We talked to Korhan Kurdoğlu, the Chairperson of Turkey-China Business Council, how the outbreak has affected mutual trade relations nowadays, where all eyes are on China
The global economy goes through an unprecedented process with the COVID-19 pandemic. Is it possible to achieve the trade speed between countries as before the outbreak? Is it possible for the world’s production giant China to go back to its old capacity? Such questions turned all eyes on China. And we talked to Korhan Kurdoğlu, the Chairperson of Turkey-China Business Council, about the impacts of the outbreak on China’s economy and Turkey-China trade relations.
We see a sense of insecurity towards the trade with China after the COVID-19 outbreak. What do you think about the impacts of this on China’s economy and the world’s supply and production chains?
It is still too early to answer this question. However, we know that China is the world’s production and export centre, and it will take some time to put the supply and production chain back to track, for sure.
China is a great power and an indispensable market for many countries with its population, the consumption capacity of the growing middle class, production ability, financial scope, and economy. Many global companies have establishments and production facilities in China. There might be a trust crisis after the outbreak, but I don’t think it’s something that can’t be overcome in the long term. Developing more cooperation and innovative solutions will help the world’s and each country’s economy. I believe that cooperating with China is the right decision to find new solutions in the supply and production chain. Companies in search of innovation can establish a new and flexible supply chain infrastructure by cooperating with Chinese companies.
Some say that this trust crisis will disrupt the Belt & Road Initiative. As someone who knows China well, what is your take on this?
Belt & Road is a long-term and quite valuable project. There may be some delays, but I don’t think that there will be a major revision in practice. We are experiencing a significant movement restriction due to coronavirus. Such comments are likely to come up in this sensitive period and that’s normal. However, this initiative is important not just for China but for Turkey and many countries in Europe as well. Asian Infrastructure Investment Bank, established for this purpose and of which Turkey is a member, is an important actor for the continuity of the project. Today, countries may experience many urgent economic and social problems due to the pandemic but in the medium term all sides, especially China, will do what they can to prevent the disruption of this project.
Like all countries experiencing the pandemic, China also reduced its economic activities to a minimum while actively fighting against the virus. And at this point, there are no new cases in the country. As a result, is it possible to say that China, one of the world’s production giants, has returned/can return to its old production capacity in a short time?
Leading indicators in China point to a revival in logistics activities, mainly in production. Prolonged holidays and quarantine caused a sharp shrinkage in the industry before. Now, there is a serious recovery in the production and service sectors. Quoting from economists, a “V” turn is observed. And there was an apparent shrinkage in the first quarter of 2020 in the retail side. Even though social restrictions have increased people’s demand for e-commerce while they stayed at home, I believe that recovery will take some time. After the outbreak, sectors that focus especially on retail and consumption seem to start operation gradually within our country and all over the world.
These sectors will begin to revive step by step as people begin to go out on the streets again. We see that shopping mall activities are starting to get normal in China gradually.
Quarantine was lifted in Wuhan already, the city where the coronavirus first appeared. But it will take some time to reach 2019 volumes.
If I am to speak on behalf of TFI – TAB Food Investments, 90% of our restaurants in China are open and serving. And in these sensitive times, we ensured the continuity of our business by using digital channels and innovative applications such as “Leave My Order On The Door”, “Contact-free Delivery” and fully hygienic “Safe Package”, and embracing digitalization in our business processes at the maximum level. This month, we even opened the first restaurant of our Popeyes brand in the country.
China is one of the biggest trade partners of Turkey. Do you think Turkey-China trade relations will change after the COVID-19 period?
There will be an important investment flow into both China and Turkey with China’s Belt & Road Initiative. This showed once again how important was Turkey’s Kars-Tbilisi-Baku Railway as one of the biggest investments in this context. We need to make good use of the upcoming period for collaborations, partnerships, and new opportunities.
I believe that with the contribution of this project, there will be a much more dynamic economic relationship between China and Turkey as a win-win situation. We need to manage this relationship properly in order to increase our trade potential. If we manage this coronavirus process properly, both sides can win and increase their trade volume in the upcoming period.
It is very important to attend fairs in China as well. As Ata Group, we attended the China International Import Expo (CIIE), the first of which was held in Shanghai in 2018, with our five companies. There, we had the opportunity to closely observe the interest in Turkish brands. So, I am sure that Turkish companies will find new business areas in China as long as they keep doing their job well.
Considering the changing dynamics, which sectors would you recommend to Turkish businesspeople who want to invest in China in the upcoming period?
We have seen that China has taken measures to pave the way for big companies, including foreign investors, and to facilitate investments with the coronavirus process. This can be a good opportunity to invest in China. It might be helpful to look for regional and sectoral practices and incentives in the country. With incentives implemented for the coronavirus, many new opportunities can arise from textile to agriculture, software to digitalisation, research & development to the defence industry.
China is a competitive country with a competitive business world. I think that as TFI – TAB Food Investments, our investment will turn into success and be an example of how the people of China and Turkey can work together culturally. We also contributed to our own country with our investment in China. We export products such as potatoes from Turkey. We have meat, potato, and bread in our ecosystem here. This creates an opportunity to export to China, Asia, and the countries within the Burger King system. I would like to recommend once again that Turkish companies take a closer look at China in their own sectors and seize good opportunities for cooperation with the country.
Chairperson of Turkey-China Business Council Korhan Kurdoğlu