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An ancient modern city – Notes from Istanbul

in Finance and Insurance, Language Connect

Turkey’s long been a country of interest for me. I studied the Ottomans at school and as a child it was the destination of our most exotic family holiday from which I recall blistering heat and the locals’ obsession with football. In recent years, however, Turkey has been more in my thoughts due to the increase of demand for its language at Language Connect. It has gone from historically near the bottom of our top 15 list to the 6th most requested language by our clients this year. Keen to find out more about what could be driving this, last week I went on a UK Trade & Investment-backed trade mission to Istanbul with several other UK SMEs.

The first thing that’s striking about Turkey is the size of its population and in particular the number of young people in the country. It’s second only to Germany in Europe with 74m people, of which half are below the age of 29 making it Europe’s biggest youth population. As has been the trend in emerging economies, there has been mass migration into the cities and metropolitan areas. Istanbul is now Europe’s largest city with 13 million residents. The sprawl of the city continues as far the eye can see, interrupted only by the Bosphorus which marks out the boundary between Europe and Asia.

The next thing you notice in Istanbul is the construction sites. Turkey’s construction industry is one of the jewels in its economy’s crown. You can find over 20 shopping malls in the central provinces of Istanbul and row after row of residential tower blocks in the suburbs. There is speculation of a property bubble; however, Turkey escaped the 2008 financial crisis without the collapse or bail-out of a single Turkish bank. In fact, it was one of the few counties whose credit rating was upgraded in recent years.

The Turks are not just builders. Turkey’s snug position as the gateway between Europe, North Africa, the Middle East and Central Asia give it a competitive edge for international trade. Turkey is home to some of the biggest multinational companies you’ve probably never heard of since very few of its family-run holding companies are public-listed. Beko, a household appliance manufacturer, command a 14% share of the UK’s refrigerator market. Did you know they were Turkish? Neither did I. Vestel, a Turkish TV manufacturer, are Europe’s largest accounting for 16% of the LCD market and 25% of digital set-top boxes. ‘Made in Turkey’ is now printed on a staggering 1 out of every 6 electrical household appliances in Europe. Turkey’s geographic edge is further enhanced by the Turks’ fundamental understanding of European taste, sometimes lacking in products from manufacturers further East.

Communication is in Turks’ blood. They love to gossip and have a massive appetite for the latest technology. I saw more iPads in the cafes of Istanbul than I do in London, and most of these were the newer iPad 2 model. More than a million smartphones are sold in the country every year, and almost everyone, including drivers worryingly, are glued to them.

Istanbul is building from the country’s strong base of textiles production to becoming a fashion hub in its own right. Istanbul Fashion Week took place last week attracting 25,000 people who booked up most of the city’s hotel rooms. The familiar UK fashion retailers are all represented in force around Istanbul’s glittering shopping malls. However, domestic retailers and brands such as Koton and Ramsey are equally abundant. At an official event, the CEO of Ramsey told us his story of starting and running his business of 100 staff in London for 15 years. Acknowledging the lower cost base, he moved the business to his home country in the mid-80s. His company is now a major clothing retailer, exporter and household name in Turkey employing 2,500 people.

Whilst the Turkish people love shopping in the hubbub of the city’s bazaars, shopping malls and avenues, online commerce in Turkey is also coming of age. An estimated 15 billion TL (c. $8bn) of revenues were generated online last year and this market is expected to grow 50% this year. Internet penetration has risen to 50% and, in a recent survey, nearly all of Turkey’s Internet users said that they were likely to buy online within the next 6 months. Their love of communication is also heavily reflected in online consumer habits. Social media use is very high, and I saw a number of retailers promoting their Facebook fan pages and Twitter profiles in-store.

A Turkish business that has had remarkable success from embracing the Turk’s love of fashion and communication is Trendyol (meaning ‘become a trendy person’ in Turkish). Launched in early 2010, the web-based business offers its users ‘flash sales’: customers sign up to get access to sales where the latest fashions are available at heavily discounted prices. Facebook fans regularly get asked by the company which brands and styles they are interested in gathering customer feedback for future sales. The site’s popularity has exploded over just 18 months to where it now counts 4 million users and has $100m in revenue. This success has not come unnoticed; a US venture capital firm with investments in LinkedIn and Zynga have recently invested $26m into Trendyol.

As power, money and influence shift East, Istanbul and Turkey’s strategic location looks likely to sustain the cultural, economic and political progression it’s currently enjoying. It’s fascinating that, along with cities like Beijing and Delhi, the resurgence of an ancient global city happens in the 21st Century, a new world of technology revolution and globalisation. Maybe it’s true to say that the world doesn’t change much after all.



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