors’ Research, Development and Education) is an institute of Education Project, which was established under the EU-KOSGEB Shoes Quality Control Laboratory. TASEV has begun to serve the footwear industry since October 30, 2006. The laboratory test report on the Shoes Industry by providing services 39

that can be recognized at an international level, and resolve the lack of a reliable organization was established to meet the industry’s needs in this regard. Laboratory abroad-trained and experienced staff, selected by experts in domestic and abroad, and the computer is equipped with special devices to modern, air koşullandırmalı equipped with separate sections for special sections and serves as the chemical tests.

Potential

Turkey has pursued a large role in the growth of the Turkish footwear industry. The country is striding confidently toward its 2023 centennial goals of entering the ranks of the world’s ten largest economies and generating globally recognized Turkish brands. In recent years, the experienced shoemakers of the world have closed their facilities and shifted manufacturing to third world countries. This influenced shoe production values in Turkey, indicates Lemi Tolunay, President of the Istanbul Leather and Leather Goods Exporters’ Association. “The Turkish footwear industry benefited from this axial shift, too. An accumulation of information, know-how, and technology transfer therefore took place. Our industrialists put this opportunity to use and raised their quality, and they developed products in the upper segments of the markets,” he says, adding, “Standing out from among other countries in the world who practice mass production, Turkish shoe brands achieved differentiation with products that comply to international norms and target quality, bringing them to the position where they are today.” Another of the factors behind this rise is the importance given to innovation on footwear.

t r a d e a g r e e m e nt s & L aws

Since the 1920s Turkey chose, under the leadership of Kemal Ataturk, to become a modern secular republic with democratic rules and institutions based on 600 years of tradition. Turkey has created a growing commitment to trade and in foreign integration through the introduction of Free Trade Agreements. Their trade policy is among one of the most open in the world. Turkey is a member of the UN, the Organization for Economic Cooperation and Development (OECD), the Council of Europe, the Organization for Security and Cooperation in Europe (OSCE), the World Trade Organization (WTO), the Black Sea Economic Cooperation (BSEC) Council, the Euro-Atlantic Partnership Council (NATO), Group of twenty (G-20), International Monetary Fund (IMF), World Bank (WB), and the Organization of Islamic Cooperation (OIC). In addition, Turkey has 17 FTAs (Free trade Agreements) in force or European-FTAâ&#x20AC;&#x2122;s with; Macedonia, Bosnia-Herzegovina, Albania, Israel, Palestine, Morocco, Tunisia, Egypt, Syria1, Georgia, Serbia, Montenegro, Chile, Jordan, South Korea and Mauritius. The Agreements with Lebanon and Kosovo will be in effect after the completion of internal ratification procedures. Turkey has launched initiatives to start negotiations with 13 countries; which are the USA, Canada, Japan, Thailand, India, Indonesia, Vietnam, Peru, Central American Countries, other ACP Countries, Algeria, Mexico and South Africa. Free trade agreements are ultimate tools to bring prosperity by establishing an environment leading to a sustainable 41

increase in foreign trade, which can be observed through the lasting and establishing relationships that foreign markets create with such relations. Potential In terms of Ottössön we look into agreements and relationships between

Turkey and the

Untied States. As a company we want to look for easy and comfortable relationships that can

be built in foreign markets. This being said Turkey has been a long-standing ally of the U.S. and a member of the transatlantic alliance. It has been a loyal member of NATO since 1952 and was a founding member of the Western-led economics and political organizations ranging from the General agreement of Tariff and Trade (GATT), International monetary fund (IMF), World Bank (WB), the OECD and Council of Europe. These agreements have created an establishment for sustainable economic growth, world trade, aide in economic recovery, secure financial stability, facilitate international trade, promote high employment, reduce poverty around the world, reduce barriers of international trade and reduction of Tariffs, quotas and subsidies. Turkey is moving forward in negotiations to create stronger alliances and foreign relationships with other markets, so why not tap into some of the largest markets. Today negotiations like the TTIP can be the ‘in’ for turkey. The partnership between Europe and the United States is growing and emerging with similar negotiations like the Trans-Pacific Partnership (TPP) that ties 11 East Asian and pacific countries together. Both these projects, the TTIP and TPP aim to develop and introduce a new set of rules known as WTO-plus standards to govern international economic relations. The TTIP and the TPP would go well beyond traditional free trade agreements, they would aim to eliminate remaining custom duties while addressing non-tariff barriers to trade and improve the investment environment. More ambitiously, they aim to introduce a new generation of regulatory standards, which would cover a range of issues from the protection of foreign investments and intellectual property, to opening up public opportunity to international competition. These agreements would bring together a group of countries, which account for 2/3 or the worlds GDP.

With negotiations between The United States and Europe about the TTIP, TPP and its memberships Custom Union Agreement these

relationships are building blocks

to a strong

internal stability between foreign investment markets. The agreements would allow a threading relationship to form between trade markets of Western and Eastern countries. The agreements would create custom union 42

agreements that would eliminate the custom duties and quotas on industrial goods imported or exported between the parties. This framework explains why many global companies are now using Turkey as a second supply source and manufacturing base, primarily because of the locations and connections that Turkey has created with neighboring countries. Turkey is not only a growing market for the EU but also for the Middle East, Black Sea and North African markets, in addition to the United States. With the added advantage of a relatively low cost and a growing educated labor force, coupled with cost-effective transportation. The process of examination of various issues regarding harmonization and compliance with EU norms is still in

“That’s why we’re [Turkey] appealing both to the United States and to the European Union: if you’re going to create a trans-Atlantic economic space, then Turkey should definitely be part of it.” Other agreements and laws such as The Organization for progress today (2013). Turkey is becoming an export power house,

Economic Co-operation and Development (OECD), and NATO have been implemented during this time helping to create a transitional trade agreement practice, with one of the leading trade markets in the world, Europe. In addition to the establishment of customs union and imposition of the common customs tariff (CET) with the European union has brought an important development in foreign trade relations with Turkey. If Turkey where to become part of the EU there would be a compliance between the two countries. They would be part of a voluntary agreement between the United States and Europe that would create a faster and safer supply chain transaction and set agreements like the TTIP and TPP. With these relationships taking place today, they would bring together a group of countries, which account for close to half of the worlds trade. (Brookings)

Turkey’s investment legislation is simple and complies with international standards, while it offers equal treatment for all investors. The backbone of the investment legislation is made up of the Encouragement of Investments, Employment Law, Foreign Direct Investments Law, international treaties and various laws and related sub-regulations on the promotion of sectoral investments. Yet with such benefits we can interject with situations that Turkey may find themselves in with creating such tight relations with the west. With a country that finds themselves embroiled in Middle Eastern conflicts the fear of damaging relationships with eastern countries is at large, in addition, the fear of damaging turkeys own economic development and democratization 43

process. The hope to stir fear out of the eyes of the Turkish future is to alternatively sign a parallel free trade agreement between the U.S. and Turkey, this in essence would create a win-win situation for all parties involved, including the middle east. SUM-UP Turkey has concluded Free trade Agreements (FTA’s) with 30 countries, 11 of which were repealed due to the agreement of these countries to the EU. Currently, for the period of 2000-2012, while Turkey’s total exports increased by 446%, and exports to Turkey’s FTA’s partners has increased by 551%. The exports to turkey’s FTA partners, which were around 2.2 billion dollars in 2000, reached 14.5 billion dollars in 2012. For the same period, while total imports increased by 340%, Turkey imports from their FTA partners have increased by 280%. So, imports from FTA partners, which was around 2.8 billion dollars in 2000, was recorded as 10.7 billion dollars in 2012.Turkey’s FTA partners have a share of 9.5% in Turkey’s export markets and a share of 4.5 % in Turkey’s imports, with a trade surplus of 3.9 billion dollars.( Economy Gov.)

Export Shares of Total Exports to Turkey (Percent %’s)

Import Shares of Total Imports to Turkey (Billions $’s)

In addition is the Bilateral Agreements for the Promotion and Protection of Investments, which was signed in 1962 with countries that show the potential to improve bilateral investment relations. The basic aim of bilateral investment agreements is to establish a favorable environment for economic cooperation between the contracting parties by defining standards of treatment for investors and their investments within the boundaries of the countries concerned. The aim of these agreements is to increase the flow of capital between the contracting parties, while ensuring a stable investment environment. In addition, by having requirements on international settlements, Turkey aims to prescribe ways to successfully settle disputes that might occur among investors. Turkey has signed Bilateral Investment Treaties with 75 countries. Turkey has also signed double taxation prevention treaties with 77 countries. This enables tax paid in one of two countries to be offset against tax payable in the other, thus preventing double taxation. Turkey is continuing to expand the area covered by the double taxation prevention treaty by adding more countries on an ongoing basis. In addition, Turkey has signed Social Security Agreements with 22 countries. These agreements make it easier for immigrants to move between countries. The number of these countries will increase in line with the increased sources of FDI.

The aim of the Foreign Direct Investment (FDI) Law No. 4875 is: •

to encourage FDI in the country (TURKEY)

•

to protect the rights of investors

•

to align investors and investments with international standards

•

to establish a notification-based system rather than an approval-based one for FDI

•

to increase the volume of FDI through streamlined policies and procedures.

The FDI Law provides a definition of foreign investors and foreign direct investments. In addition, it explains important principles of FDI, such as freedom to invest, national treatment, expropriation and nationalization, transfers, access to real estate, dispute settlement, valuation of non-cash capital, employment of expatriates, and liaison offices. Yet there are always regulations on the implementation of the FDI Law which by specifying the procedures and principles of the issues that are laid down in the FDI Law. The FDI Law truly aims to create work permits for foreigners by regulating the work carried out by foreigners and assembling the rules on work permits given to the foreigners. A relationship building block. 45

Turkey is strategically growing politically and economically its growing economic diversification

and minimal military self-reliance is allowing Turkey to exercise greater leverage with the West with more democratic values. And with a growing democratic independence Trade there foreign investment incentives is only strengthen there potential market between countries.

The U.S.-Turkey partnership is based on mutual interests and mutual respect and is focused on areas

such as regional security and stability, economic cooperation, and human rights progress. The United States also stands in solidarity with Turkey in the fight against terrorism. Counter terrorism cooperation’s are a key element of Turkey’s strategic partnership with U.S.

Turkey is a candidate for the EU and U.S. market, and its primary political, economic, and security ties

are with the West. Turkey is a quarter of the size of the EU in terms of geographical area and has a population that is one-fifth of that of the EU. This fact puts the country among the top 25 economies in the world in terms of Gross Domestic Product (GDP) (FDI Magazine, 2004).

WHO AGREES AND WHY •

Organization for Economic Cooperation and Development (OECD)- An international economic

organization of 34 countries that was established in 1961 which stimulated economic progress and world trade while promoting policies that improved the economic and social well-being of people around the world. The OECD provides a forum in which governments can work together to share experiences and seek solutions to common problems. We work with governments to understand what drives economic, social and environmental change. We measure productivity and global flows of trade and investment. We analyze and compare data to predict future trends. We set international standards on a wide range of things, from agriculture and tax to the safety of chemicals. (OECD)

•

Council of Europe- It is an international organization as well, which promotes cooperation between 47

member states, 28 of which are members of the European Union. All Council of Europe member states have

signed the European Convention on Human Rights, a treaty designed to protect human rights, democracy and the rule of law. The European Court of Human Rights oversees the implementation of the Convention in the member states. Individuals can bring complaints of human rights violations the continents of the council of Europe are based of the leading human rights organizations.

•

Organization for Security and Cooperation in Europe (OSCE)- OSCE originated for security and

co-operation in the largest European security intergovernmental organization. It offers a forum for political negotiations and decision-making in the fields of early warning, conflict prevention, crisis management and post-conflict rehabilitation, and puts the political will of its participating States into practice through its unique network of field missions. The OSCE has a comprehensive approach to security that encompasses politicomilitary, economic and environmental, and human aspects. It therefore addresses a wide range of securityrelated concerns, including arms control, confidence- and security-building measures, human rights, national minorities, and democratization, policing strategies, counter-terrorism and economic and environmental activities.

•

World Trade Organization (WTO)- Once referred to as GATT now takes on the WTO name. The

agreement is the only global international organization dealing with the rules of trade between nations, one country can complain about another countries trading policy or ways of business. It is a place for countries to settle trade disputes through an operating system of trading rules. It is the place government members try to sort out the trade problems they face with each other.

•

Black Sea Economic Cooperation (BSEC) Council- It came into existence as a model of multilateral

political and economic initiative aimed at fostering interaction and harmony among the Member States, as well as to ensure peace, stability and prosperity encouraging friendly and good-neighborly relations in the Black Sea region.

•

Euro-Atlantic Partnership Council (NATO)- Was established in 1949 as an international military

alliance based on the North Atlantic Treaty. Today NATO’s essential purpose is to safeguard the freedom and security of its members through political and military means.

•

Group of twenty (G-20)- the leading opportunity for international cooperation is on the most

important issues of the global economic and financial agenda. The objectives of G-20 are to cover policy coordination between its members in order to achieve global economic stability, sustainable growth. While promoting financial regulations that reduce risks and prevent future financial crises. In addition to, modernizing international financial architecture. Major achievements include strengthening the role of emerging economies, such as BRICS, reforming international financial institutions, improving discipline and tightening oversight over national financial institutions and regulators, improving the quality of financial regulations in economies whose regulatory problems led to the crisis, and creating financial and organizational safety nets to prevent severe economic slumps in the future.

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International Monetary Fund (IMF)- An organization of 188 countries, working to foster global

monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

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World Bank (WB)- Is an international financial institution that provides loans to developing countries for capital programs. The World Bank’s official goal is the reduction of poverty.

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Organization of Islamic Cooperation (OIC)- Today in the 21st century the OIC has laid down a blue print

for a Ten-Year Program of Action which was established din 2005 that envisions joint action of Member States, promotion of tolerance and moderation, modernization, extensive reforms in all spheres of activities including science and technology, education, trade enhancement, and emphasizes good governance and promotion of human rights in the Muslim world, especially with regard to rights of children, women and elderly and the family values enshrined by Islam.

BUSINESS ETTIQUETTE

Page :

Cu l t u r e

Negotiation Styles & Strategies

Relationship Building

S o c i a l & Cu l t u r a l E l e m e n t s

Dining

Co m m u n i c a t i o n

c u lt u r e Culture today has a push and pull attitude. The contrast from traditional to modern is being pulled on. Some Turkish citizens are jumping on the change others are embedded in the traditional lifestyle and ways of living. Cultural sexism remains as women are often viewed through traditional Islamic beliefs. The women in more rural environments tend to wear traditional conservative clothing, including headscarves and long coats, even in the summer. Yet throughout the country it is known that women need to cover their head to enter a mosque (a general rule of worship). However, with a continually evolving culture and increase in democracy, traditional views are being pushed. A new rule was implemented Oct. 12th 2013 that women in the government environment do not have to cover their hair any longer. Breakthroughs such as this are pushing out traditional values from the workplace; one can ask themselves, whatâ&#x20AC;&#x2122;s next? This new change questions whether culture should mix with business culture and are they two separate things? Yet today in Turkey we are still seeing the country still holding onto traditional farming practices. Much of the countryside is living what we would consider a permaculture lifestyle (a branch of ecological design, engineering, environmental design that develops architecture and self-maintained agricultural systems). The results of these practices are rich, cohesive communities of abounding farmland and pastures of healthy livestock. Shepherding still plays a very valuable part within the Turkish culture, and these duties are shared by family and community members. On the other hand, many parts of Istanbul and coastal resorts are very liberal. As men of all social classes have adopted western styles of dress, including trousers, shirts and jackets. Men and women in the upper and middle urban classes pay attention to western fashions. These typical Turks live a secularized, modern urban way of life, with all the materialistic advantages and temptations that go with it. They also live in high-priced apartments and try to possess Western luxury items, such as cars, electronic devices, cell phones, and computers. They have developed a taste for Western literature and music and attend musical events and plays. In Istanbul women can generally participate fully in public and working life. 52

Where Culture Lies When looking at masculine and feminine attributes, relationships and roles we look at a couple things. A culture is considered to be masculine when the people tend to be more competitive, concentrating on achieving material goals and worth. A masculine culture also has specifically defined gender roles. A feminine culture will focus more on being caring towards one another, along with the focus for maintaining long standing relationships with others. The defined roles of the people in a feminine society turn into shades of grey. Both women and men have a close to equal say and importance in the culture. Turkey is on the border of being masculine or feminine. Because of the religiously defined culture roles, the people have a hard time veering away from the traditional gender roles of Islamic Turks. The government however has made great strides to correct this imbalance in traditional roles. The government guarantees women equal work and pay opportunities, but the traditional value system practices gender segregation in the workplace and in other public places. Even though it may seem as though Turkey would be considered masculine, the people intensely focus on maintaining and establishing long term relationships, thus the emphasis on family. The importance of family in Turkey combatting traditional beliefs M make as a masculine or feminine culture. a r Turkey r i a gneutral e

Turks expect adults to marry and have children, and the vast majorities do. Because men should not lower their wivesâ&#x20AC;&#x2122; standard of living, they are not supposed to marry women of a higher economic class. People generally marry within their own religious sect and ethnic group, although interethnic marriages among Sunni Muslims are not uncommon. Even though the law prohibits parents from entering into engagement or marital agreements on behalf of their children, arranged marriages without the consent of the brides have been somewhat common. The un-consented arranged marriages ranged from 7.7 percent for women living in Istanbul, Ankara, and Izmir to 11.3 percent to 12.5 percent for women living in smaller cities, towns, and villages. An impressive 49.9 percent of the husbands surveyed said their fathers or other relatives had made the final decision about their marriages. This response category ranged from 59.1 percent for village men to 15.3 percent for men in Istanbul, Ankara, and Izmir. Today the vast majority of marriages occur with the coupleâ&#x20AC;&#x2122;s consent, but families still play a role recommending and screening potential spouses, especially for their daughters.(every culture) 53

Ethnicities Within Turkey is a Muslim country with a number of prohibitions and customs involving culture. Turkey is one of the only countries to mix the extremes of both Eastern and Western culture. This mixing bowl profile began in the Ottoman system as a multi-ethnic state that enabled individuals to keep their identity and retain separate ethnic and religious identities. Yet as we know, the fall of the empire after World War I the Turkish Republic adapted a unitary approach, which forced all cultures within the borders to mix hoping to create a seamless “Turkish” nation and cultural identity. This mixing aesthetic resulted in many shades of grey as traditional Muslim cultures hold their values as the cosmopolitan modernity of the west pushes for change. Highlighting this fact There are at least thirty-five nonTurkish ethnic groups, including other Turkic peoples who speak different Turkic languages, such as the Uygurs, Kirgiz, Kazaks, Uzbeks, Balkar, and Azerbaijanis. Those who speak non-Turkic languages include Kurds, Armenians, Greeks, Circassians, Georgians, Laz, Arabs, Rom (Gypsies), Ossetes, Albanians, and Chechens. The Kurds are the largest of these groups, probably numbering over ten million. The next largest may be the Arabs concentrated along the Syrian border at about one million and the Laz of the Eastern Black Sea coastal region, who may number about three hundred thousand.(every culture) Turkish ethnicity is approximately 80% of the population. Turks of Kurdish origin constitute both an ethnic as well as linguistic group estimating 20% of the total population. While 99% of the population is Muslim and predominant amounts are Sunni a considerable amount of the population is Alawi Muslims, with a small minority of Christians and Jewish communities. Language The Turks originated in inner Asia. Their language belongs to the Altaic family. The earliest evidence of Turkish writing dates to eighth-century C.E. runic inscriptions on steles along the Orkhon River near present-day Ulan Bator, Mongolia. The language was influenced by Persian and Arabic after the ninth century, when Turks began moving into the Middle East and converting to Islam. After the establishment of the Turkish Republic, many Arabic and Persian words were replaced with words derived from ancient Turkish. As part of Atatürk’s Turkification program, all Muslim citizens were legally required to speak and write in Turkish. Until 1991, publications, radio broadcasts, and public speaking in many non-Turkish languages were legally prohibited. Today the vast majority of young people speak only Turkish. However, most Kurds raised in southeastern Turkey speak Kurdish as well as Turkish.Since 1999, the only non-Turkish languages taught in public schools have been western European languages and Arabic. About half the Kurds reside in southeastern Turkey, their traditional homeland. Most of those in other regions have become Turkified 54

though education, work, military service, and intermarriage.

Education Turkey has numerous universities where students of both sexes study to become businesspersons, doctors, engineers, lawyers, teachers, accountants, bankers, and architects. Civil service jobs require applicants to meet educational requirements and pass a written examination. Yet still we see barriers as only 80% of women are literate as compared to 95% of men are literate. (Every Culture) About 60% of Turks live in major cities such as Istanbul (15 million people), Ankara, Izmir and Adana. Education is seemingy becoming an important practice, school attendance is mandatory until the age of 14 post this age school is voluntary. Yet with such a large growing population and middle class status the push for educated is huge. The most important determinants of social status are wealth and education. The basic categories include the wealthy urban educated class, the urban middle class, the urban lower class, the large rural landowner class, and the general rural population. A university education is the minimum qualification for entry into the urban educated class, in which there are numerous substrata. Class System Distinctions can be drawn between

most civil servants, administrators

migration of young villagers to urban

the urban upper and urban middle

of medium-size businesses and

areas makes this the most rapidly

classes. The urban upper class

industries, many persons in service

growing class. Many migrants have

includes several groups with high

occupations, some skilled workers,

difficulty finding jobs, and others work

status determined by education,

and university students. These groups

only seasonally. Many live in poverty

political influence, and wealth.

usually are less westernized than the

in the shantytowns that ring the

Wealthy businessmen are accorded

upper class and more oriented to

major cities. Urbanization continues

very high status, as are successful

Turkish culture. There is considerable

as the rural population grows and

physicians, cabinet ministers, and

mobility within the urban educated

urban industry offers better incomes.

many members of the assembly,

class.

The population of rural farmers

directors of important government

is about 30%, this group is often

departments, and other high-level

The urban lower class includes

referred to as peasants. This class

officials.

semiskilled and unskilled laborers,

has improved communications and

low-paid service workers, and the

transportation has brought them into

urban unemployed. The high rate of

closer contact with towns and cities.

The urban middle class includes

Household The traditional Turkish household is characterized by male dominance, respect for elders, and female subservience. The father or oldest male is the head, an authority figure who demands respect and obedience. The mother is also respected, but her relationship with her children is warm and informal. Although authority ordinarily rests with the father, the household is usually mother-centered. The basic relationship units are the family ( aile ) and the household ( hane ). Household members normally eat together and share income and expenses. As families grow the older sister ( abla ) becomes like a second mother, as the older brother ( agabey ) assumes the helpful but authoritarian status of a minor father

OVERVIEW Turkey truly garnishes a variety of people, cultures, societies and ways of thinking. It is a country that has truly become a melting and mixing pot for societies. For foreign countries to look upon Turkey they can notice a canvas that is open to be written on. This canvas is open to integration and change. Through non governmental organizations, NGOâ&#x20AC;&#x2122;s, they represent and expanding market of interests from merchants, industrialists, brokers, employers, and in particular interest groups in crafts sports, social issues, education, religion and arts. It is a white canvas market that is waiting to be taped into.

n e g o t i at i o n st y l e s & S t r at e g i e s Turks most important negotiation style or strategy is in building a personal relationship. Relationships are fostered in the office, over extended lunches, dinners and social outings, when doing business courtesy is crucial. Strengthening the personal relationships and building trust is key to achieving the most successful negotiations. Donâ&#x20AC;&#x2122;t expect things to happen quickly. It can take a long time for an agreement to be reached. Wining, dining and tea are often involved, it is about the experience not the outcome in most meetings.

When initially greeting in a first meeting it is advised to wait for oneâ&#x20AC;&#x2122;s counterpart to initiate the greeting. Westernized men shake hands firmly with other men. Maintaining direct eye contact is important firm handshake is the way to go. It is not customary to shake hands again upon departure. Among close friends or family a more traditional greeting may involve with a two handed handshake and or kiss on the cheek. In the case of meetings involving both genders and across cultural lines, Turks may greet a close friend of either sex, however, a foreign man should not address a Muslim Turkish women unless she has been formally introduced to him. One should not kiss, hug or even hold hands with someone of the opposite sex in public. Always remember, elders are most respected in turkey thus one should rise to greet them when they enter a room, and when being introduced to a group of men, one should start shaking hands with the eldest.

When beginning a negotiation or business meeting it is wise to be punctual for the business meeting, especially if you do no know the other party. Some small talk is usually expected. Its best to allow the host to dictate the business discussion, the main purposes of initial meetings are to get to know the other party, not to always make decisions, its best to go with the flow and not impose your agenda to forcefully. When in conversation good topic choices include families, sports, culture, personal hobbies and interests, professions and other non-controversial affairs. Generally discussions about politics or anything should be avoided. The Turks are proud of their country and are willing to 58

answer questions on their culture and history although be sure to avoid political history. Most Turkish men love football (soccer) and usually support on the three teams Galatasaray, BeĂžiktaĂž or FenerbahĂ§e. Personal space tends to be very close, sometimes discomforting to foreigners. But be aware never take a step back. An arms length is generally considered an appropriate amount of personal space when speaking particularly when interacting with colleagues and acquaintances. Turks tend to be very touchy-feely in friend-tofriend conversations, but everything is above the waist. The waist, is the sexual line for both men and women it is merely and indicator that this culture has a different understanding of sexual orientation.

When it comes time to negotiate styles and strategies

may seem irrelevant to the purpose of your visit. But

do exist. One should always come to Turkey knowing

stay interested; maintain eye contact while speaking

two things; your success is defined by your ability to

since Turks take this as a sign of sincerity. It is extremely

build effective personal relationships combined with a

rude to insist that your colleagues get to the point. Once

clearly outlined and well-presented proposal. When in

a relationship has been established, communication

a business situation bargaining is accepted recognize

is direct and to the point. At that point ensure your

when two business partners are talking to a third person

proposal clearly demonstrates the mutual benefit and

they may demonstrate mutual trust by briefly putting a

profitability of any agreement or partnership. Once a

hand on the shoulder or the upper back of the partner.

plan is set in action do not use deadlines or pressure

Avoid lower back contact as it can be regarded as sexual.

tactics as the Turks will use this to their advantage and

It is most likely that you will meet and negotiate with less

reverse the tactic by threatening to cancel agreements

senior members of a family first. Once you are seen as

or end negotiations. Be patient. It may not always

trustworthy and your proposal financially viable you will

be necessary to focus on financial benefits when

then move on to meet more senior members, a decision

negotiating. It is just as useful to point to areas such as

is ultimately made by the head of the family/company.

power; influence, honor, and respect. When you have

When negotiating, the Turks will start at extremes in

or are creating a relationship plan appointments 1 to 2

order to gage your response. Prior to negotiations know

weeks in advance, preferably by telephone. Turks prefer

your target figure and work slowly towards it through

verbal contact rather than electronic or e-mail based

meaningful concerns. Remember, when negotiating

conversations. This is because they are very personable

discussions may start slowly with many questions that

people once a relationship is built. 59

Business is personal. Although this is changing with the influx of big multi-nationals and a more corporate culture in some of the larger companies, many businesses are still family owned and run. Turks will want to do business with those they like, trust, and feel comfortable with and with those that can provide a long term relationship. If they feel you are hiding something or there is an element of suspicion about your motives you may not get very far. As well as looking to the person, Turks are also intelligent business people. OVERVIEW Learning these negotiation styles and strategies will help set OttĂśssĂśns apart from their foreign competitors. Knowing and understanding business situations and showing respect to foreign markets shows more than you want to do business. It shows that as a company we care. We want to build strong and lasting relationships. As we teach ourselves about the culture and business etiquette of Turkey we feel more comfortable about a building relationship that can grow from within. In addition with growing interaction between the United States and Turkey the two countries which are working on strengthening there partnership in years to come, and increase in the volume of trade and economic interdependence would establish a more common ground for partnership and stability. An understanding of the two countries will only make them work stronger together. In addition the shift In the United States and Turkeyâ&#x20AC;&#x2122;s foreign policies seem to be coinciding with one another. Both are balancing relations with other regional powers but with a willingness to coordinate the stability and security of economic and social interactions between the two countries themselves.

r e l at i o n s h i p building “[Building a relationship with turkey] is important, because we all know that when the Turkish people gain stronger connections-both to each other and to the outside world- they succeed and thrive.” (U.S. Embassy) President Obama came to office determined to build and develop the relationship with Turkey, which had been badly frayed during the Bush years.

U N I T E D S T A T E S

TURKEY

Do: Greet the eldest person first Handshake Kiss on the cheek Shake hands with everyone present (in cluding children)

Do: Handshake Hug Inquire about health and family Maintain eye contact Pat on back Smile

Don’t: Hug Inquire about health and family Maintain eye contact Pat on the back Smile Do:

Firm Handshake Kiss Cheek

Don’t: “Peace Sign” Eye contact Point with index finger Smile Thumbs up

Don’t:

Greet the eldest person first Kiss on the cheek Shake hands with everyone present (in cluding children)

Do: “Peace Sign” Eye contact Firm handshake Point with index finger Smile Thumbs up Don’t: Kiss cheek

Do:

Don’t leave food on your plate Don’t use left hand If treated to a meal, take your host out later Pay only if you invited others When finished, place knife and fork together on plate

Don’t:

Napkin on lap No elbows on table Wait for host to tell you when to eat Wash hands before meal

Do:

Conservative dress

Don’t: Dark colors Formal dress Jewelry Suit and tie ties

Do:

Napkin on lap No elbows on table Wait for host to tell you when to eat Wash hands before meal When finished, place knife and fork together on plate

Don’t:

Don’t leave food on your plate Don’t use left hand If treated to a meal, take your host out later Pay only if you invited others

Do: Dark colors Formal dress Jewelry Suit and tie Ties Don’t: Conservative dress

Building relationships is vital to any successful endeavor. Turks like to do business with people they know. Relationships are often best solidified over meals. Expect small talk at the beginning of any meeting as it gives your Turkish colleagues a chance to get to know you. Often a first meeting will be spent simply allowing you and your Turkish colleagues to get to know one another. Much of Turkey is Muslim and Islam dictates five prayer times each day. It is important that you are aware of these prayer times to best schedule your meetings around them.

S o c i a l & C u lt u r e E l e m e nt s Why hello my name is: At initial meetings, it is a good idea to get to know your Turkish counterpart on a personal level. Ask about his/her family without prying. Questions about children will be welcomed. Find out about their work, role and company. The Turks are proud of their country and will enjoy answering questions on their culture and history, although be sure to avoid political history. Most Turkish men love football [soccer] and usually support one of three teams: Galatasaray, Besiktas or Fenerbahçe. It is the connection that a business meeting hold that is most treasured.

Topics to Avoid Turkish business is built upon strong relationships, here a few things not to do; giving opinions over sensitive issues involving Turkey, especially Turko-Kurdish relations, the Cyprus issue and EU membership. Turkey has had a turbulent political history which may be best left in the past. Try and avoid this subject as a whole. There is a West-East divide in Turkey on the issue traditional vs. modern values. Generally, the Eastern Turks are a lot more conservative due to their closer adherence to Islamic values. Western Turks, especially those in Istanbul, Ankara or Izmir are usually a lot more westernized. Islam takes on more of a cultural feel rather than a religious one. Depending on where you are, be careful how you approach any topic about Islam. When entering a room for an initial meeting, if you are not automatically met by someone, greet the most elderly or most senior first. At social occasions, greet the person closest to you, then work your way around the room or table anti-clockwise. When initially meeting someone, greet people with either the Islamic greeting of ‘Asalamu alaykum’ [peace be upon you] or ‘Nasilsiniz’ [How are you? Pronounced nasul-su-nuz] Other useful phrases are ‘Gunaydin’ [Good Morning, pronounced goon-ay-dun], ‘iyi gunler’ 63

[Good Day, pronounced ee-yee gun-ler] or ‘Memnun Oldum’ [pleased to meet you]. When addressing a Turk the most common method is to call a man by his first name followed by ‘bey’ (pronounced bay). Similarly a woman’s first name would be followed by ‘hanim’ (pronounced hanum). Where professional titles exist such as Doctor or Professor, always use them either on their own of before the first name. Curiously this is also the case with many other professions such as lawyers ‘Avukat’ or engineers ‘Muhendis’. Within Turkish companies and organizations senior ranking staff will be addressed accordingly. A common example is Mr. Manager, ‘Mudur Bey’. A common phrase one will hear Turks using is ‘efendim’ (literally ‘my master’). You may hear this from a waiter, a secretary, taxi driver, doorman, shop staff and many others. It is simply a polite way of addressing people you are not familiar with.

When getting ready for business meeting: Business dress is conservative. You will be expected to wear a suit and tie. Similarly, women should wear smart professional outfits. In the summer, and especially in the cities of Istanbul, Izmir and Ankara, the weather is very hot and humid. It is acceptable to wear a shirt with trousers and in most cases not to wear a tie. Outside the big cities--and especially in the East of Turkey--both women and men should wear more conservative clothing. Women are advised to refrain from exposing their legs and arms and to ensure clothes are not tight-fitting. Men should not wear shorts. When visiting a mosque, bear in mind that it is place of worship. Never enter a mosque with shoes. There is always a rack where shoes can be kept. Make sure your feet are clean and will not bring in dust or mud. Men should not wear shorts and must wear a shirt or T-shirt. Women should be covered fully, especially their hair. If you do not have a scarf, ask an attendant as some are usually put aside for foreign visitors.

Business Card Etiquette Business cards are exchanged without formal ritual. Use both hands to exchange cards. Present your business card to the receptionist when you arrive. Have one side of your business card translated into Turkish. Although not a business necessity, it will impress your business colleagues. Quite often Turks do

not give their business card unless they are certain that they wish to establish a business relationship.

Gestures: Non-verbal communication can help or hinder a conversation just as easily as words can. And this is where it might get tricky in Turkey if you don’t understand the meaning of certain body language. The Turkish gestures for ‘yes’ and ‘no’ can at first be quite confusing. ‘Yes’ is indicated with a nod of the head upwards, while ‘no’ is also an upward nod but accompanied by the raising of the eyebrows. A sure sign that a ‘no’ is meant is if it is accompanied with a hissing of the teeth [‘tsk’]. Turks tend to stare at one another, and foreigners, much more than Westerners are used to. It is not something to feel singled out by, though it can be a little intimidating at first for Westerners who are constantly told that it is rude to stare. If you get the hand gesture that demonstrates a palm up and forward movement of the fingers toward your thumb then you did something right. This is a compliment. It can also be used to demonstrate that a man or woman is attractive. Another hand gesture to recognize is If a Turk waves his hand downwards in a scooping motion, while saying to you Gel, gel! (Come, come!), he is asking for you to come or to follow him.

The Turkish are much more touchy-feely. While a kiss in the west shows affection it is a sign of respect when a hand is kissed. In addition, it is very common to see two men walking with their arms around each other or sometimes even holding hands. It does not say anything about their sexuality; just that they are close friends. It is useful to bear in mind that men tend to get physically closer to one another in Turkey than in many other countries; it is not something to feel threatened or awkward about. The Turkish too like to kiss one another one kiss on each cheek when meeting. This can be done man to man, woman to woman or woman to man. This means that you are close to that person. In some resorts, it may also be used to welcome return guests to a restaurant, for instance. If you are not close to the other person, it is usual to just shake hands. A man’s handshake with a woman, however, will often be very soft, sometimes even limp. If someone is very religious, they may not touch the other person at all.

What not to use There are certain hand gestures and actions that are considered offensive in Turkey, some of which are perfectly acceptable here in the Untied States. Ones to avoid the OK sign/signal (when your forefinger touches your thumb) in the U.S. and other countries this is a positive sign, in Turkey it is not. It means you are accusing someone of being a homosexual and is considered very bad. It is also considered rude to sit and have the sole of our shoe pointed at someone, this is because the sole of the foot is the lowest part of the body and is considered unclean. Never point at someone it is considered extremely rude. Hand gestures to avoid would be snapping your finger and slapping your opposite fist this is considered one of the most obscene gestures one can use.

Space: Personal space? Who needs it, Turkish people are very friendly and “touchy” in personal conversations. It is important to maintain eye-contact with people while speaking to indicate to them that you are listening. It is OK to touch people’s hands or shoulders while speaking closely, showing the level of sincerity. Talking to people from a distance might indicate that you are not sincere enough. Turks will usually stand much closer to each other when talking than Americans do. Even when riding a bus or boat, Turks tend to cluster together even though they may not know each other or even acknowledge one another. It seems to be an unconscious move. In the West we pride ourselves on our independence and seek out almost any chance for solitude, especially while in crowded situations such as riding public transportation.

Gift Giving: Gift giving has no real place in business relationships or etiquette. Relationship building and the like will usually take the form of dining or sight seeing trips rather than lavish gifts. However, if a gift is given it will be accepted graciously. It is always a good idea to bring gifts from your own country such as food stuffs or craft items. Be aware that Turkey is a Muslim country. Before giving alcohol to anyone, be 100% sure that they drink. The only time you would need to give any great thought to gifts would be if you were invited to

a Turk’s home for dinner. The most common gifts to take are pastries, [especially ‘baklava’] and decorative items for the home such as ornaments or vases. Flowers are not usually taken to a host, but can be if felt appropriate. It is best to ask a florist for advice on what is best to take. If the host has children, take some expensive sweets or candy.

Turkey made a funny: Turkish people are very fond of doing jokes to friends and enjoy funny conversations. It is important to estimate the level of sincerity when doing sex-related jokes. Turkish people are pretty much quick-minded and like to perform spontaneous jokes on the spot.

Superstitions: Food: +One cannot eat meal by putting his one foot over another, it means disrespect to the table and it is considered a sign of famine. + Milk cannot be given to nobody in the darkness of night, it is said that if it is given thencow does not produce milk any more. + When giving a milk to somebody, a small piece of coal or a green leaf is put into milk; other wise it is believed that animal will no more produce milk. + It is improper to call someone as pig; whoever says such word, it is believed, has no appetite for forty days. No working: + No work is done between “Sala” and “Ezan” (call to prayer) on Friday. + Thirteenth day of a Month is considered as ill-omen; nothing is done on this day. + Laundry is not done on Saturdays and Tuesdays. + No sweeping work is done at nights which are considered holly by religion. Odd: + One should not look at mirror at nights

+ To put on trousers by standing up is the sign for poverty. + It is said that if you say something in forty times it is achieved. + Sleeping in the same room as a cat is considered bad. The cat will steal the personâ&#x20AC;&#x2122;s soul and shortens his life. Color: Turquoise is the bluish green color, the word turquoise comes from the french for Turkish as the gem was originally imported from Turkey. The first recorded use of Turquoise as a color name in English was in 1573. The color Turquoise was inspired or derived from the gem stone, an opaque blue-to-green mineral that is a hydraous phosphate of copper and aluminium. It is a rare and valuable finer grade and has been prizes as a gem and ornamental stone. Turquoise has long been a symbol of wealth and opulence in ancient cultures, but fascination with this striking gemstone has never been stronger than today. No matter where it is found, turquoise is always associated with strong, positive traits such as purity and healing. Plan your Schedule: Although Turks do not practice time keeping and punctuality perfectly, they will expect you to do so. However, due to the Mediterranean spirit of easy goingness, Turkish people are not that punctual on their meetings and not too much of planned. It is acceptable to be late for a meeting unless it is over 15-20. Arrange appointments in advance. Try to do so via telephone and confirm it with a letter or an e-mail. It is a good idea to call a few days before to check that it is still convenient. Friday is the traditional Islamic weekly holiday, although this is now Sunday in Turkey. Many Turkish males will attend the Friday congregational prayer Cuma Namazi [pronounced juma namz-uh]. Times to avoid travelling to Turkey on business are the main summer months of June, July, and August since most Turkish businesspeople take extended vacations to spend time with family.

In addition, Turkey has many secular and Islamic holidays. January 1st is New Yearâ&#x20AC;&#x2122;s Day, August 30th is Victory Day and October 28-29th is Republic Day. In addition to these, there are a few minor celebrations.

Islamic holidays will fall on different dates each year due to their being calculated on lunar cycles. Ramazan [called Ramadhan in other Muslim countries] is the month in which the Quran was originally first transmitted to the Prophet Muhammad. It is incumbent on all Muslims to fast from dawn until dusk. Before dawn you may hear drums being banged in the streets to wake people up to eat and at dusk a cannon or the call to prayer [ezan] is used to signal an end to the fasting. Ramazan ends with the festival known as Ramazan Bayram or Şeker Bayram. Families will visit each other and children will receive presents, sweets or money. Work pretty much grinds to a halt. The other major Islamic festival is Kurban Bayram or the ‘sacrifice festival.’ Marking the end of the pilgrimage in Mecca, Saudi Arabia, it is based upon the Quranic story of Abraham’s willingness to sacrifice his son for God. A few days prior to the festival you may see herds of sheep, goats or cows on the outskirts of towns and cities that will be bought by families and tied up outside houses until the day arrives. The animal is then slaughtered and the meat distributed among the family, neighbors and the poor.

In most Muslim countries, eating and drinking publicly during the day may be extremely inappropriate for a foreigner, however in Turkey you will often find locals doing so. It is best to err on the side of caution and avoid doing so.

Entertaining for business success

Most business entertaining will take place in restaurants. Turks enjoy food and the meal is a

time for relaxing and engaging in some good conversation. The protocol of Turkish hospitality dictates that the host always pays for the meal. The concept of sharing a bill is completely alien. You may try and offer to pay, which may be seen as polite, but you would never be allowed to do so. The best policy is graciously to thank the host, then a few days later invite the host to dinner at a restaurant of your choice.

Dining

Turkey is a very social country and dining is at the center of it all. Meals are meant to be enjoyed both the food and the company so meals may take hours to finish. Even business dinners are intended for socializations (as highlighted earlier), while discussing business is ‘taboo’, the true intension is relationship building. Turkish food is simple in presentation, its natural flavor is not camouflaged by sauces; contrary to a common misconception in the West, spices and herbs are used sparingly. The foundations of the cuisine are grains, rice and wheat , and vegetables. While there are certainly a great many dishes in Turkish cuisine, dishes typically use one or two types of main ingredients. That’s to allow the flavor of the main ingredient to come through. Remember the Turkish do not eat pork – this is forbidden to Muslims. Turkey is a country with a massive cuisine culture. Dining in homes requires you arrive on time. 99% of the Turkish families do not enter their homes with their shoes on. Shoes are taken off either outside or in the mudroom if they have one. In more conservative homes men and women dine separately, however as a very liberal country this trend is growing more uncommon each year. If you are a guest in a house, bring some sweets and have a gift for the family’s children if they 70

have any. If you’re dining in a restaurant, you may find

also thick and black, and each cup is individually brewed,

yourself dining with strangers, politely ignore them as the

often with the sugar already in it, and milk is usually not to

locals do.

be added. Since it is offered all the time and everywhere, it is a gesture of hospitality and you must always take the

Recognize where you are seated. The host sits at the head

coffee or tea, even if you only put it to your lips or just take

of the table, with the honored guest seated next to the

a few sips. Your cup will always be refilled if it is less than

host. In addition, the honored guest sits on the side of

half full. Because you must never pour your own drink, you

the table farthest from the door. (At business meetings,

must always be alert throughout the meal as to whether

the key people sit in the middle, flanked on either side in

your neighbor’s cup or glass needs refilling. If it is less than

descending order by their aides, with the least important

half full, it needs refilling; alternately, if yours is less than

people sitting at the ends of the table farthest from

half full, your neighbor is obliged to refill it. If he or she

the middle, and closest to the door; the arrangement is

does not, do not refill it yourself, indicate your need by

mirrored on the other side.) Men and women eating at

pouring a little more drink into your neighbor’s glass, even

someone’s home might dine in separate areas (and spend

if it doesn’t really need it.

the entire evening separated) or at separate times, with the men dining first, again this is a changing delegacy with

If you are the honored guest, you will be expected to make

a more liberal country reform occurring.

a toast, usually soon after the host does or at the end of the meal, just before everyone departs. Remember status

As the food is served, the greatest compliment you can

is noticed, do not begin to eat or drink until the oldest man

offer is to insist that the older men and more senior diners

at the table has been served and has begun. You may want

are served before you. They will insist that you are their

to ask your host when it is appropriate to begin.

guest and you be served first, but your insistence that the older men are served first will be greatly appreciated. Tea

A couple important table manners to point out. When

and coffee is always served first. It is usually served in

eating recognize that you will use your fork in your right

little curved glasses that you hold not by the stem, but by

hand and knife in your left hand. You want to finish your

the lip: you never add milk, but you can add water as you

entire plate, some Turkish hosts might get offended if

drink it to dilute the tea, which is sometimes still steeping

you don’t. When your plate is empty, to indicate you are

when you get it. Coffee is generally available. The coffee

finished place your knife and fork sid-by-side on your

is drunk carefully (there are grounds on the bottom); it is

plate. 71

For a typical day a persons diet consists of three meals. Typically a light breakfast, Turks will eat bread with white cheese, butter, eggs, marmalade or honey, and olives, all accompanied by tea or yogurt. Lunch is an important meal at midday, but the main meal of the day is eaten in the evening when the family generally expects to sit down together. Dinner may consist of several courses.

What accompanies your meal are drinks. Tea (cay) is the national drink. Everyone drinks tea at all hours of the day and night. You can see tea sellers with their brass trays, scurrying about bringing tea to thirsty people. Turkey has some special teas. Apple tea is delicious, true apple flavor and very refreshing as is lemon tea and sour cherry tea. Turkish coffee is good and you can read your fortune in the grounds. (khave), Beers are very fine. (bira). In the past wines were not very drinkable. But now things have vastly improved and there is an array of moderately priced white and red wines. Turkey is a Muslim country so alcoholic beverages are not served in some restaurants but it is available in most places in Istanbul. Raki is like anisette only better, licorice flavored and very tasty, diluted with water it assumes a milky color.

Turkish cuisine is taken very seriously and a typical meal in a Turkish home can resemble a feast. Due to the countries wide range of weather, altitude, humidity and vegetation the countries geography plays a significant role in a wide range of different dishes. Turkey is one of only seven countries in the world that produces enough food for its population and still has some left for export.

c o m m u n i c at i o n Turkey encompasses the Turkish language also referred to as Istanbul Turkish or Anatolian Turkish. The most widely spoken Turkish languages with over 63 million native speakers. Turkish speech is located predominantly in Turkey with smaller groups in Germany, Bulgaria, Macedonia, Norther Cyprus, Greece and other parts of Eastern Europe. Caucasus and Central Asia. Turkish can be traced back to the earliest examples of Turkish writing, two monumental inscriptions which are written in Orkhon script, or â&#x20AC;&#x153;Turkic runesâ&#x20AC;?. Dating back to 735 AD, they were found in the Orkhon river valley in Mongolia in the 19th century. In addition, the lengthy Ottoman Empire influenced much of the language development. The Turkish language was used as the administrative and literary language of the Ottoman Empire. Ottoman Turkish experienced a great influx of Persian and Arabic words. There are also many loanwords of French origin in the Turkish language. Turkey has had many linguistic influences from neighboring countries as well as from European languages throughout its history. The language and literary of Turkish would map the way to what is spoke throughout Turkey today. The language is now spoken by about 90% or the entire 74 million people that live in Turkey. The current Turkish Alphabet was written by the founder of the Turkish Republic, Mustafa Kemal Ataturk. It was one of the major revolutionary changes which came with Ataturks reforms after the birth of the Turkish Republic in 1923. The transition from the Arabic Alphabet that lasted over 1,000 years to the now Latin alphabet was formalized by law in November 1928. This making the use of the new Turkish alphabet compulsory in all public communications and the education system. 73

Turkish is understood in many countries of Central Asia and is a member of the Turkish or Western subgroup of the Oghuz languages, which includes Gagauz and Azeri. The Oghuz languages form the Southwestern subgroup of the Turkic languages, a language family comprising of 30 languages spoken across Eastern Europe, Central Asia, and Siberia. The Turkish language is distinguished by five main factors: vowel harmony. The absence of gender, cohesion, adjectives precede nouns, and verbs come at the end of the sentence.

When communicating one needs to take into consideration the gestures that are recognized in the culture. Turks use hand gestures and mimic a lot to express themselves so being affluent in gestures as well as speech is key for communication. Couple of reminders: Turks personal space is narrow and physically very close, the rule of thumb of ‘to close for comfort’ is broken in Turkey, maintain eye contact, it is considered rude otherwise. Turkish people are hospitable and friendly and become familiar quickly, every conversation can build a relationship.

Phone: The telephone infrastructure is an organized, efficiently working direct dialing system. Turkey’s systems are the 6th in Europe and 12th in the world. All residential areas in whole Turkey are linked to this system. The main service provider is the Turk Telecom half privatized telecommunication company. The telephone numbers do have 7 digits in Turkey. Every town/city has its own 3 digits “Area Code”.

Country code: 90 Telephones (land lines): now:15,210,846 (2011) was:19,125,163 (2004) Telephone system: fair domestic and international systems, area codes

Postal: Turkeyâ&#x20AC;&#x2122;s postal services are comparatively organized and efficient. All post offices bear the distinctive yellow PTT sign (Post, Telephone, Telegrams). Post cards and open enveloped post cards do have different tariffs. Internet: The usage of electronic mail and internet is increasing rapidly in Turkey. The usage of internet is around 10 millions (1/6 of the population)

For OttĂśssĂśns we will face a communication barrier yet with personal relationships as the foundation for a successful business relationship. There will be a great deal of small talk before getting down to the business discussion. Patience may be a necessary cross cultural attribute. Never appear impatient or attempt to rush a Turk to make a decision. This is a hierarchical society where decisions are reached at the top of the company. Expect a great deal of bargaining and haggling. Turks are tough negotiators. High-pressure sales tactics may be used. It is a good idea to hire an interpreter unless you are certain of the English languageproficiency of the people you will be meetingin order to avoid any possible cross cultural miscommunication.

G LO B A L S O U R C I N G

Sourcing Guidelines

M a n u f a c t u r i n g & P ro d u c t i o n

Co s t i n g

Import Classification

100

Logistics & Imporation

104

Co u n t r y E x p o r t i n g R e q u i r e m e n t s

109

Conclusion

Page :

117

sou rcing gu idel ines the ottössöns strategy

ttössöns strives to design for the estab-

We offer selective production in which we distribute a

lished man with a creative style. We cre-

rare product that demonstrates creativity, individuality

ate a rare premium product that redefines the idea of

and passion to create a timeless one of a kind piece. Our

art in footwear. Our goal is to use design to redefine

shoes are handcrafted with the finest leathers and fabri-

business. Our objective is to conduct business to the

cations for an authentic shoe with a redefined style.

highest level of ethical standards while being socially responsible. We have made it our mission to develop

Our bespoke designs range from our signature Chel-

long term partnerships with vendors who are commit-

sea Boot to our redefined Classics are made with the

ted to meeting the uppermost environmental, product,

customer in mind. Our core collection is designed by

and community standards while treating our employees

our Ottössöns design team, but it is the customer that

with the concept of family in mind. To fulfill our poten-

decides the details. We offer a variety of vibrant color

tial we need to operate in ways that keeps our compet-

combinations and embellishments to redefine the art of

itors on edge while making sustainability integral to our

men’s footwear.

advancements as a company. We are an active member of Greenpeace’s “Commit or Cancel” policy for halting

Finally we offer premium manufacturing while re-in-

deforestation for cattle ranching in the Amazon Biome

venting the supply chain. We skip the traditional retail

and we believe the best practice for supporting the de-

channels to build a direct relationship with our clients.

velopment and implementation of a traceability system

Our showroom stores allow our customers to see, feel,

for our leather products is to ensure our leather within

touch and try on the product and purchase Online. This

our supply chain is traceable back to where it originated

reduces costs and our carbon footprint by eliminating

by abiding by the Leather Working Group guidelines. Our

steps in the overall supply chain.

customers are our business, they have the opportunity to design personalized shoes custom to their style and taste levels. 78

content content KEY OBJECTIVES:

CODE OF CONDUCT Employment S T R A T E GVoluntary Y Social Responsibility Child Labor S T R A T E GFair Y & Equal Treatment Product Impacts - Materials & Methods E NSourced V I R OLeather N M E N T A Harassment L I M P A &C Abuse T Sustainable and Humanely ECreating N V I RAOBalance N M E N T A Nondiscrimination L IMPACT Internal & Eternal Awareness U.S. Customs PRODUCT SOURCING Routine Auditing PRO D U C T S O UDocumentation R C I N G & Inspection PRODUCT SOURCING Modern Technologies & Quality A N I CraftsmanM A L S K I N S Sub-contracting POLICY ship Developing remeditation plans ANIMAL SKINS POLICY Strong Relationships with Manufacturers C OallDfactories E OF CONDUCT Code of Conduct for COMMUNITY INVOLVEMENT

CODE OF CONDUCT Greanpeace INVOLVEMENT The Leather Working Group INVOLVEMENT

ANIMAL SKINS POLICY COMMUNITY Particular Skins & Country of Origin C O M MAnti-Biome UNITY Animal Welfare

Forest Footprint Disclosure

Social Responsibility Environmental Impact: Key objectives Ottössöns believes in resource efficiency and a strong responsibility for the care of environmental issues. Not only will the products and practices undergo in a way that energy, natural resources and materials be used efficiently, but that waste and remaining products are also reduced. Ottössöns is in constant evaluation of strategies to help better suit the needs of the world around us. Product Impacts- Materials & Methods As a precautionary act, when there exists appropriate replacements for materials that cause environmental risks, Ottössöns will make alterations to use those materials and methods. The evaluation of potential risks of present and future operations and materials in order to minimize the negative impact on the environment will be conducted on a routine bases. The activities of Ottössöns are to be executed in full respect of appropriate legislation governing prevention and environmental protection. The Ottössöns ethic of transparency will be strongly implemented in the environmental sector of the company. As a global company, awareness and concern for climate change, energy use, resource consumption, and pollution is increasingly high. Quarterly, environmental profit and loss accounts will be drawn out; the measuring of water and pollution, waste, and greenhouse gasses will be reported. Packaging Ottössöns uses paper and packaging that is environmentally responsible. The paper purchased is monitored by volume and recycled certified content. Ottössöns is strongly committed to recycling and reusing to keep within our focus of responsible packaging. Suppliers Ottössöns believes in a set of core sustainability targets to achieve across its business model. The evaluation of our key suppliers must adhere to Ottössöns code of conduct. Our suppliers must be in collaboration with our environmental views and understand and improve their performances and practices. Not only must they abide to the environmental views of Ottössöns, but their country of operation. They must have a written environmental policy, and engage in a system to minimize and even eliminate negative impacts on their surrounding environment. Ottössöns partners must report on their environmental impacts and activities regularly. Just as Ottössöns operates, the elimination of toxic and hazardous substances from materials and methods must be implemented. Natural resources and raw materials used should be at a minimal, while responsibility for waste management should be at most concern. Sustainably & Humanely Sourced Leather As a result of leather being Ottössöns mainly used material, 100% of the Ottössöns leather will be from domestic livestock that is from responsible and verified sources. These will not result in converting sensitive ecosystems into grazing lands or agricultural lands for food production. 80

Creating a Balance The balance of market expansion and environmental growth is not an easy equilibrium, although Ottössöns believes that the two are connected. With climate-change regulation increasing and the development of new sustainable technologies and green opportunities, this balance is not only completely necessary to the prosperity and quality of life for generations to come, but also most important to the lasting competitiveness of our business. Internal & Eternal Awareness Ottössöns strives to be the demonstrator of how a business can succeed with respect and care for the environment in which it operates. To complete our environmental message, Ottössöns seeks to raise internal and external awareness about our efforts to our employees and customers. Product Sourcing Where We Stand We manufacture our products in Turkey using the finest cutting edge leather textiles. The truth in outsourcing our manufacturing is due to the modern textiles and technologies used in the production, in addition the quality workmanship. For many of the products we are producing (some of the most highly tailored and technical advances on the market) the required skill sets and technologies that no longer exist in the U. S. Thankfully our team has created lasting and established relationships with foreign manufacturers whose practices and integrity we know and trust. Sure there are always road bumps, but if approached with honesty and transparency, and monitored by a system of checks and balances, we believe it can actually benefit the people and countries where work is done. What We Are Doing Besides working with manufactures, creating lasting relationships and producing a design that redefines our business, we have created a code of conduct with which we have committed to meet. Where We will Go We will continue to evaluate all our manufacturing partners and practices. We will remain committed to producing our goods with integrity. Continuing to learn from: Fair labor Association (www.fairlabor.org) We find value in partnering with a diverse supplier base. It is vital to have partnerships with viable suppliers that provide us with a competitive advantage and provide our customers with the products, services and experiences they want. Animal Skins Policy The following policy applies to Ottössöns brand products or Ottössöns Affiliate brand products that contain animal skin materials (“Animal Skins”) 81

Permitted Animal Skins: The following Animal Skins are permitted to use in Products: • Sheep •

Cow / calf (leather + hair on hides)

• Goat • Pig • Antelope • Horse •

Exotics (examples include but are not limited to alligator, crocodile, lizard, snake, ostrich, fish, marine mammals, etc.) Amazon Biome Leather Sourcing Policy

The Amazon Biome relates to the Amazon Rainforest and its related ecosystems. The boundary of the Amazon Biome within Brazil is defined by the IBGE. The map is available at tp://geoftp.ibge.gov.br/mapas/tematicos/mapas_murais/biomas.pdf Raw hides/ leather used in our products will not be produced from cattle raised in the Amazon Biome as defined by Brazil’s National Institute of Geography and Statistics. Brazilian hide / leather suppliers are required to certify, in writing, that they are supplying hides / leather for our products from cattle raised outside of the Amazon Biome. Animal Welfare: •

Our suppliers must source Animal Skins from processors that use sound animal farming, and humane animal treatment and slaughtering practices whether farmed, domesticated or wild

•

According to The Leather Working Group (LWG) (www.leatherworkinggroup.com) Leather suppliers must screen tanning processes against the LWG Protocol to ensure adherence to best environmental practices.

•

Suppliers must have the ability to trace raw hides/skins back to country of origin.

•

The Integrity of our products are very important to us. Our animal skins’ identification of species must be very accelerate (scientific or Latin or common names) as appropriate for the legal import or export of these materials and product.

•

All of our suppliers must meet all applicable global legislative standards that apply to animal skins. They also must comply with country specific import/export trade regulations that apply to all Animal Skins. Voluntary Employment Code of Conduct

Ottössöns will not conduct business with any Supplier that uses involuntary labor of any kind, including prison labor, indentured labor, bonded labor, or labor obtained through human trafficking or slavery. Employee’s presence must be voluntary. Child Labor No workers under the age of 15 will be employed at any Ottössöns warehouse or manufacturing location, both nationally and 82

internationally. If a specific Country has a minimum working age greater than 15, workers must be that age. All additional suppliers must comply with all other applicable child labor laws. Workers under the age of 18 shall not perform work that may jeopardize their health or safety. Fair and Equal Treatment Work environments must be free of physical, sexual, psychological and verbal harassment and abuse, retribution for grievances, and corporal punishment. No person shall be subject to any discrimination in employment including hiring, salary, benefits, advancement, discipline, termination or retirement on the basis of gender, race, religion, age, disability, sexual orientation, political opinion, nationality, social or ethnic origin, marital status, capacity to bear children, gender identity and or transition, genetic features or other status of the individual unrelated to the ability to perform the job. Harassment and Abuse Ottössöns suppliers must treat all workers and those involved with respect and dignity. No corporal punishment or physical, sexual, physiological, or verbal harassment will be present in the work environment. Wages and Benefits Ottössöns suppliers must comply with all applicable laws and regulations relating to wages and benefits. Workers will be paid at least the minimum wage or higher. Overtime work shall be compensated at the premium rate as is legally required. Compensation is provided on a monthly basis without illegal or inappropriate deductions or penalties. Benefits will be provided to all workers, including but not limited to health, dental, and life. Ottössöns provides its workers with a family-like environment, which insures a trustworthy, educational, and honest atmosphere. Nondiscrimination Ottössöns suppliers must not discriminate in employment practices including, but not limited to, recruitment, hiring, compensation, training, benefits, advancement, termination, or retirement on the basis of race, color, ancestry, national or social origin, religion, gender, marital status, age, sexual orientation, gender identity or expression, disability, political opinion or any other personal characteristics of beliefs.

Health and Safety Ottössöns suppliers must comply with all applicable laws and regulations governing workplace health & safety. Work environments will be clean, safe, and healthy to work in. The same applies to any other facilities associated with the Ottössöns brand. Hours of Work/Overtime Ottössöns suppliers must comply with all applicable laws and regulations relating to hours of work. Workers shall not work more than 60 hours per week (including overtime). During the 7-day workweek, workers are required to take at least 1 day off and encouraged to use their provided vacation time.

U.S. Customs Vendors will implement and maintain all areas of our Code of Conduct. Suppliers will comply with applicable U.S. Customs importing laws and, in particular, will establish and maintain programs and documentation to support country of origin production verification, to avoid illegal transshipping. Suppliers shall seek ongoing education regarding Customs-Trade Partnership Against Terrorism (C-TPAT) supply chain security requirements, establish an action plan for compliance, be prepared for supply chain security audits by Ottössöns and/or third party auditor, and maintain standards set therein. Routine auditing Our team takes routine audits of partners seriously and works to ensure that our Partnership Guidelines are followed. During an audit, we join with independent, third party monitoring companies to review and assess physical surroundings, compensation, and working-hour documentation. We also gather input from workers and managers. New vendors are reviewed and compliance levels are assessed before we approve any facility for production of Ottössöns. Once the auditors have reported their findings, our program managers and partners work together to address any compliance issues. Documentation and Inspection Ottössöns intends to monitor compliance with our Partnership Guidelines and to undertake on-site inspections of Suppliers’ facilities. Suppliers will maintain on file all accurate documentation necessary to demonstrate compliance and will authorize Ottössöns and its designated agents (including third parties) to engage in announced and unannounced monitoring activities to ensure compliance, including confidential employee interviews. Ottössöns will review and may terminate its relationship with any Supplier found to be in violation of the Partnership Guidelines. Developing re-mediation plans We believe compliance is an ongoing process—and we begin the process with an extensive assessment to identify potential labor, health and safety, and environmental issues. From these findings, we create a corrective action plan and assist our factory partners in addressing any challenges. Transparency and continuous improvement is our goal. We will provide in-depth training and planning for factory management to address complex compliance issues. Sub-contracting Our vendors are not permitted to sub-contract any part of the work (all goods and services) without the written consent of Ottössöns and only after the subcontractor have agreed to comply with the Partnership Guidelines. Suppliers will not change manufacturers, factories, subcontractors or vendors for the production of Ottössöns products without written approval and authorization from Ottössöns, and only after the new factory, subcontractor, or vendor has agreed in writing to comply with the Partnership Guidelines. Any Vendors proposed, 84

as sub-contractors must also meet the standards outlined in the Code of Conduct.

Environment Suppliers must demonstrate a regard for the environment, as well as compliance with applicable environmental laws. Further, Ottössöns actively seeks Suppliers who demonstrate a commitment to progressive environmental practices and to preserving the earth’s resources. Community Involvement Ottössöns is very active in protecting our ecosphere’s resources. In 2009, Green peace highlighted the environmental impact of the increasing level of deforestation in the Amazon rainforest. Ottössöns shares these concerns in regard to the ecological impact of the leather industry on the Amazon Rainforest in direct effect on biodiversity and the changing of the world’s climate. We promise to work with Non-Governmental Organizations such as The Leather Working Group, and Government authorities to support and promote a long-term strategy towards achieving zero deforestation in the Amazon Biome.

We will contribute to the “Forest Footprint Disclosure” report. This initiative prides itself on sustainable

and sound business practice in the key commodities that, if managed badly, can encourage deforestation: soy, timber, cattle products, palm oil and bio-fuels. http://www.globalcanopy.org/

the ottössöns philosophy Our Mission & Vision Ottössöns strives to design for the established man with a creative style. We create a rare premium product that redefines the idea of art in footwear.

EXCLUSIVE PRODUCTION BESPOKE DESIGNS PREMIUM MANUFACTURING

Ma nufactu r ing & Product ion

M A D E

I N

T U R K E Y

SUPPLIERS “Standing out from among other countries in the world who practice mass production, Turkish shoe brands achieved differentiation with products that comply to international norms and target quality, bringing them to the position where they are today.” –Pier luigi loro Riana, Italian Luxury fashion firm

Akar Shoes Co.Ltd. AGUCINO Shoes Co.Ltd. AKEM SHOES MOYLER SHOE COMPANY FERUNDUN KUNDURA ZIYLAN GROUP’S POLAT AYAKKABI LTD. ŞT TOKTAŞ KALIP SEBATA ALYASAN KUNDURA İMALAT TİC. SAN. LTD. ŞTİ ÜÇEL AYAKKABI SAN. TİC. LTD. ŞTİ 86

TOP TEN SUPPLIERS :

AKAR Shoes Co.Ltd.

Telephone: +90 212 637 82 70 E-mail: info@akarshoes.com

Akar Shoes was founded in 2004 Brands: Corrente, Dino Maginal, Enrico Cavalli, Duca D’Meglio, Caboverde AKAR has enlarging their customer portfolio creating a prestige customer base. Ottössöns looked to AKAR due to the solidity and belief in their mission to produce a premium product through quality manufacturing techniques. With an aim to produce classic leather shoes, by using the highest quality raw materials combined with good quality in craftsmanship. While pushing innovation through research and development departments there manufacturing operations foster strong production.

AGUCINO Shoes Co.Ltd. Telephone:90-232-2516054 Website: www.agucino.com.tr E-Mail: info@agucino.com.tr Founded in 1983 From a small workshop the manufacture of leather shoes was produced. Agucino has been active in the men’s and women’s footwear production. With a 80 persons staff, modern factories encompass an area of 3,000 m2. The quality of Italian craftsmanship with technology-band system, create the foundation from which Agucino is bases upon. Our company has participated in the global market trade organizations and meetings organized by the introduction of a reliable, modern and aims to become a global brand of high quality.

AKEM SHOES

Phone: 90 212 696 60 79 Email: Info@akem.com.tr Founded 1994 Brands: Akem, Cott Producing high quality standards Akem shoes, own brands with national and international markets, the leader in a shoe manufacturer. As a manufacture of premium men’s footwear our priorities are quality, service and integrity. Our mission is to meet with costumers, employees, partners and suppliers in joint points, without compromising standards to off the product to our consumers.

MOYLER SHOE COMPANY Phone: 0 212 671 56 90 Fax: 0 212 671 56 91

Founded 1996 Brand: Sergio Paganelli +European brand Molyer Shoe Company, have been the invisible power of leading shoe retailers and garment retailers in Turkey. “We are seeing our clients as our partners and with this synergy we always introduce high quality collections / products to the taste of fashion followers.” With a 2,500 m² plant with over 70 workers there innovation is growing. With a vast amount of technology used to manufacture the best and high quality shoes. While manufacturing daily 850 pairs. Of any kind of shoes and over 200,000 pairs annually for whom addicted to quality and fashion. Molyer Shoe Company also contributes important amounts to Turkish exports. “We found a good place for us in export markets both with our brand name “Sergio Paganelli” and with manufacturing for very important European brands with their labels.”

FERUNDUN KUNDURA Phone: +90 216 365 9524

Founded in 1974 Brands: TREND, and FERTINI +private labels Ferudun Kundura, is now one of the reputable shoe manufacturer in Turkey. Main production is focused on men classic and casual shoes; men , women ,and children sandals and sleepers. Production facilities are about 2500 m closed area with a capacity of 800 pairs per day. While providing footwear that is functional, trendy responsive to t needs and reflects the talent of Turkish finest Craftsmen. “Our corporate mission is to offer highest quality, new and updated collection, competitive pricing effective communication by means of prompt response to customers, and strong after sale support.” Ferudun Kundura, vision is to satisfy customers and establish a good brand name in the market will providing top quality service.

ZIYLAN GROUP’S

Phone:+90 212 446 8989 Founded 1960’s Brand: Flo,Polaris, Lumberjack, Kinetix, Torex and Pinkstep. The Ziylan Group’s foundations were laid in a small 50 m2 workshop in Gaziantep in the early 1960’s at which time it was making shoes to order. Soon shifting to mass production on a minor scale, the company set its course for Istanbul in the 1970’s. The 7 companies in the

Ziylan Group provide employment to 5,000 people selling 20 million pairs of shoes each year. The manufacturing plants sprawling across 70,000 sqm have the capacity to turn out 120,000 pairs of soles and 18 tons of sole liners per day. While working to satisfy customer demands and expectations at the highest level by constantly improving the quality of products and services. Ziylan Group works to ensure customer loyalty by building emotional bonds between consumers. Ziylan Groups vision is to become a reliable and reputable company of Turkey, that constantly develops its own processes and pioneers the industry in its field of expertise in order to boost the effectiveness and productivity of our company on the national / international market.

POLAT AYAKKABI LTD. ŞT

Telephone : +90 212 671 61 60  Fax : +90 212 671 60 37 info@oggi.com.tr Founded 1971 Brand: OGGI We produce handmade leather shoes with subtle detail and ingenious touches for 40 years. While achieving the balance between past and future with handmade and new design perspectives. “We work to be excellent to be here to stay for people who like to dress well…”

TOKTAŞ KALIP

Phone: +90 212 637 34 10 – 11 Fax: +90 212 637 34 24 Founded in 1992 Brands: Bulldozer, Woffo and Raffine Today being one of the first names to be mentioned for shoe industry and production, TOKTAŞ is a distinguished company with its experience, reliability and quality in the sector TOKTAŞ both carries out production for major shoe store chains in the market and also prepares and produces the articles from Turkey’s leading men’s garment brands and various foreign menswear brands. It has also commenced to make export investments through special productions addressing European states. It carries out production and marketing activities in its 1500 square meter plant in Merter, İstanbul and produces shoe upper in its 500 square meter plant in Güngören. Having all state-of-the-art technology, TOKTAŞ has an annual production capacity of 300 000 pairs of shoes with its young and dynamic team. With its team of designers that pursue worldwide trends and fashion closely. 89

SEBATA ALYASAN KUNDURA İMALAT TİC. SAN. LTD. ŞTİ

Tel: 90 212 6370888 Fax: 90 212 637 0676 www.sebata.com Brands: de marchi + “We can also produce for our customer’s own design under their brand name.” SEBATA ALYASAN KUNDURA IMALAT TIC. VE SAN. LTD pleased to introduce our company, sebata alyasan shoes company located in Istanbul, Turkey as a manufacturer of high quality men shoes. We are proud to distinguish our company with its very high quality production carried out by modern equipment and facility, long term experience in the market, fast delivery and service support and high capacity production capability. We believe that we are very much competitive with our prices for the quality level we offer and with strong partnership we will definitely be very active in foreign markets, as we believe in our quality, price and standards. We carry over more than 250 models, mainly classical but also attractive modern lines. All of our products are manufactured in our own factory.

ÜÇEL AYAKKABI SAN. TİC. LTD. ŞTİ

Tel: 0236 286 71 75 & Fax: 0236 286 71 28 E-Mail: info@ucel.com.tr Founded 1983 Brands: Dr.Flexer, WINCHESTER, CAPITOL WALK ÜÇEL model for “Quality First” has achieved remarkable success in a short time with the idea. The partnership became a limited company in 1988, and moved to a new factory building in Germany carried out the first export. Since then, the ever evolving, branding, quality and customer satisfaction, along with the policy developed domestic dealer network, our company has started to have a say in international markets. Which is open to innovation and development, our company in Turkey with TSE and Total Quality Certificates, the first companies in the industry. Also in Spain, in 2000, the company was awarded the World Quality Award. In 2006 our country to China shoes is the first company to export its success.

While selecting suppliers for initial research, OttĂśssĂśns looked to suppliers who mimicked our philosophy within their production processes. We wanted to foster an

alignment with suppliersâ&#x20AC;&#x2122; operations that fit seamlessly ! " # $ " ! % ! & " ' " ( ! # $ # !

# !

with our sourcing guidelines, values and mission. While

)

ensuring we have selected the correct supplier today,

* )

thus ensuring we have the correct supplier for tomorrow.

)

Specifying our Turkish suppliers was a task that we at

+ ) ,

OttĂśssĂśns felt empowered with. Picking and choosing

who and what we wanted to foster through out our

business identity was an exciting feet.

+ )

)

Delving into the importance of operational metrics such

as price, capacity, flexibility and delivery we critically ! " # $ " ! % ! & " ' " ( ! # $ # !

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evaluated suppliers, however we wanted more. By

) )

strategic evaluation of our suppliersâ&#x20AC;&#x2122; capabilities and

practices amongst; quality, management, services and

their strategic outlook, OttĂśssĂśns selected suppliers

who fit in line with our values, ideals, and visions.

)

We feel that by producing a premium product the

development process must see â&#x20AC;&#x2DC;eye to eyeâ&#x20AC;&#x2122; from start

+ )

to finish, holding true to our sourcing guidelines as

)

well as customer satisfaction. While selecting high-

performance suppliers we looked to our customers to ! " # $ " ! % ! & " ' " ( ! # $ # !

# !

)

be the designers, mimicking the U.S. market perception

map of importance in a luxury brand; reputation 24%,

) -

design 38%, prestige 47%, craftsmanship 48% and price

+ ,

55%. This being said we selected suppliers who fostered

, +

quality assurance at a competitive price, reliability

with a keen eye for details and perfection, vertically

) +

integrated design processes pushing innovation, and

)

reliability. These seven skills foster the buyer-supplier relationship that we believe will distinguish us in a

competitive marketplace and create a competitive edge for OttĂśssĂśns and our suppliers.

Why these SUPPLIERS :

the ottรถss

All of these manufactures are setting the foundation for Ottössöns. We want to encompass a relationship built platform with our manufacturers and make sure that our manufacturers believe in the same foundation values

öns vision

that run Ottössöns. We want to encompass a open line of communication and understanding of our company as well as there’s. After significant amount of research these 12 manufacturers are potential locations for where the magic happens for Ottössöns.

c o st i n g A major goal that we at Ottössöns have is to achieve the strongest increase in the international competitiveness of the brand and product. In doing so we look to international markets to source and manufacture our products. As a Small and Medium sized Businesses (SME’s) in order to find success in the market place, we give our company budgetary stinginess, this helps to create a competitive edge within our negotiations. With producing a base cost we are able to look at requirements of cost that may need to be altered in terms of creating a profitable production. We look at shifting resources, location, shipping, and even changing manufacturing locations. In addition with formatting a structural budget base we can look at implementing changes where need be. Our goal is to apply modern technologies to our production processes. Some firms will use technological processes more effectively and they will be able to optimize our production and cut costs more quickly. We here at Ottössöns want to join a market that is going to give our brand the competitive edge we are looking for.

" Redefining the art in footwear"

Style #: 00901 Style Name: Chelsea Description: Men's classic leather shoe with gore elastic

220 Manhatten Avenue New York, New York

Season: Fall 13 Ottossonsgroup.com contact@ottossons.com 313.910.8745

Date: Oct 2013

LEATHER Upper: Cognac Calf 4.5-5 oz (finished) Lining: Calf - Natural Sole: Cow Insole: Cow - Natural- Thickness 1.2

Sq ft./ Units 3 2 2 2

Cost Per Sq. ft/Unit 8.70 8.00 2.00 2.00

Yield 1.03 1.03 1.03 1.03

Amount $ 26.88 $ 16.48 $ 4.12 $ 4.12

TOTAL LEATHER: COMPONENTS: Thread Nylon #69 (Black) Leather Shoe Tab Heavy Duty Gore Elastic 3" (Per Yard) Shanks Toe Cap: Cow Stiffner: Cow

Yards/Units 0.66 2 0.15 2 2 2

Cost Per Yard/Unit 3.75 0.08 1.00 1.00 0.70 0.70

Yield 1.03 1.03 1.03 1.03 1.03 1.03

TOTAL: PACKAGING: Black Box Printed Dust Bag Black Tissue Paper Shoe Horn

Units 1 1 2 1

LABOR: Cutting (Clicking) Closing (Sewing) Insole Preperation Stiffeners Preperation Lasting/Stretching Sole Heel Building Finishing (Edges & sole)

PACKING: Cartons Tape Labels

OTHER: Freight Broker Insurance

Average Wholesale Average Cost Average Margin Margin %

Cost/Minute

Quantity

Quality + Waste

TOTAL PACKING:

Amount $ 0.10 $ 0.01 $ 0.08 $ 0.19

Units per container 2,952.00 TOTAL:

Amount $ 1.39 $ 0.08 $ 0.03 $ 1.50

1 4 1

$ per Container/trip 4098 250 81

$ $ $

Amount $ 0.39 $ 0.59 $ 0.29 $ 0.29 $ 0.39 $ 0.29 $ 0.39 $ 0.29 $ 2.94

0.098 0.098 0.098 0.098 0.098 0.098 0.098 0.098 TOTAL LABOR:

$/unit 0.10 0.002 0.08

71.74 286.96 (215.22) 75%

7.81

Amount $ 0.60 $ 0.15 $ 0.06 $ 0.50 $ 1.31

0.60 0.15 0.03 0.50 TOTAL PACKAGING:

Minutes 4 6 3 3 4 3 4 3

Amount $ 2.55 $ 0.16 $ 0.15 $ 2.06 $ 1.44 $ 1.44 $

Cost Per Unit

51.60

1.01 1.01

Invoice Subtotal Duty Rate 10% of freight Other:

$ $ $

63.85 6.39 1.50

TOTAL

71.74

Style Name: Loafer Description: Style #:Men's 00904 classic leather Loafer Style Name: Loafer Flat with Tassel

" Redefining the art in footwear"

220 Manhatten Avenue New York, New York

Description: Season: Fall 13 Men's classic leather Loafer Flat with Tassel

220 Manhatten Avenue Ottossonsgroup.com New York, New York

Date: Oct. 2013

contact@ottossons.com 313.910.8745

Season: Fall 13

Ottossonsgroup.com contact@ottossons.com 313.910.8745

Date: Oct. 2013

LEATHER Sq ft./ Units Cost Per Sq. ft/Unit Upper: Cognac Calf 4.5-5 oz (finished) 2.75 $ 8.70 LEATHER Sq ft./ Units 2 Cost Per Sq. ft/Unit Yield Lining: Calf - Natural 8.00 Upper: Cognac Calf 4.5-5 oz (finished) 2.75 $ 8.70 1.03 Sole: Cow 2 2.00 Lining: 2 8.00 1.03 Insole:Calf Cow- Natural - Natural- Thickness 1.2 2 2.00 Sole: Cow Insole: Cow - Natural- Thickness 1.2

2 2

2.00 2.00

1.03 1.03

Yield 1.03 Amount 1.03 $ 1.0324.64 $ 1.0316.48

$ $

4.12 4.12

49.36

TOTAL LEATHER: COMPONENTS: COMPONENTS: Thread Nylon #69 (Black) Thread Nylon #69 (Black) Facing Accessory Attaching Tassel Facing Accessory Attaching Tassel Tassel Tassel Shanks Shanks ToeCap: Cap:Cow Cow Toe Stiffner:Cow Cow Stiffner:

TOTAL LEATHER:

Yards/Units Yards/Units0.66 0.66 2 2 4 4 2 2 2 2 2 2

Cost Per Yard/Unit Yield 3.75 0.20 1.03 1.03 0.45 1.03 1.25 1.03 0.70 1.03 0.70 1.03

Cost Per Yard/Unit 3.75 0.20 0.45 1.25 0.70 0.70

TOTAL: TOTAL: PACKAGING: PACKAGING: Black Box Black Box Printed Dust Bag Printed Dust Bag Black Tissue Paper Shoe BlackHorn Tissue Paper

Shoe Horn LABOR: Cutting (Clicking) LABOR: Closing (Sewing) Cutting (Clicking) Insole Preperation Closing (Sewing) Stiffeners Preperation Lasting/Stretching Insole Preperation Sole Stiffeners Preperation Heel Building Lasting/Stretching Finishing (Edges & sole)

Sole Heel Building Finishing (Edges & sole) PACKING: Cartons Tape Labels PACKING:

Cartons Tape OTHER: Labels Freight Broker Insurance

OTHER: Freight Broker Insurance Average Wholesale Average Cost Average Margin Margin %

Average Wholesale Average Cost Average Margin

Margin %

Units Units 1 1 1 1 2 1 2

1 Minutes 4 6 Minutes 4 3 6 3 4 3 3 3 4 4 3

3 4 3

$/unit 0.10 0.002 0.08 $/unit

0.10 0.002 $ per Container/trip 4098 0.08

Cost Per Unit

0.60 0.15 0.03 0.50 TOTAL PACKAGING:

0.60 0.15 0.03 0.50 TOTAL PACKAGING: 0.098

Cost/Minute 0.098

0.098 0.098 0.098 0.098 0.098 0.098 0.098 0.098 Quantity Quality + Waste TOTAL LABOR: 1

0.098 0.098 0.098 0.098 0.098 0.098 TOTAL LABOR:

4 1 Quantity

TOTAL PACKING:

$287.92 ($215.94)

$ $ $ $ $

Amount 0.60 0.15 0.06 0.50 1.31

$ $ $ $ $ $ $ $ $

Amount 0.39 0.59 0.29 0.29 0.39 0.29 0.39 0.29 2.94

Amount 0.10 1.01 $ 0.01 1.01 $ 0.08 Quality + Waste $ 0.19 1

75%

49.36

$ $ $ $ $ $

Amount 2.55 0.41 1.85 2.58 1.44 1.44

10.27

$ $ $ $ $

Amount 0.60 0.15 0.06 0.50 1.31

$ $ $ $ $ $ $ $ $

Amount 0.39 0.59 0.29 0.29 0.39 0.29 0.39 0.29 2.94

Amount 1.01 1.39 0.08 0.03 1.50

Amount 0.10 $ 0.01 $ 0.08 $ 0.19 Amount 1.39 0.08 0.03 1.50

Invoice Subtotal Duty Rate 10% of freight Other

$ $ $

64.08 6.41 1.50

TOTAL

71.98

2,952.00 -

TOTAL

$71.98 $287.92 ($215.94)

1.01

$ $ $ $

Invoice Subtotal TOTAL: Duty Rate 10% of freight Other

75%

Amount 1.03 2.55 1.03 0.41 1.03 1.85 1.03 2.58 1.03 1.44 1.03 1.44 10.27

Cost/Minute

Amount 24.64 16.48 4.12 4.12

Yield

Cost Per Unit

Units per container 1 2,952.00 TOTAL PACKING: 250 81 $ per Container/trip TOTAL: Units per container

4098 250 81 $71.98

$ $ $ $ $ $

$ $ $ $

$ $ $

64.08 6.41 1.50

71.98

Description: Men's classic leather shoe Style #: 00902 with buckle Style Name: Jodphur Boot

" Redefining the art in footwear"

220 Manhatten Avenue New York, New York

Description: Season: Fall Men's classic leather shoe with buckle

220 Manhatten Avenue Ottossonsgroup.com New York, New York

Date: Oct 2013

contact@ottossons.com 313.910.8745

Season: Fall 13

Ottossonsgroup.com contact@ottossons.com 313.910.8745

Date: Oct 2013

LEATHER Sq ft./ Units Cost Per Sq. ft/Unit Yield Upper: Cognac Calf 4.5-5 oz (finished) 3 $ 8.70 1.03 LEATHER Sq ft./ Units 2 Cost Per Sq. ft/Unit Yield8.00 Amount Lining: Calf - Natural 1.03 Upper: Cognac Calf 4.5-5 oz (finished) 3 8.70 1.03 2.00 $ 26.88 Sole: Cow 2$ 1.03 Lining: Calf - Natural 2 8.00 1.03 $ 16.48 Insole: Cow - Natural- Thickness 1.22 2 1.03 Sole: Cow 2.00 1.03 2.00 $ 4.12 Insole: Cow - Natural- Thickness 1.2

2.00

1.03

TOTAL LEATHER:

COMPONENTS: COMPONENTS: ThreadNylon Nylon (Black) Thread #69#69 (Black) Shanks Shanks Toe Cow ToeCap: Cap: Cow Stiffner: Cow Stiffner: Cow Buckle

Yards/Units Cost Per Yard/Unit Yards/Units Cost Per Yard/Unit Yeild 0.66 3.75 0.66 3.75 1.03 2 1.25 1.03 2 1.25 2 0.70 1.03 2 0.70 2 0.70 1.03 2 0.70 2 1.00 1.03

Buckle

1.00

TOTAL: PACKAGING: Black Box PACKAGING: Printed Dust Bag BlackTissue Box Paper Black Shoe HornDust Bag Printed

Units 1 1 2 1

Cost Per Unit

Cutting (Clicking) Closing (Sewing) Insole Preperation LABOR: Stiffeners Preperation Cutting (Clicking) Lasting/Stretching Closing (Sewing) Sole Insole Preperation Heel Building Finishing & sole) Stiffeners(Edges Preperation

6 3 3 4 3 4 3

Lasting/Stretching Sole PACKING: Heel Building Cartons Finishing (Edges & sole) Tape

$/unit 0.10 0.00 0.08

Labels

0.60

OTHER: Average Wholesale Average FreightCost Average Broker Margin

0.098

Insurance

Margin %

Average Wholesale Average Cost Average Margin Margin %

$/unit Units per containerQuantity $ per Container/trip 0.10 4098 2,952.00 250 0.00 81 0.08 TOTAL : TOTAL PACKING: $ $ $

51.60

$ $ $ $ $

Yeild Amount 2.55 1.03 2.58 1.03 1.44 1.03 1.44 2.06 1.03

10.07

$ $ $ $ $

Amount 0.60 0.15 0.06 0.50 1.31

$ $ $ $ $ $ $ $ $

Amount 0.39 0.59 0.29 0.29 0.39 0.29 0.39 0.29 2.94

0.19

1.03

74.22 296.88 (222.66) 75%

Quality Amount+ Waste

1 $ 4 $ 1 $

$ per74.22 Container/trip Units per container Invoice Subtotal 296.884098Duty Rate 10% of freight 2,952.00 (222.66)250 Other 81 75% TOTAL TOTAL :

$ $ $

0.098 Minutes Cost/Minute 0.098 4 0.098 0.098 6 0.098 0.098 3 0.098 0.098 0.098 3 0.098 TOTAL LABOR: 4 0.098 3 0.098 Quantity Quality + Waste Amount 4 0.098 1 0.10 3 0.098 4 1.01 $ 0.01 0.08 TOTAL1 LABOR: 1.01 $ TOTAL PACKING:

PACKING: OTHER: Cartons Freight Broker Tape Insurance Labels

4.12

TOTAL:

Units Cost 0.15Per Unit 1 0.60 0.03 0.50 1 0.15 2 TOTAL PACKAGING: 0.03 1 0.50 Minutes Cost/Minute TOTAL0.098 PACKAGING: 4

Black Tissue Paper Shoe Horn LABOR:

1.39 0.08 0.03 1.50

$ $ $

66.11 6.61 1.50

74.22

1.01 1.01

$ $ $ $

Amount 26.88 16.48 4.12 4.12

51.60

$ $ $ $ $

Amount 2.55 2.58 1.44 1.44 2.06

10.07

$ $ $ $ $

Amount 0.60 0.15 0.06 0.50 1.31

$ $ $ $ $ $ $ $ $

Amount 0.39 0.59 0.29 0.29 0.39 0.29 0.39 0.29 2.94

Amount 0.10 $ 0.01 $ 0.08 $ 0.19

$ $ $ $

Amount 1.39 0.08 0.03 1.50

Invoice Subtotal Duty Rate 10% of freight Other

$ $ $

66.11 6.61 1.50

TOTAL

74.22

Description: Men's classic leather Style #: 00903 Style Name: Modified Derbyelastic shoe with gore

" Redefining the art in footwear"

220 Manhatten Avenue New York, New York

Description: Season: Fall 2013 Men's classic leather shoe with gore elastic

Date: October 2013

contact@ottossons.com 313.910.8745

Season: Fall 2013

Ottossonsgroup.com contact@ottossons.com 313.910.8745

Date: October 2013

LEATHER Sq ft./ Units Cost Per Sq. ft/Unit Upper: Cognac Calf 4.5-5 oz (finished) 2.5 $ 8.70 Lining: Calf - Natural 8.00 LEATHER Sq ft./ Units 2 Cost Per Sq. ft/Unit Yield Upper: Cognac Calf 4.5-5 oz (finished) 2.5 8.70 1.03 Sole: Cow 2 $ 2.00 Lining: - Natural 2 8.00 1.03 Insole:Calf Cow - Natural- Thickness 1.2 2 2.00 Sole: Cow Insole: Cow - Natural- Thickness 1.2

2 2

2.00 2.00

1.03 1.03

Yield 1.03 1.03 Amount $ 1.03 22.40 $ 1.03 16.48 $ $

$ $ $ $

Amount 22.40 16.48 4.12 4.12

47.12

$ $ $ $ $ $

Amount 2.55 0.16 0.15 2.58 1.44 1.44

8.33 $

8.33

4.12 4.12

TOTAL LEATHER: TOTAL LEATHER:

COMPONENTS: Yards/Units Cost Per Yard/Unit COMPONENTS: Yards/Units0.66 Cost Per Yard/Unit Yeild Thread Nylon #69 (Black) 3.75 Thread Nylon (Black) 0.66 3.75 1.03 Leather Shoe#69 Tab 2 0.08 Leather 2 0.08 1.03 HeavyShoe DutyTab Gore Elastic 3" (Per Yard) 0.15 1.00 Heavy Duty Gore Elastic 3" (Per Yard) 0.15 1.00 1.03 Shanks 2 1.25 Shanks 2 1.25 1.03 Toe Cap: Cow 2 0.70 Toe Cap: Cow 2 0.70 1.03 Stiffner:Cow Cow 2 0.70 Stiffner: 2 0.70 1.03 TOTAL: PACKAGING: PACKAGING: Black Box Black Box Printed Dust Bag Printed Dust Bag Black Tissue Paper Black Tissue Paper Shoe Horn

LABOR: Cutting (Clicking) LABOR: Closing (Sewing) Cutting (Clicking) Insole Preperation Closing Preperation (Sewing) Stiffeners Insole Preperation Lasting/Stretching Sole Stiffeners Preperation Heel Building Lasting/Stretching Finishing (Edges & sole)

Minutes 4 Minutes 6 4 3 6 3 3 4 3 3 4 4 3

Sole Heel Building Finishing (Edges & sole) PACKING: Cartons Tape Labels PACKING:

Cartons Tape OTHER: Labels Freight Broker Insurance

OTHER: Freight Broker Average Wholesale Insurance Average Cost Average Margin

3 4 3

$/unit 0.10 0.002 0.08 $/unit

Average Wholesale Average Cost Average Margin

Margin %

0.098

4 1 Quantity

Amount 0.39 0.59 0.29 0.29 0.39 0.29 0.39 0.29 2.94

TOTAL

67.38 269.52 (202.14) 75%

$ $ $ $ $

Amount 0.60 0.15 0.06 0.50 1.31

$ $ $ $ $ $ $ $ $

Amount 0.39 0.59 0.29 0.29 0.39 0.29 0.39 0.29 2.94

1.01 $ 0.01 1.01Quality $ 0.08 + Waste 0.19 $ 1 $

75%

$ $ $

$ $ $ $ $ $ $ $ $

0.098 0.098 0.098 0.098 0.098 0.098 0.098 0.098 0.098 0.098 0.098 0.098 TOTAL LABOR: 0.098 Quantity Quality0.098 + Waste Amount TOTAL LABOR: 1 $ 0.10

$ per Container/tripTotal: Units per Container 4098 2,952.00 250 67.38 Invoice Subtotal 81 269.52 Duty Rate 10% of freight Total: (202.14) Other

Margin %

Amount 0.60 0.15 0.06 0.50 1.31

TOTAL PACKAGING: Cost/Minute 0.098

47.12

Yeild Amount 1.03 2.55 1.03 0.16 1.03 0.15 1.03 2.58 1.03 1.44 1.03 1.44

$ $ $ $ $

Cost/Minute

0.10 TOTAL PACKING: 0.002 4 $ per Container/trip Units per Container 0.08 1 4098 2,952.00 TOTAL -PACKING: 250

$ $ $

$ $ $ $ $ $ $

TOTAL:

Units Cost Per Unit Units Cost Per Unit 1 0.60 1 0.60 1 0.15 1 0.15 2 0.03 2 0.03 1 0.50 1 TOTAL PACKAGING: 0.50

Shoe Horn

Amount 0.10 1.01 $ 0.01 Amount 1.01 0.08 $ 1.39 $ 0.19 $ 0.08 $ $ $

0.03 1.50

$ $ $

$ $ 59.89 $ 5.99 1.50 $

67.38

Amount 1.39 0.08 0.03 1.50

Invoice Subtotal Duty Rate 10% of freight Other

$ $ $

59.89 5.99 1.50

TOTAL

67.38

Turkey: Fall 2013 Cost Sheets: Ottรถssรถns

220 Manhatten Avenue Ottossonsgroup.com New York, New York

product category INITIAL VS PRELIMINARY VS FINAL COSTS Men’s Footwear

Leather Prelimary Cost $400 - $1200 urkey Chelsea Boot | Jodphur Boot | Loafer |TMonk

p r o d u c t 901c a t e g o r y Style #

RETAIL

Cost

Margin%

$ 297.00 $ 74.22

75.01%

902 $ 287.00 $ 71.74 Modified Derby 903 $ 270.00 $ 67.38 Loafer 904 $ 290.00 $ 71.98 Men’s Footwear Average Price Leather$ 286.00 Average Cost $ 71.33 $400 - $1200 Average Chelsea Margin Boot | Jodphur Boot | Loafer | Monk

75.00%

Jodphur Chelsea

75.04% 75.18%

75.06%

i m p o rt c l a s s i f i c at i o n

Trade policies can be an innovative tool to help grow America’s economy and the world economy, while helping workers and firms here at home. Turkey was the United States’ 45th largest supplier of goods imports in 2011. U.S. goods imports from Turkey totaled $5.2 billion in 2011, up 24.1% ($1.0 billion) from 2010, and up 72% from 2000. (USTR) Turkey, a long standing political and military partner of the United States and a key NATO ally, is becoming an increasingly important business destination for American companies. In 2011 and into 2012, there is increasing positive momentum in the U.S.– Turkish business relationship. The statistics (below) verify that the U.S. has an unmatched competitive advantage in providing raw cotton exports while Turkey has a comparative advantage in supplying cotton apparel and household goods. Leading US exports to Turkey, 7 product categories showed percentage gains of at least 43.2%. (Ameroturk)

1. Steel making materials …......................................... US$2 billion, up 121.7% from 2007 (20.2%

of US exports to Turkey)

100

2. Civilian aircraft …......................................................... $1 billion, up 153.9% (10.4%)

3. Fuel oil …......................................................................$814.9 million, up 1,590% (8.2%)

4. Raw cotton …...............................................................$536.5 million, down 30.1% (5.4%)

5. Metallurgical grade coal ….............................................$382.5 million, up 202.2% (3.8%)

6. Parts for military-type goods …..................................... $337.9 million, up 43.2% (3.4%)

7. Organic chemicals ….................................................... $259 million, down 15.4% (2.6%)

8. Plastic materials …........................................................ $231.3 million, down 25.2% (2.3%)

9. Soybeans …................................................................. $214.1 million, up 60.1% (2.15%)

10. Unmanufactured agricultural industry goods …...............$210.8 million, up 87.5% (2.12%)

United States Import Trends of HTS Code 6405.10.00.90 — Footwear, gaiters and the like; parts of such articles: Other footwear: With uppers of leather or composition leather: (panjiva) The the rates of duty/ tariff imposed on imported goods from Turkey on footwear is set at a rate of: 2.5%. The United States and Turkey The Generalized System of Preferences (GSP) program began operation in 1974. It provides preferential duty-free treatment for 3,474 products from 131, Turkey being included. The GSP provides duty free treatment to most dutiable manufactured items and inputs; those not eligible for GSP are textiles and apparel made with cotton, wool, man-made fiber, other vegetable fiber (linen and ramie); watches; certain footwear and handbags; luggage; flat goods not of silk; work gloves; and other leather items. The GSP is a formal exemption form the general rules of the World Trade Organization (WTO). GSP exempts WTO member countries from most favorable nations principle (MFN) for the purpose of lowering tariffs for the least developed countries, without also lowering tariffs for rich countries.

Ottössöns has a slight chance to fit into this beneficial treatment but it is helping a growing market. In addition, the Free Trade Agreements(FTA) which allows goods to be traded between the parties benefit from the preferences required in a said agreement on the basis of the rules of origin. Besides, in the free trade agreements, there is no obligation to implement common commercial policies or common competition rules; on the contrary, the parties implement their own customs duties to the third countries.

Two-way trade (exports plus imports) between the United States and Turkey is creating a growing foundation for a strong relationship. U.S. foreign direct investment (FDI) in Turkey amounted to $6.3 billion in 2009, mostly concentrated in the wholesale trade and manufacturing sectors, while Turkish FDI in the United States was $218 million in 2007. (USTR)

101

102

International Trade and Market Access Data

The data displayed represents the world market of trade. It includes those part of the WTO with those who are not, in addition to the countries with latterâ&#x20AC;&#x2122;s applied Most Favored Nation (MFN) tariffs. The graph shows the average duty or tax as a percent % of the import value imposed on goods entering a country or customs territory for the relevant year. The calculation of the average is based on the complete applied tariff (HTS). The simple average applied MFN tariff is specific to the product sector of leather, footwear. According to WTO statistics, Turkeyâ&#x20AC;&#x2122;s simple average MFN tariff rate was 9.7% in 2008, for agricultural products, the simple average MFN tariff rate was 42.2%, and for non-agricultural products, 4.8%.

103

LO G I S I TC S & I M P O R Tat i o n In general terms, Logistics is the process that takes on all or some of the shipping, distribution, transportation and in the mean time when necessary the storing processes of merchandise. It is the transportation system that has a great importance for countries for their economic and social development. It is the foundation that grows markets, economies, social development and improves foreign relations.

Getting from Point A to B

In Turkey, investments in the transportation system are concentrated on land transportation infrastructure. The country has developed highways, motor ways, and working towards a modern railway. Turkey is said to have one of the largest land transportation fleets in Europe. (Invest.gov) BUS: Buses are Turkey’s most widespread and popular means of transport. Most Turkish cities and towns have a central bus station generally called the otogar, garaj or terminal. Besides intercity buses, the otogar often handles dolmuşes (minibuses that follow prescribed routes) to outlying districts or villages. TRAM: Tram’s are found in the larger cities, they are a quick and efficient way of getting around, normally you pay around fee. There are underground trams as well over ground tramways (trams). DRIVING: Road surfaces are generally good along main road. The bad news is that Turkey has one of the world’s highest motor-vehicle accident rates. Turkish drivers are not particularly discourteous, but they are impatient and incautious and drive at high speeds.

At present 95 percent of passengers and 90 percent of goods are conveyed by highway transport. RAILROADS: Railroads make up 10,984 km of railways, operated by the General Directorate of Turkish State Railways (TCDD). Since most of the railways have been in use for quite a long time, the Turkish government is aiming to modernize the system through various projects. AIR: Turkey has 45 airports, 13 of which serve international flights. Turkish Airlines is one of the fastest growing airlines in Europe and the leader in traffic and capacity growth in Europe (AEA, 2009). Turkish Airlines is also the “Best Airline in Europe” (Skytrax World Airline Awards - 2011). Istanbul Ataturk Airport has been selected as the “Best Airport in Southern Europe” (Skytrax World Airline Awards - 2010). In 2010 there were more than 100 million airline passengers in Turkey. WATER: Turkey has a coastal border of about 8,333km making Turkey the number one most popular method of transportation for Turkey’s exports and imports. Turkey is surrounded by three bodies of water; Mediterranean, the Aegean and the Black Sea, together with the straits of the Dardanelles and the Bosphorus. 104

OVERVIEW Ottössöns is opting to use water ways as our means of transportation for the following reasons; Water or maritime transportation is the most popular method of transportation for Turkeys exports and imports. With export shares at 50.7 percent and import shares at 53.2 percent Turkey is located at the crossroads between Europe and Asia. This geographical location enables Turkish ports to handle significant amounts of cargo between the Western and the Eastern points. Turkey has great potential in terms of intermodal transportation due to it’s geographical position amidst European, Central Asia and Middle Eastern countries. Historically as a maritime country, Turkey attaches great importance to its maritime sector. Today, Turkey holds 70 shipyards and has managed to become well known throughout the world, especially in the construction of chemical tankers and container ships. Turkish shipyards ranked 6th in the world in terms of the number of new ship orders as of 2010.

Hayda r pas a , tu r key

M e rs in , tu r key

CUSTOMS DECLARATION TIME: 24 HOURS

LOADING CARGO ON BOARD: 2 DAYS

fob del ivery time: 3 days

SEA TRANSIT TIME: 15 DAYS 9 HOURS

SEA TRANSIT TIME: 14 DAYS 21HOURS

TIME IN THE PORT TRANSSHIPMENT: 14 DAYS

ARRIVAL TO PORT OF DISCHARGE: 24 HOURS

DISTANCE: : 5163.91 NAUTICAL MILES (9563.57 KM)

DISTANCE: : 5004.97 NAUTICAL MILES (9269.21 KM)

CIF Del ivery time: 30 days 9 hours

CIF Del ivery time: 32 days 21 hours

FREIGHT FORWARDING & CUSTOMS CLEARING: 2 DAYS

DISTANCE: 0.88 NAUTICAL MILES

LAND DELIVERY TO FINAL DESTINATION: 1 DAY 12 HOURS

[ total ] dp p del ivery: 33 days hours

NY glob a l ter m in a l, new yor k, ny

NY glob a l te r m in a l , ne w yor k, ny

Freight Lines that most benefit transit for Ottössöns Due to manufacturer locations in terms of top manufacturing company locations Turkey has 29 sea ports with 14 container terminals New York has 2 sea ports with 4 container terminals

105

106

APL Tasimacilik ve Lojistik Ltd. Sti.

Istanbul Dunya Ticaret Merkezi A-2 Blok APL Logistics designs and operates smart globally integrated 15th Floor No. 444 34149 Yesilkoy supply chains. By combining origin and destination logistics soluIstanbul tions with transportation services across all modes and regions of the world. The APL Logistics brand services quality, reliability

Tel: (90) (212) 468 0909 and operational excellence. By constantly measuring performance Fax: (90) (212) 465 7158 against established targets and implement continuous improvement programs to drive operational excellence throughout their organization.

CEVA Logistics Turkey

CEVA has provided both freight management and contract

valuing quality service and providing a wide range of warehousing

Telephone: +90 216 633 44 44 and distribution service across the country. They are a end to end Fax: +90 216 633 45 45 contract logistics and freight management team.

Gulf Agency Denizcilik A.S.

GAC has been active in the Turkish market since the 1960s,

Omer Avni Mah., Inebolu Sok. No:67 Setustu Kabatas 34427 offering a full range of shipping and logistics services. As well as Istanbul handling the documentation and liaison with local authorities, our staff handles crew changes, supplies of water and provisions,

Tel: +90 212 444 8422 onboard medical emergencies and the receipt and clearance of Fax: +90 212 245 2305 spares. Email: turkey@gac.com

Uni Logistics System

Turkey: Logistic: Ottössöns

Alemdag Cad. Site Yolu Sokak CEVA Plaza No:20 34768 Umraniye logistics services for a wide range of customers. Their freight Istanbul management services cover all air and ocean requirements, by

Address: Kayisdagi avenue 111 Uni Logistics System offers innovative logistics solutions for Bilgin Plaza, 34750 worldwide customers. UNI logistics system refers to themselves Istanbul as the “The Eurasia Specialist,” serving as a bridge between Turkey, Europe, Asia and the Middle East. They work to service Ocean

Phone: +90 (0216)5774686 Vessel chartering, Turkey transport solutions, door-to-door projFax: +90 (0216) 5774687 ect services, Inter modal transportation (Ocean + railway or ocean e-mail: sales@unils.com.tr + trucks or ocean + air and their combinations), warehousing, Website: http://www.unils.com.tr

Customs Clearance & Documentation, heavy Lift/Over dimensions cargo handling & transport, logistics Project Management, route & region surveys, and transport engineering. 107

Projects: Turkey was able to ride out 2008 financial crisis and is now in a position to pour billions of dollars into its infrastructure. The Turkish government has set an ambitious 2023 vision that will vastly transform the transportation sector in the country. The Turkish Railways Authority and General Directorate of Highways plan to build more than US$100 billion worth of highway and railway lines in Turkey between now and 2023, while international associations have already begun working on major projects such as the Eurasian Tunnel and the third Bridge on the Bosphorus. The next wave of projects which are expected to be offered before 2015 includes Channel Istanbul and Canakkale Bridge. (INVEST.GOV)

On a more verbal scale: CTPAT first worldwide â&#x20AC;&#x153;supply chain securityâ&#x20AC;? initiative, companies will ensure a more secure and expeditious supply chain for their employees, suppliers and customers. CBP has significantly increased its exam rates over the last several years due in large part to the increased use of Non Intrusive Inspections and other targeting tools. C-TPAT shipments are 4 to 6 times less likely to undergo an examination. Thus getting the product to the companies door in a more timely manor. This initiative would help speed up importation processes.

The Logistics Process

108

C o u nt ry E x p o rt i n g R e q u i r e m e nt s Documentation is very important for the processes for importing and exporting goods. All shipments of exported goods are recorded and all require documentation. Documentation is required for clearance of government agencies, customs authorities, port and container terminal authorities, health and technical control agencies and banks are taken into account (for valuation, classification, and liquidation). Turkey as a founding member of the World Trade Organization (WTO), believes that the universally agreed international trade system, which is embodied within the WTO and based on the principles of reciprocity and non-discrimination can serve the interests and welfare of the whole global community. The liberalization of trade at the regional or bilateral level can also contribute to liberalization and trade expansion in the global context. The basic objective of this strategy is to constitute an outward oriented economic structure in the framework of free market economy and to be integrated with world markets.

Therefore, Turkey with its wide range of economic and social approaches, bridging very different regions of the world, considers establishing bilateral and regional trade relations as valuable opportunities to enhance trade liberalization.

Turkeyâ&#x20AC;&#x2122;s foreign trade policy is fully committed to the liberalization of trade at multilateral levels. There can be no doubt that the basic guideline that Turkey follows in its bilateral and regional trade relations is that international trade should be carried out in line with the spirit of the WTO. This entails the gradual opening up of markets on the basis of reciprocity and non-discrimination. As long as the basic principles of the multilateral trading system are fully respected, trade liberalization, both regionally and bilaterally, will not interfere in any way, but rather strengthen the benefits of the multilateral trading system.

The most significant phenomenon in Turkeyâ&#x20AC;&#x2122;s foreign trade policy is the Customs Union established between the EU and Turkey along with WTO regulations. This development initiated the period needed for the legal infrastructural consistency of foreign trade strategy with the EUâ&#x20AC;&#x2122;s norms, thus both import and export regimes have been made consistent with the regulations of the EU. Turkey now applies measures indirectly assisting exports such as; export finance and insurance along with promotion and marketing assistance. Overall, Turkey has reshaped incentives provided to exporters, eliminated subsidies in order to harmonize foreign trade policies and increased transparency of export subsidy programs

109

Also important steps have been taken in the automation of customs. 99.5% of foreign trade volume is now process by automated customs authorities. (dtm.gov) The automation system also allows traders to register their customs declarations by using EDI. The cargo declaration export EDI is sent as the container shipment leaves the port by ship, the shipping company/shipbroker will submit the exit manifest to customs. By the end of 2005, 70% of customs declarations are registered with EDIâ&#x20AC;&#x2122;s. Automation systems enable custom administrations to make risk analysis and decrease the physical inspection rate. Customs automation system is also a core point for e-state and e-trade activities in Turkey.

Send your Order

Set your calendar

Manufacture Product

Ship Product Out

On the import side: The Import Regime is transparent; this open trade regime is regulated by the Undersecretariat for Foreign trade (UFT). The import regime decree is prepared every year by UFT, reflecting Turkeys international rights, obligations and the countries economic needs. It is based on the framework of the World Trade Organization (WTO) and the Customs Union Agreement with European Union. Turkey Import Regulations The dimensional and weight maximumms for import shipments: An invoice is required for all shipments with a Declared value. Duty/Tax free entry is allowed for gifts valued up to US$ 100. Unsolicited gifts must be shipped from one individual to another and should not contain tobacco or liquor.

Most often an international specialist for customs brokerage is used for guidance of SMEâ&#x20AC;&#x2122;s. They often

take over the forwarding shipment processes from time of P.O. until importing. The customs broker creates that connection to customs and ease of handling during the import process. Once the process of trade begins three main documents are needed; Commercial invoice (which is provided by the supplier) with packing list, certificate of origin and bill of lading. Once product is exported expect customs fee often around $100 along with duty rate based of FOB value of goods along with merchandising processing fee and harbor maintenance fee, these are both small percentages of total. Customs duties have been rearranged 110

according to product groups (industrial, agricultural, processed agricultural, fish and fishery products) and country of origin of the products in order to be more transparent and simple. Commercial Invoice: The commercial invoice must be submitted in triplicate, including the original copy; and must contain a complete description of the goods (packing list) and all required payment terms. The exporter must endorse the original as follows: â&#x20AC;&#x153;We hereby certify that this is the first and original copy of our invoice, the only one issued by our firm for the goods herein mentioned.â&#x20AC;? The Turkish Embassy or Consulate in the United States must certify the document. At least one copy of the invoice should accompany the goods, and the original should be sent to the importer through the correspondent bank. Certificate of Origin: The certificate of origin is to be prepared in duplicate and issued by a Chamber of Commerce showing the country of production. No corrections are permitted on this document, which is to be prepared in English. The Turkish Embassy or Consulate in the United States must certify the certificate of origin. One copy of the document must be surrendered to the customs authorities at the time of importation. Bill of Lading/Airway Bill: Details in the bill of lading should correspond exactly to those given in other shipping documents.

Leather and leather Export Articles

BALANCE OF PAYMENTS AND TRADE (US$ millions)

2000

2010

Total merchandise exports (FOB)

27,775

113,883

Total merchandise imports (CIF)

54,503

185,544

111

Commercial Invoice

112

Certificate of Value

113

114

BANKING:

The developments in the Turkish economy and banking sector after 2001 are so striking that the year 2001 is

widely accepted as a structural break point for the country. The pre-2002 period in Turkey had a poor macroeconomic environment, an ineffective financial supervision framework divided between different institutions,and sector-specific problems in banking, such as the moral hazard issue due to savings deposit insurance schemes, which, taken together, led to a significant economic crisis in a negative global sentiment. Banking on an export import level in Turkey consists of, Commercial and Saving banks, which account for the largest portion of the business volume. They grant short-term loans and credit lines, medium and long-term loans, underwrite, issue, and trade in securities for customers and on their own account. They are also allowed to own shares and participation in other industries. Development and Investment Banks serve to finance the big investments and infrastructure constructions.In addition, with the establishment of the Turk Eximbank in 1987, supporting exports gained a new dimension. In this respect, in order to increase the competitive strength of the Turkish exporters in foreign markets, some credits and guarantee programs under the international commitments began to be applied to the sectors with high export potentials. Turk Ex-im bank has a key role in the liberalization and outward orientation of the Turkish economy. Increasing the competitiveness of Turkish exports under free market conditions is the Bankâ&#x20AC;&#x2122;s primary goal. Export credits extended through Turk Ex-im bank have played a crucial role in securing the stable export growth. Turk Ex-im bank enhances export Performance primarily through credit, guarantee and export credit insurance.

What banking is pairing up with today in turkey: The country partnership strategy (CPS) is a strategy for

climate, deepened and broadened access to finance;

the upcoming years. It is a partnership with the Turkish

improved quality and coverage of early childhood education;

government, private sectors, civil society, and the World Bank

a more effective and financially sustainable health system,

Group (WBG). They have set three main strategic objectives:

other countries expressed interest to learn from Turkeyâ&#x20AC;&#x2122;s

enhanced competitiveness and employment, improving

good experience; progress made toward gender equity;

equity and public services; and deepening sustainable

improved public services and governance; improved supply

development. In pursuit of these objectives, the CPS plans to

of reliable and efficient energy, increased use of renewable

achieve several goals within a four year time span: sustained

energy,

macroeconomic and financial stability and strengthened

strengthened environmental management and adaptation

exports, domestic savings and external resilience; increased

to climate change; and improved sustainability of Turkish

employment and reduced job informality, especially for

cities. With working with the highest sectors of the country

women and youth; improved investment and business

the plan can be implemented.

and

climate

actions

under

implementation;

115

TURKEY

116

conclus ion Turkey’s rapidly expanding economy, political and economic stability, and the possibility of EU membership has attracted the attention of a variety of American companies. Turkey’s rapid growth and development over the last decade is one of the success stories of the global economy. Today, Turkey is an upper middleincome country with a population of 74 million and a gross domestic product (GDP) of US$735 billion, making it the 16th largest economy in the world. Turkey is a quarter of the size of the EU in terms of geographical area and has a population that is one-fifth of that of the EU. This fact puts the country among the top 25 economies in the world in terms of Gross Domestic Product (GDP) (FDI Magazine, 2004).

Within in the past decade Turkey’s financial sector has created a strong platform, stronger than that of many other countries, in part due to a series of reforms in the wake of the 2001 financial crisis, which left Turkish banks better leveraged than many of their U.S. and European counterparts. However, banks here remain hesitant to extend trade and project credit. This inevitably will hinder foreign investments for terms of payment and open cash books for progression and growth. However, in recent years, Turkey’s market reforms, strong growth and economic and political stability have attracted Foreign Direct Investment (FDI). Despite a decline in FDI inflows as a result of the global economic crisis, cumulative FDI in Turkey now stands at $ 88 billion; with a 74% increase FDI in 2011. Snowballing American investment in Turkey is officially about $6-7 billion – a number that is understated because of U.S. company investments through third world countries. In 2011, U.S. green field investments by Cummins, Pratt and Whitney, AES and Dow signaled increasing U.S. interest in Turkey. Turkey requires further investment; however excessive bureaucracy, an unpredictable legal system and weak intellectual property protection impedes further FDI growth. It seems at this point everything that Turkey does right their government does wrong. With that being said in 2011, U.S. exports to Turkey reached a record $15 billion, a 34% increase from 2010. That trend is expected to continue, however an expected economic slowdown in Turkey in 2012 might give pause to some importers’ buying decisions.

117

In 2005, the EU and Turkey began formal EU accession

to reliability and honesty. These continued delays have cooled

negotiations. Turkey has adopted many European Union

popular interest in EU membership, however the current

directives, regulations and laws in anticipation of accession,

government understands that the process itself contributes

this has benefited Turkey significantly from deepening

to Turkeyâ&#x20AC;&#x2122;s global competitiveness yet the repeated actions

integration with the EU through growing sophistication of both

hinder acceptance.

exports and imports and access to financing. Turkeyâ&#x20AC;&#x2122;s political

and business leadership remains committed to joining the EU.

Turkey faces significant economic risks going forward,

While one can question the sincerity of Turkish government,

including spillover from the European debt crisis. With low

due to reactions and actions made on events that pose concern

domestic savings, Turkeyâ&#x20AC;&#x2122;s economic growth relies on capital

118

inflows to finance investments and growth. The countryâ&#x20AC;&#x2122;s

of capital inflows to emerging markets driven by a flight to

large current account deficit and the composition of its

safety, Turkey could possibly face a renewed recession

financing remain a critical concern. Turkeyâ&#x20AC;&#x2122;s dependence on

external financing has left the country prone to boom-bust

However, as Turkey tries to hold onto optimism, the focus

cycles, and the key challenge going forward is to deliver a

on success is being scene. Other countries, notably in the

soft landing, from the high growth rates in 2010 and 2011.

Middle East and North Africa, are looking to Turkey, with its

In addition, combinations of external and domestic factors

gains in income and social outcomes in recent years, as an

pose significant risks going forward. Under a deepened crisis

interesting development model to emulate.

scenario in the Euro zone and a corresponding sudden stop

119

Despite the economic and political risks, the government

country? One of the key problems for Turkey is the East-West

of Turkey has recognized the importance of innovation and

divide. Western Turkey has good economic conditions, with

continual changing and developmenting, will increase long-

industries competing at global levels, higher employment rates

term growth. Innovation can serve as a ‘silent engine of

and better and more balanced access to education and higher

prosperity,’ spurring sustained wealth and expansion. It can

educational attainment levels. While the Eastern provinces of

lead to the development of an internationally competitive

Turkey are more rural oriented, with low employment rates and

SME sector to complement Turkey’s globally integrated

poorer educational attainment. This being said the west hold

large corporations. Public and especially private sector R&D

a more modern perspective while the east holds onto a more

spending can help boost the productivity of existing firms and

conservative viewpoint. This causes a social conflict dividing a

stimulate the creation of new innovative businesses. While

nation in half. The worry that emulates this concern now is the

Turkey still has ample possibilities of growth, by adopting

education status of this large workforce. Half of the working-

frontier technologies from abroad and increasing incentives

age population has less than a basic education; accounting for

and opportunities. Turkey shares with many European

64 percent of the jobless and 65 percent of informal workers.

countries the challenge of promoting product and process

Younger workers are better educated and skilled, but still lag

innovation among its SMEs, which account for 27 percent of

behind their counterparts in OECD countries. Concentrating on

total output and 80 percent of employment. This being said

building a strong foundation, there is a strong potential for a

ample opportunity is still to be had and achieved.

highly skilled and educated labor force in the future.

Today turkey looks to there employment for growth and

While looking into the opportunity for market growth, Turkey

opportunity, as poverty decreased from 28.1 percent in 2003

is one of the most renowned leather export manufacturing

to 17.1 percent in 2008, increasing by 1 percentage point

districts around the world. In terms of Ottössöns there growth

to 18.1percent in 2009 as a result of the global crisis. Since

is opportunity in the leather footwear market. According to

then as labor markets continue to adjust unemployment has

statistics Turkeys footwear industry has a $546 million in their

continued to drop to 9.1 percent and the employment rate

export sector and $864 million dollar in their import sector

at 45.4 percent in October 2011, improving on pre-crisis

that contributes to $5.2 billion dollars to Turkish economy and

levels. Economic growth and social policies are behind these

has an annual capacity of 500 million pairs shoes.

achievements. Turkey has one of largest labor force compared to the EU and one of the largest and fastest growing labor forces

among the developing countries and emerging economies.

With that being said education is still needed for qualified

Turkey’s young population is an important contributor to labor

personal, a new department of education, “The Shoe Design

force growth and has contributed to Turkey’s rank over its

Department” has been opened at Mimar Sinan University in

competitors. However with such a large labor force one might

Istanbul, which offers two-year courses. In addition, every

question is there enough opportunity for all the people? And is

year, various shoe design competitions are being organized

the employment population evenly distributed throughout the 120

in order to discover new talents in the field of design. This is

the industry today, now concentrated effort on training and

Turkey has become a long-term ally of the United States

design. The footwear industry is a market that can create

and a charter member of NATO with strong links to global

opportunity. With many steps in the manufacturing process

institutions. Turkey has a key role to play in most of the major

of a single shoe with technical craft and skill this industry

regional issues facing the United States. The U.S.-Turkey

could employ many. Small and medium sized businesses

partnership is based on mutual interests and mutual respect

like Ottössöns CAN HELP to enhance investment in human

and is focused on areas such as regional security and stability,

capital by increasing the quality of education and training,

economic cooperation, and human rights progress. The United

improving the linkage between education and labor market

States also stands in solidarity with Turkey in the fight against

through a partnership approach. If Ottössöns delves into

terrorism. Counter terrorism cooperation’s are a key element

the Turkish market we would be part of a new age of reform

of Turkey’s strategic partnership with U.S. Our two countries

and expansion. Today, the Turkish footwear industry has

currently enjoy a close and vibrant partnership, extending

a strong position among exporters of high quality fashion

into key issues such as Syria, Iraq, Afghanistan and Cyprus.

goods. Another sign of positive development is the increase in

However, bilateral relations have been occasionally difficult.

foreign investments in the sector. Thus, shifted manufacturing

Under the Obama administration, continued high-level

to third world countries. This influenced shoe production

government contacts have created a constructive atmosphere,

values in Turkey, indicated by Lemi Tolunay, President of the

with a special emphasis on building bilateral commercial

Istanbul Leather and Leather Goods Exporters’ Association.

relations. The governments Framework for Strategic Economic

“The Turkish footwear industry benefited from this axial shift,

and Commercial Cooperation and the private sector led U.S.-

too[third world countries]. An accumulation of information,

Turkish Business Council are examples of intensified efforts

know-how, and technology transfer therefore took place.

to increase bilateral trade and investment. Over 1,000

Our industrialists put this opportunity to use and raised their

American firms are registered in Turkey, ranging from large

quality, and they developed products in the upper segments

multinationals to small and medium size firms. While Turkey’s

of the markets,” he says, adding, “Standing out from among

economic growth in 2012 is expected to slow, the longer-term

other countries in the world who practice mass production,

prospects for many American firms in Turkey remain excellent.

Turkish shoe brands achieved differentiation with products that comply to international norms and target quality, bringing

The Government of Turkey has set itself ambitious development

them to the position where they are today.” With a growing

goals. Turkey intends to be one of the world’s 10th largest

awareness as a leading market in footwear Turkey has set the

economy by 2023 – the 100th anniversary of the founding

stage for Ottössöns to tap into. However, as a new business we

of the Turkish Republic. The Government’s 2023 ‘vision’ aims

would still be part of the educational age and growth process

for a gross domestic product of US$2 trillion; a foreign trade

of the still developing country of Turkey while complying with

volume in excess of US$1 trillion; per capita income to reach

growing standards that fit western societies.

US$25,000; and, unemployment to decline to 5 percent. Turkey also aims to complete full membership negotiations with the EU; further develop Istanbul as a leading international financial 121

hub; and, become the leading manufacturing and service provider both in the region and beyond.

Ottössöns has taken a detailed look into the truths in outsourcing our product from Turkey. Ottössöns absorbed all aspects of the Turk’s social atmosphere, economic stance, political involvement, cultural attributes, industries specifically footwear, sourcing guidelines, work-force participation, trade agreements, and finally looking into how our product would place in Turkey. While assessing whether Turkey is the place for Ottössöns sourcing and manufacturing of men’s leather shoe products, we found several benefits and risks.

While taking a detailed look at Turkey and looking into the risks and benefits of the country and specifically the leather shoe industry. Ottössöns puts into perspective that with opportunity comes risk and with risk comes opportunity. We have made Turkey as transparent as possible. While there are many significant opportunities for Ottössöns in Turkey, there are also more pressing obstacles that hinder entrance into the market. Turkey offers strong attractive international retailer environments with growing awareness and projects increasing attractiveness, there is a strong business-to-business relationship that happens between buyer and seller, and a promising movement towards membership within the European Union, Turkey is creating momentum to adopt European business regulations and standards in Turkey, thereby ultimately making it easier to sell and conduct business in this market. However, with nothing being set and stone yet it is hard to determine what could come in the upcoming years. Today, with the knowledge of culture, political, economic, social and the business outlook in Turkey the risks are outweighing the opportunity for Ottössöns. Challenges that are faced include contradictory policies, a culture that is mixed with modern and traditional values and ideals, lack of education and high unemployment rates that follow, the close proximity of political instability in neighboring countries, an ongoing account deficit, the need to accelerate its innovation, a constitution that needs extensive reform, a restructured judiciary and de-militarizing the political system are risks that Ottössöns will face with market entry.

The truth in outsourcing our product in Turkey, our manufacturers are very stable however with such an influx in government it is hard to put a business there. With opportunity comes risk but when risk outweighs opportunity it is in Ottössöns best interest to invest elsewhere.

122

123

APPENDIX

Co u n t r y Tr a i t s

126

Cu l t u r e

132

133

D i n i n g & Cu i s i n e

Economy

136

MAPS

138

Te c h P a c k

BIBLIOGRAPHY

124

Page :

140

146

125

Turkey

Location and main indicators Ankara Turkish 783 560 km2 74 million 778 billion USD 10 522 USD +8.5% +18.6% Turkish lira (TRY)

Capital Language Area Population GDP 2011 GDP per capita GDP 2011 GDP last 5 years Currency

Footwear industry Value Million USD

2011

Quantity

World Rank

Million Pairs

Prices

World Rank

USD

Quantity

100

Exports

398

4.30

Imports

816

15.63

Production

188

Consumption

148

Million USD

800

Imports

700

Exports

Value

900

Million Pairs

600

500

400

300 200

Imports

Exports

100

0 01

Main trading partners 2011 Export Markets

Million USD

Value Share

Million Quantity Share Pairs

Russian Fed.

18%

Iraq

15%

28%

Saudi Arabia

Germany

Import Origins

Last 5 years variation USD Million | %

+606% +389% +60% +63

+46

-50%

+10 -9

Russian Fed

Iraq

Saudi Arabia

Greece

Types of footwear traded 2011 (quantity) Export

42%

28%

Waterproof Rubber & Plastic

25%

52%

Leather Textile 23%

126

Other

19%

Value Share

Million Quantity Share Pairs

China

451

55%

73%

Vietnam

107

13%

10%

Indonesia

11%

Italy

India

Last 5 years variation USD Million | %

+59% +267% +116% +525% +166

+62

+57

China Indonesia Vietnam

+11

Syria

Recent developments Istanbul and Izmir are the main centers of the Turkish footwear industry. The industry also has a relevant presence in Konya, Bursa, Ankara, Gaziantep, Manisa and Denizli. Both exports and imports increased strongly in 2011. In the last five years Turkey has substantially increased its exports to neighbouring Russia and Iraq, which became its main clients, to the detriment of other European countries.

Import

6% 1%

Million USD

C O U N T RY T R A I TS

The identity and the character of a country is multifaceted. Countries activities, emotions, ideologies, population

size, location, religious and social character and personality set the atmosphere.

People:

Turkish Language: Turkish Language is mainly used in Turkey. Around 65-73 million people speak in this language all over the world. Some of the Cyprus, Greece and European people speak in this language.

Age Structure: 0-14 years: 26% 15-24 years: 17.1% 25-54 years: 42.5% 55-64 years: 7.7%

65 + years:

6.4%

Median Age:

Male: 28.5 years

Female: 29.2 years

TOTAL: 28.8 years

Population Growth Rate: for 2011-2020 is estimated 8.3% Life expectancy at birth: Total population: 72.77 years Male: 70.86 years

Female: 74.78 years

Birth rate: 17,58 birth/ population Death rate: 6.1-deaths/1,000 population

Urban population: 70% of total population (2010) Rate of urbanization: 1.7% annual rate of change (2010-15 est.)

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Religions: Muslim 99.8% (mostly Sunni), other 0.2% Ethnic Groups: Turkish 80%, Kurdish 17%, other (mostly Christianity and Jewish)

Government: Capital: Ankara Government type: Parliamentary democracy with free market economy Proclamation of the Republic: October 29 1923 Proclamation of Constitution: November 7, 1982 Administrative divisions: 79 provinces Legislative: Grand National Assembly with 450 deputies (general election every 5 years) Executive: President ( 7 year term) and Council of Ministers, headed by Prime Minister (5 year term)

President: Abdullah Gul

Prime Minister: Recep Tayyipp Erdogan

Judiciary: Independent with Constitutional Court supervising conformity of laws to the 1982 Constitution Right to vote: At age 18

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Life As Turkey Knows it...

TURKEY IS NOT A CHEAP COUNTRY. There are expectations that Turkey is a much cheaper country than it actually is. The food, entrance fees to museums, transportation, alcohol, gas, etc. We hope you don’t make the same mistake. Turkey is NOT cheap at all. A few examples: Turkish people pay for the most expensive gas in the world. It is more than $9 a gallon in November 2012. There are more than 400% taxes on alcohol and museums are even expensive, usually between 5 to 10 Euros a museum. The food is generally not super expensive, but not too cheap either. TURKEY (ESPECIALLY ISTANBUL) IS TOURISTY. Turkey is the 6th most visited country in the world. More than 30 million people visited Turkey in 2011, which puts Turkey in the 6th position behind France, USA, China, Spain and Italy. Finding a local, non-touristy restaurant or a cafe can be challenging at times. NOT ALL TURKISH MEN HAVE MUSTACHES This Turkish stereotype is remarkably persistent . While you might see members of the older generation sporting a mustache, young Turks are more likely to be clean-shaven. TURKISH SOAP OPERAS ARE HUGE Local studios “churn out dizi” , soap operas, are expanding. Almost every Turkish region has its own soap opera. Most socializing in Turkey is done at home, and watching soap operas is a favorite pastime. Turkish soap operas are not only popular inside the country; they are also watched throughout the Arab world and Central Asia. These shows have even been credited for an increase in Arab tourism in the country. 130

TURKISH PEOPLE ARE EXTREMELY HOSPITABLET If a Turkish person invites you to his house after you’ve known him for half an hour, don’t panic. Turks are incredibly friendly and hospitable and as a misafir , guest, you are highly valued. Many will consider it an honor if you accept an invitation to visit them. Once inside, you will be plied with food and strong black çay or Turkish coffee. TURKISH PEOPLE ARE ALSO VERY INQUISITIVE A typical conversation with a Turkish person you’ve just met might go something like this: “What country are you from?… Are you married?… Is your husband / wife Turkish?… Do you have children?… How old are you?” If you come from a different culture these might seem like very personal questions. Compared to people in U.K., the Turkish people I know are much more comfortable talking freely about personal details, even with someone they don’t know well. WEARING A HEADSCARF IS FORBIDDEN IN PUBLIC BUILDINGS This means that a girl who wears a headscarf cannot attend university. Some find ways around this, such as by wearing wigs. In other places, wearing a headscarf is purely a matter of personal choice. The proportion of women wearing a headscarf varies depending on which city or even which part of town you’re in. Interestingly, a recent study by ESI showed that while most Turks think headscarf wearing is on the rise, the percentage of Turkish women who cover their heads actually decreased from 73% in 1999 to 64% in 2006.

geography

Istanbul’s improvements in disaster preparedness are an international success story. Investments have been made in seismic strengthening for public buildings, especially schools, hospitals and dormitories. Of 1,576 public facilities identified, 496 had been completed by February 2011 through combined World Bank, EIB and CEB financing. The Istanbul Seismic Mitigation and Emergency Preparedness (ISMEP) Project includes collaboration with the Global Facility for Disaster Reduction and Response and the World Bank Institute (WBI). A national-level Disaster and Emergency Management Presidency was created in the Prime Ministry, unifying previously fragmented institutional responsibilities. Turkey is one of the most earthquake prone areas on Earth and has suffered from 13 earthquakes in the past 70 years. The North Anatolian Fault extends hundreds of miles from the Sea of Marmara in the western part of the country to the Eastern Anatolian Highlands. The fault moves back and forth about 8 inches (20 centimeters) a year. 131

Culture Turkish Art: Turkish art is a combination of various forms of Turkish culture. Turkish art tradition has richness in itself and it heritages. Turkish art has come from the influences of several empires and other cultures that have come closer to the Turkish civilization and society.

Rüstem Paşa Camii Designed by the renowned architect Sinan in 1561, the Rüstem Paşa Camii is perhaps one of the most striking mosques in the city. The interior is covered with gorgeous İznik tiles featuring floral and geometric blue designs on a white background, some enlivened by vivid red details.

Turkish Dance: Turkish dance has several forms corresponding with several tribes among the Turkish people who have their particular culture and dance forms. Some of the famous Turkish dance forms are, Halay, Karsilama, Hora, Zeybek, the belly dance and many other forms of dances. Halay is the national dance of Turkey. It has originated from the empire of Assyrian.

Turkish Music: Turkish music has a rich history and tradition of its own. Turkish music originated back in the 11th century at a time when the Seljuk Turks spanned their kingdom by including both Anatolia and Persia. As a result in the Turkish music there are influences from both these two regions and kingdoms. Turkish music can be divided into several periods and music groups, however the two most popular groups are, classical Turkish music and folk music.

Turkish Geography beauty: Lycian Way Turkey’s first and most-established long-distance footpath, the Lycian Way follows the coast for 500km, from Ovacik, near Fethiye, to Antalya. Views over an impossibly blue sea are mesmerizing, while the path itself undulates through peaceful olive groves and scented pine forests, past impressive remains of ancient amphitheaters and tombs, and over trickling streams.

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Dining & Cusine

Turkish cuisine is often regarded as one of the greatest in the world. Its culinary traditions have

successfully survived over 1,300 years for several reasons, including its favorable location and Mediterranean climate. The countryâ&#x20AC;&#x2122;s position between the Far East and the Mediterranean Sea helped the Turks gain complete control of major trade routes, and an ideal environment allowed plants and animals to flourish. Such advantages helped to develop and sustain a lasting and influential cuisine. (Food by country)

Main dishes include: Borek-: is a pastry made of many thin layers of dough interspersed with cheese, spinach, and/or ground meat. Kebab- is the common word for meat roasted in pieces or slices on a skewer or as meatballs on a grill. Dolma- Dolma is the generic name for dishes made of vegetables (tomatoes and peppers) and leaves (e.g., grape, cabbage, and eggplant) that are stuffed with or wrapped around rice or bulgur pilaf Turkish cuisine includes many different stews of vegetables and meat (lamb and beef primarily)

Borek

Kebab

Dolma

Seasons Eating: In the winter, many Turks eat a breakfast of bread with hot soup. In the warmer seasons, they commonly eat bread and jam, hard- or soft-boiled eggs, a white cheese made from sheepâ&#x20AC;&#x2122;s milk, salty olives, and warm milk or hot tea with milk.

Day to Day: A typical noon meal consists of vegetable and meat stew with a side dish of rice or bulgar pilaf and salad, with fruit for desert. Borek or dolma may substitute for the stew. Sweet deserts, such as baklava, are served on special occasions. The evening meal is usually lighter, consisting of leftovers from noon or a kebab with salad. Ordinarily, only water is drunk with the noon and evening meals. Food preferences and preparations vary by region and ethnicity. For example, the Black Sea is noted for fish, 133

especially anchovy, dishes, while the eastern region is noted for spicy foods.

Dining: All cities have numerous restaurants and snack stands. Many specialize in a limited number of foods, such as kebabs, soups, meat wraps made with pide (a flat bread), pastries, and fish. Others offer a variety of meals, including stews, pilafs, vegetables, and deserts. Inexpensive restaurants cater to workingmen, who commonly eat only breakfast and the evening meal at home. Higher-class restaurants generally set aside a section for females and families. And as we know it American fast food has found its way into cities.

No-No: The major food taboo in Turkey is pork, which is forbidden to Muslims. Although the Koran also forbids alcoholic beverages, many Turks drink beer, wine, and liquors. Certain segments of the Muslim population regard other foods as taboo even though their religion does not prohibit them.

Food Customs at Ceremonial Occasions: Special dishes are associated with holy days and celebrations: Gaziantep, yuvarlama (a blend of ground meat, rice, chickpeas, onions, and spices served with yogurt) is a special dish for the Feast of Ramadan at the end of the Islamic month of fasting. After the Feast of Ramadan comes the holy month of Ashure many households prepare a pudding called Ashure to share with guests, friends, and neighbors.

Beverage: Turkish beverages include tea which is had throughout the day, thick coffee usually taken after a meal, ayran (buttermilk), boza (a fermented bulgur drink taken in the winter), and rakĂŽ (an aniseed-flavored brandy usually mixed with water). Carbonated drinks have become popular with young people, and beer gardens in major cities have become hangouts for men.

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RECIPE Kaymakli Kuru Kayisi (Cream-Stuffed Apricots) Ingredients 1 pound dried apricots 2Â˝ cups sugar 3 cups water 1 teaspoon lemon juice 1 pound marscapone (sweet cheese); cream cheese softened with a little sour cream, heavy cream, or even milk may be substituted. Add 1 Tablespoon of the cooking syrup if using cream cheese. Âž cup pistachio nuts, chopped

Procedure Soak the apricots in cold water overnight and drain. Heat the sugar and water together over medium heat for 10 minutes, then add apricots. Cook the apricots until they are tender and syrup is formed. Add the lemon juice and remove from heat. With a slotted spoon, transfer apricots to a plate to cool. With a spoon, open the apricots halfway and fill the inside with cream or sweet cheese. Arrange the apricots (slit side up) on a platter, pouring over them as much syrup as they can absorb. Garnish with grated nuts. Serves 18 to 20. Fun Fact: Kaymakli Kuru Kayisi (Cream-Stuffed Apricots) are made with apricots and pistachios, both of which are grown in Turkey. Each July there is an apricot festival in the central region of the country.

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Economy

Turkey, a constitutionally secular state is often viewed as a

bridge between East and West. Turkey has developed into a successful multi-party democracy. With current reforms taking place to instutionalize a more democratic envrionment. Although there are worries that Prime Minister Recep Tayyip Erdogan’s Justice and Development Party (AKP) are pushing an Islamist agenda and breaking up Turkey’s Euro–Atlantic connections. (Heritage) Economic modernization is progressing despite clashes with more traditional values of Turkish society.

World Rank: 69 32

Regional Rank: FACTS

Population: 74.0 million GDP(PPP): $1.1 trillion 8.5% growth in 2011

5 year compound annual growth

Has the current economic situation had an $14,517 per capita impact on your holiday plans for 2013?

Unemployment:11.7% Inflation (CPI): 6.5% FDI inflow: $15.9 billion Public Dept: 39.4% of GDP Main industries textiles, food processing, autos, electronics, tourism, mining (coal, chromate, copper, boron), steel, petroleum, construction, lumber, paper

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Industry Production Growth:

Fiscal Policies

According to an article published at www.eurasianet.org, Turkey: IMF Talks Provide Way to

Gauge Ankara’s Fiscal Discipline by Nicholas Birch, Turkey’s fiscal policy is an expansionary policy with plans to increase government spending on local cities and health benefits for the people of Turkey. Turkey’s officials hope this increase in government spending will stimulate the growth of their GDP. Current Account Balance: -$59.74 billion (2012 est.) -$77.24 billion (2011 est.) Budget surplus (+) or deficit (-): Exports:

-2.6% of GDP (2012 est.)

$154.2 billion (2012 est.)

$143.4 billion (2011 est.) Exports commodities: apparel, foodstuffs, textiles, metal manufactures, transport equipment Exports partners: Germany 10.3%, Iraq 6.2%, UK 6%, Italy 5.8%, France 5%, Russia 4.4% (2011) Imports:

$225.6 billion (2012 est.)

$232.9 billion (2011 est.) Imports commodities: machinery, chemicals, semi-finished goods, fuels, transport equipment Imports partners: Russia 9.9%, Germany 9.5%, China 9%, US 6.7%, Italy 5.6%, Iran 5.2% (2011) Turkey’s largely free-market economy is increasingly driven by its industry, service sectors, and agriculture sector. An aggressive privatization program has reduced state involvement in basic industry, banking, transport, and communication, and an emerging force of middle-class entrepreneurs is adding dynamism to the economy and expanding production beyond the traditional textiles and clothing sectors. In addition, gas pipelines projects also are moving forward to help transport Central Asian gas to Europe through Turkey, which over the long term will help address Turkey’s dependence on imported oil and gas to meet 97% of its energy needs.(IndexMundi) After Turkey experienced a severe financial crisis financial and fiscal reforms were adopted. The reforms strengthened the country’s economic fundamentals. Global economic conditions and tighter fiscal policy caused GDP to contract in 2009, but with a well regulated financial market and banking system helped the country weather the global financial crisis and watched GDP rebounded. Further economic and judicial reforms and prospective EU membership are expected to boost Turkey’s attractiveness to foreign investors. However, Turkey’s relatively high current account deficit, uncertainty related to monetary policy-making, and political turmoil within Turkey’s neighborhood leave the economy vulnerable and weaken investor 137 confidence.

Maps Geography

The Country

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Railroad Transporation

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Tech Pack

T E C H PA C K Ottössöns Packaging Sheet Company Classification Period

17 East Jones Street Savannah, GA 31401 USA Garment Label

Ottössöns MEN'S SHOES

10/1/13

Season Buyer

Ottössöns FW 2014 Ottössöns Inc

PACKING INFORMATION FOR SHIPPING

CARE INSTRUCTIONS A. ALWAYS USE A SHOE HORN SO LEATHER WILL NOT COLLAPSE. B. BRUSH WITH HORSE HAIR BRUSH. C. CHAMOIS BUFF D. AFTER WEAR, ALLOW SHOES TO BREATH, THEN INSERT SHOE TREES E. COVER WITH SHOE BAG.

TISSUE INFORMATION Black / One SHEET PER BOX / SIZE: (L) 75CM x (W) 56 CM

140

Fabric Content

1 (813) 690 1524

CALF LEATHER

Colorway Description

COGNAC JODPHUR BOOT

SHOE BOX DIMENSIONS A B C D E F G H I J

DIMENSIONS (CM) 28.4 38.2 37.5 28 14.5 4 28.4 38.2 24 3

COMMENTS SHOE BOX SHOE BOX SHOE BOX SHOE BOX SHOE BOX SHOE BOX SHOE BOX DUST BAG (DB) DUST BAG (DB) SAME ON DB & BOX

LOGO EMBOSSED ON BOX / PRINTED ON DUST BAG

PACKAGING INFORMATION SHOES WILL BE SHIPPED IN STANDARD SHOE BOX ) WITH SHOE HORN (STANDARD SIZE / WOOD) AND DUST BAG. SEE SIZING ABOVE.

Ottössöns Component Sheet Company Classification Period

TECH PACK 302 W Park Ave. Savannah, GA 31401 USA

Ottössöns

Garment Label

MEN'S SHOES

Season

10/1/2013

Pair / Size

Color/ Material

Material/ Reference

Lining / Color

Sock Lining / Color

Pair / Size

Color/ Material

Material/ Reference

Lining / Color

Sock Lining / Color

COGNAC / CALF

CALFSKIN

GENUINE LEATHER

Name A B C D E F G H I J K L M N O P Q R S T U V W

ENTIRE BOTTOM SHOE SOLE

SHOE HEIGHT (LEATHER) HEEL HEIGHT HEIGHT SHOE OPENING BOTTOM HEEL SOLE WIDTH OF STRETCH (TOP) WIDTH OF STRETCH (BOTTOM) SHOE TAB (LENGTH) SHOE TAB (WIDTH) SHOE LENGTH SHOE OPEING LENGTH TOE WIDTH SHOE OPENING WIDTH HEEL WIDTH LENGTH FROM LOGO TO TOE LENGTH FROM HEEL TO TOE WIDTH OF TOE SHAPE WIDTH OF LOGO LENGTH FROM LOGO TO HEEL WIDTH FROM LOGO TO OUTER SHOE EDGE WIDTH OF HEEL LENGTH OF HEEL

NATURAL

Dimensions (Inch) 32 CM 16 CM 3 CM 19 CM 14 CM 9.2 CM 6.5 CM 11 CM 2 CM 1.4 CM 32 CM 14 CM 11 CM 11 CM 8.3 CM 21 CM 23 CM 11.5 CM 2 CM 2 CM .5 CM 3.2 CM 9.3 CM

Ottössöns

Fabric Content CALF LEATHER

FW 2014

Buyer

Ottössöns Inc

Insole Binding Insole Binding SOFTCAM EL

Sole / Sole Color

1 (313 )910 8745

Colorway

CHESTNUT

Description CHELSEA BOOT

Sole / Sole Color

Edge Color / Mid Sole Color Edge Color / Mid

TR DK / BROWN

Sole Color WOOD

Ornaments / Finish / Ornaments Finish BRASS

Heel Heel

HEEL HEIGHT Column1

STACK MATCH SOLE

Comments

141

Ottössöns Fabric Sheet Company Classification Period

Ottössöns

TECH PACK 302 W PARK AVE. Savannah, GA 31401 USA Garment Label

MEN'S SHOES

Season

10/1/2013

Buyer

Ottössöns

1 (313) 910 8745

Fabric Content

FW 2014

Colorway

Ottössöns Inc

Description

CALF LEATHER CHESTNUT CHELSEA BOOT

LEATHER INFORMATION

COGNAC CALF

STYLE # WIDTH

SIZE RANGES

EU 38.5-45

DELIVERY DATE

TBD

COGNAC CALF SKIN

COMMENTS EMERALD FABRIC SWATCH IS A STRETCH FABRIC COGNAC CALF SKIN WILL BE THE EXTERIOR LEATHER OF THE BOOT NATURAL CALFSKIN WILL BE USED FOR THE INTERIOR LINING OF THE LEATHER BOOT STRETCH EMARLD THREAD:needle eg 47 needle for 50 awl

SEE OUR Ottössöns SOURCHING GUIDELINES

NATURAL CALF SKIN NON LEATHER MATERIAL: 3'' GORE STRETCH EMERALD

142

TECH PACK

Ottössöns Company Classification Period

302 W PARK AVE. Savannah, GA 31401 USA

Ottössöns

Garment Label

MEN'S SHOES

Season

10/1/2013

Buyer

Ottössöns

Fabric Content

FW 2014

Colorway

Ottössöns Inc

Description

1 (313) 910 8745

CALF LEATHER CHESTNUT JODPHUR BOOT

Sketch

COLORS

* Please Note: Colors shown are for reference only. For closest match, see material page, samples are available. CARE INSTRUCTIONS A) ALWAYS USE A SHOREHORN ( LEATHER WILL NOT COLLAPSE) B) BRUSH WITH A HORSEHAIR BRUSH C) CHAMOIS BUFF D) AFTER WEAR ALLOW SHOES TO BREATHE, THEN INSERT SHOETREES E) COVER WITH SHOE BAG

SIZE CHART (MENS) EUROPEAN 38.5 39 40 41 42 43 43.5 44 44 44.5 45

USA 6.5 7 7.5 8 8.5 9 9.5 10 10.5 11 12 SAMPLE SIZE

JAPAN 24.5 25 25.5 26 27.5 27.5 28 27.5 28.5 29 29.5

PACKAGING INFORMATION SHOES WILL BE SHIPPED IN BOX WITH SHOE HORN AND DUST BAG STANDARD SHOE BOX AND STANDARD SHOE HORN A) BOX DIMENSIONS: B) DUST BAG DIMENSIONS: C) STANDARD SHOE HORN SEE OUR Ottössöns SOURCHING GUIDELINES FOR ANY ADDITONAL CONCERNS

OTHER INFORMATION / COMMENTS COGNAC LEATHER

PANTONE COLOR: 17-5641

NATURAL LEATHER

143

TECH PACK

Ottössöns Detail / Construction Sheet Company Classification Period

Ottössöns

302 W PARK AVE. Savannah, GA 31401 USA Garment Label

MEN'S SHOES

Season

10/1/2013

Buyer

Ottössöns FW 2014 Ottössöns Inc

1 (313) 910 8745

Fabric Content Colorway Description

CALF LEATHER CHESTNUT CHELSEA BOOT

Detail(s)

COMMENTS ON DETAILS A) Logo will be placed directly at the arch of the shoe

B) Ottössöns logo will be embossed at the bottom of the shoe

C) Thread: NYLON 69 BLACK

D) Sole: 3- Sole Bend Leather Stacked

THE DETAILED MEASUREMENTS HIGHLIGHT WHERE THE LOGO PLACE MENT WILL BE LOCATED ON THE SHOE. The sample size is U.S. 10.5 And the European sizing is a 44

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http://www.kwintessential.co.uk/resources/global-etiquette/turkey-country-profile.html http://www.gfmag.com/archives/175-may-2013/12479-country-report-turkey.html#ixzz2fxDMVuEL http://www.atkearney.com/consumer-products-retail/global-retail-development-index/full-report/-/asset_publisher/oPFrGkbIkz0Q/content/2013-global-retail-development-index/10192#sthash.sAAFY0ev.dpuf http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Turkey-WORKING-CONDITIONS.html#ixzz2gcq6w2Ef http://www.stratfor.com/products/premium/read_article.php?id=297234&selected=Stratfo “Navigation.” Atkearney.com. N.p., n.d. Web. 21 Oct. 2013.http://www.atkearney.com/consumer-products-retail/ global-retail-development-index/full-report/-/asset_publisher/oPFrGkbIkz0Q/content/2013-global-retail-development-index/10192 “Turkey: Alternative Energy Report.” - HSBC Global Connections. N.p., n.d. Web. 21 Oct. 2013.https://globalconnections.hsbc.com/global/en/articles/turkey-alternative-energy-report “Doing Business In Turkey.” Business Etiquette. N.p., n.d. Web. 21 Oct. 2013.http://www.gfmag.com/archives/175may-2013/12479-country-report-turkey.html#axzz2fxBk7IUW “Doing Business In Turkey.” Business Etiquette. N.p., n.d. Web. 21 Oct. 2013.http://www.turkey.doingbusinessguide. co.uk/the-guide/business-etiquette/ “Countries and Their Cultures.” Culture of Turkey. N.p., n.d. Web. 21 Oct. 2013.http://www.everyculture.com/To-Z/ Turkey.html#b https://www.joi.or.jp/modules/investment/custom/documents/TUR_1007_R-Labor_Force_in_Turkey-EU.pdf http://www.ey.com/Publication/vwLUAssets/Turkey_attractiveness_survey_2013/$FILE/turkey_attractiveness_2013.pdf https://www.gtap.agecon.purdue.edu/resources/download/3298.pdf http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113456.pdf http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113456.pdf “Turkish Transportation and Logistics Industry” report – Deloitte

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