Are joint ventures an outdated strategy for growing in the Turkish market?
The answer is increasingly yes.
Joint ventures were a preferred strategy for multinationals looking to enter the Turkish market, often by partnering with Turkey’s powerful conglomerates, in the 1980s and 1990s. Since then, however, Turkey’s operating environment has seen significant improvements – macroeconomic stabilization, strong economic growth, investor-friendly government policies, growing adoption of EU standards, and, importantly, an increasing number of multinationals that are setting up a direct presence in the market. Simply put, it’s a lot easier for multinationals looking to scale their presence in the market today to go hybrid or direct than it was a decade or two ago. As a result, multinationals in Turkey increasingly prefer to maintain full control over their local business and go at it alone instead of navigating the challenges of partnering with local companies.
Are joint ventures in Turkey dead then? Not quite. We find that forming a joint venture can still be a successful strategy for scaling in the market, and it is a particularly good fit for companies that are looking to expand but are unable or unwilling to commit significant up-front investment to it. Multinationals in this position will find that Turkey’s conglomerates, as well as big local players, and even other multinationals with a significant presence on the ground could give them access to the manufacturing facilities, distribution networks, capital, as well as government connections and market know-how that will allow them to rapidly expand.
As a result, joint ventures are increasingly becoming a niche strategy, one among many that multinationals can implement to effectively scale their business in the market while maintaining profitability.
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