TURKEY: BUSINESS ROUNDTABLES IN GAZIANTEP, ADANA AND MERSIN

UNCLAS SECTION 01 OF 04 ADANA 000079 SENSITIVE SIPDIS ATTENTION: S/P - GREG BEHRMAN, S/SRMC - KAREN CHANDLER, R - SEHREEN NOOR-ALI E.O. 12958: N/A TAGS: ECON EAID PREL SOCI TU SUBJECT: TURKEY: BUSINESS ROUNDTABLES IN GAZIANTEP, ADANA AND MERSIN PROVE MINDSET IS KEY TO ENTREPRENEURSHIP REF: STATE 112468 ¶1. (SBU) SUMMARY: DCM Douglas Silliman, accompanied by Adana PO and DPO, held three business roundtables in Gaziantep, Adana and Mersin to discuss President Obama's Cairo speech and the upcoming Summit on Entrepreneurship. During the roundtables, business leaders from Gaziantep, with their can-do spirit, ambition and commonsense approach to competition and enterprise, upheld their province's reputation for being the most entrepreneurial in Turkey. Adana's business group discussed GoT-imposed impediments to entrepreneurship and held that private business foundations and associations should lead the way in building transatlantic links. Another group of Adana entrepreneurs cited the lack of capital and a learn-by-rote education system as impediments to entrepreneurship. Mersin's roundtable discussion touched on the need for the GoT to "become trustworthy" and give businesses a break through tax reform. All participants welcomed President Obama's ideas and encouraged support from the U.S. public and private sectors in expanding transatlantic business ties. END SUMMARY -------------- -------------- -------------- WHY IS GAZIANTEP SO SUCCESSFUL AT BUSINESS? -------------- -------------- -------------- ¶2. (SBU) When Gaziantep's top business leaders at the roundtable answered the question "Why is Gaziantep so successful at business?"several themes emerged. Most mentioned Gaziantep's Silk Road history and strategic trade location, and from that an inherent understanding of the day-to-day struggle of commerce. As a board member from SANKO Holding, one of Turkey's largest companies operating in more than 10 sectors with over 14,000 employees, said: "We had to learn to sell before we learned to produce. We are inherently innovative, creative and have a spirit of self-sufficiency that is aggressive and uncompromising. We channel that into business." -------------- -------------- -------------- FAMILIES EMBRACE BUSINESS CULTURE AND EDUCATION -------------- -------------- -------------- ¶3. (SBU) Several business leaders described how their fathers took them to the workshops or factories to show them the ropes from an early age. By making them partners from childhood, they ensured a business culture would be passed from generation to generation. Business is discussed regularly at all mealtimes, a few business leaders commented. In Gaziantep, they said, everyone is an entrepreneur. All the leaders emphasized education was the top priority for parents who started businesses, and that the second generation was vital in expanding existing enterprises with their newfound know-how. -------------- -------------- -------------- NO BRAIN DRAIN AND FIERCE LOYALTY TO THE PROVINCE -------------- -------------- -------------- ¶4. (SBU) Unlike other provinces where children of successful business leaders stay abroad or in Istanbul, Izmir or Ankara to seek their fortunes, Gaziantep business leaders and entrepreneurs have an unflagging loyalty to the province and a deep pride of association. They pointed out Adana's prosperity began in the 1950s with five major family businesses that later pulled up stakes and moved to Istanbul, leaving the province bereft of any significant commercial entities. In contrast, Gaziantep's second and third generations who are so central to expanding and invigorating Gaziantep businesses stay and carry out their commitment to making it a better place for the whole community. SANKO Holding, for example, has set up foundation schools and provides scholarships to disadvantaged children, and its philanthropy in the area of archeology was instrumental in ADANA 00000079 002 OF 004 salvaging submerged mosaics from the famed Zeugma collection. The spirit of contributing to the community lives in Gaziantep entrepreneurs. -------------- -------------- -------------- UNITED BY SCARCITY AND INSPIRED BY THE SUCCESS OF OTHERS -------------- -------------- -------------- ¶5. (SBU) Gaziantep has little arable land and no resources to speak of. Even potable water must be transported from 80 km away. Under these circumstances, Gaziantep had to recognize its limitations and capitalize on its relative advantages, including its location on an established trade route, border crossings with Syria, and access to airports and seaports. Gaziantep used its advantages to become a top producer of Turkish exports. Gaziantep's business leaders do not see other companies' success as something to be envied but rather as a model to admire and emulate. -------------- -------------- -------------- NEVER POLITICIZE BUSINESS AND MAINTAIN FLEXIBILITY -------------- -------------- -------------- ¶6. (SBU) Gaziantep business leaders uphold the rule of "no talking politics" in business meetings. They emphasized the importance of taking a common sense approach to politics and government and working with the governor and mayor to "maximize the environment of opportunities." Business leaders also mentioned holding their members of Parliament accountable for representing their business needs in Ankara. The financial sector in Turkey did not develop until the 1980s, they said, so the maxim that has guided business in Gaziantep is "It may be small, but it's mine." This independence is guarded carefully, and retaining the flexibility to adapt to changing economic fortunes is vital to the longevity of business. For that reason, government intrusion into money matters is generally eschewed, including complicated financing schemes that might hinder movement. -------------- -------------- -------------- THE BOTTOM LINE: VIEW EVERYTHING AS AN OPPORTUNITY -------------- -------------- -------------- ¶7. (SBU) Gaziantep business leaders summed up the secrets to Gaziantep with a single phrase: view everything as an opportunity. With the country's largest industrial zone employing the latest technology, exporting to more than 100 countries and enjoying its position as Turkey's top exporting province by volume, Gaziantep's success is driven by this mindset. Gaziantep business leaders expressed an interest in new opportunities in Afghanistan and welcomed additional information about the role they could play there. -------------- -------------- -------------- -------------- ADANA: FOCUS ON LINKING U.S.-TURKISH BUSINESS ASSOCIATIONS -------------- -------------- -------------- -------------- ADANA 00000079 003 OF 004 ¶8. (SBU) Adana's Cukurova Young Businessmen's Association (CUGIAD) leaders were critical of the GoT for making entrepreneurship so difficult, citing onerous and ill-conceived government regulations, a prohibitive tax burden, the lack of infrastructure to support entrepreneurs and the deficiency of available capital. CUGIAD's president dismissed the value of large business delegations that accompany prime ministers and presidents on official trips, pointing out that very few meaningful business gains ever materialize. One businessman was curious what the United States could offer that the European Union had not already offered, referring to the EU's numerous grant programs and business capacity-building projects. CUGIAD members welcomed any structure that would promote partnerships between Turkey and the United States, but believed meaningful progress would come only by linking Turkish and American business-oriented civil society. The association president said he wanted a "development solution" and would be pleased to start a dialogue with a U.S. counterpart, in particular to invigorate the province's agribusiness-based import/export businesses. -------------- -------------- -------------- LACK OF CAPITAL HINDERS WOULD-BE ENTREPRENEURS -------------- -------------- -------------- ¶9. (SBU) During an evening roundtable discussion with some of Adana's most dynamic entrepreneurs, including three nominated for the 2010 Summit, the lamentable lack of capital for start-up businesses was cited as an enormous impediment to creating an entrepreneurial momentum akin to the United States. One guest described a $19 million World Bank program that charged Adana government bureaucrats with evaluating proposals and distributing entrepreneurship grants. In the end, the public officials were so parsimonious in their bequests that more than 75 percent of the money was returned to the WB. Another businessman, also a member of a national association of entrepreneurs, described the typical predicament of a policeman in western Turkey who went to more than 10 banks to finance the production of a textile machine he invented, but could not raise the funds. An economist at the table pointed out that two venture capital funds operate in Turkey, but he did not believe they effectively supported entrepreneurship - and very few people outside of Ankara and Istanbul know about them. The owner of one of Adana's most successful private schools pointed out the lack of an entrepreneurial mindset and the inability of the Turkish education system to imbue such a spirit in students who learn by rote and focus only on end-of-year exam preparations. -------------- -------------- -------------- - MERSIN: THE GOVERNMENT MUST BECOME MORE TRUSTWORTHY -------------- -------------- -------------- ¶10. (SBU) Established leaders of Mersin's business community protested the arduous tax burden on established businesses, including payroll taxes and social security, as well as the high cost of energy and fuel as obstacles too daunting for most business start-ups. The government, one leader said, must "become more trustworthy," citing opaque business contract awards, preferential treatment, and the inability to expand without government support. Business leaders also pointed out the lack of capital to create or expand businesses. They highlighted ways in which Mersin's economic potential rests in its flourishing port and transportation logistics operations. A logistics center is currently under construction and will be a hub where rail, sea, and land transportation will converge to create Turkey's largest logistics operation and to boost Mersin's strategic position with access to markets in the Middle East, Northern Africa, and Europe. ADANA 00000079 004 OF 004 -------------- COMMENT -------------- ¶11. (SBU) While business leaders unanimously pointed to obstacles such as the poor regulatory system, government shortcomings, heavy tax burden, lack of capital, and an education system apathetic to entrepreneurial spirit, the Gaziantep business roundtable was most encouraging in its revelation that entrepreneurship is a state of mind. Business leaders across the provinces were also unanimous in their encouragement of U.S. support for business development. Given Turkey's sensitivity and general objection to being labeled a "Muslim country," the message here must be crafted as "entrepreneurial outreach and support." President Obama's Cairo speech espoused an important idea that has certainly resonated in southern and southeastern Turkey - to work towards economic development by creating a new corps of business volunteers to partner with counterparts. END COMMENT. DARNELL