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Belgin Oil exports to around 50 countries around the world. What are your most important export markets, and in which regions are you hoping to expand?
Due to Turkey’s location in the middle of Asia and Europe, around 40% of our exports go to Middle Eastern countries, 30% to Africa, 20% to Europe and the rest for the Americas and other countries. We are growing in Asia, which is one of our main goals. In Asia, we are planning to enter with all of our product lines, but most importantly with our automotive and metal working oils. In China, in particular, we want to enter with automotive oil, whereas India is a prospective market for industrial lubricants. We are equally distributed between industrial oils and automotive oils.
How does Belgin’s JV in Germany support exports in the European region?
This small JV is a standalone entity manufacturing highly niche products for automotive industry. But, before that, we are continuously checking Western European companies, especially in German-speaking countries, to find an opportunity to form a JV or acquire a company. It is not easy to find a suitable company to form a JV.
Can you tell me how the strategy to market and export metal working oils and automotive oils differs?
For metal working oils, you need to understand customers’ processes very well, define the needs clearly, and work to develop the business because entering a market is not easy. It requires a lot of trials, approvals, and certificates, for example. But once you are successful, it is a long-term business. Automotive oil, meanwhile, is not that difficult. It is quicker to form relations. The marketing and sales activities are easier to do.
Given the difficulty of the segment, how is Belgin working to penetrate new markets in the Middle East for industrial and metal working oil?
The key is finding the right channel or the right business partner. We work mainly through distributors who have experience in the sector, certain financial strength, and strong relationships in the relevant industries. Once we find such a business partner, we discuss and design shortterm and long-term strategies together.
What are the main challenges Belgin faces in its global supply chain?
We have suppliers in and outside of Turkey. One of the main challenges for not only our company but almost all the companies in the sector is establishing long-term agreements and reliable relationships with suppliers. Another important challenge is digitalization, including automation in production and the use of big data. Our company has a large customer portfolio, exceeding 3,000 industrial companies, and we have regular, ongoing business relationships with at least 50% of those. Therefore, we have a huge data base and a lot of information to manage effectively. Another important component is connectivity with clients. In brief, in the whole supply chain process, we have a digital transformation challenge that we have already included in our investment plans.
Within the R&D field, what investments have you made, and how have they yielded new products for Belgin?
Our company’s vision statement declares: “We strongly aim to grow beyond borders through high technology products.” This is how we plan to proceed. We have highly knowledgeable and experienced experts in R&D, and we are hiring new ones. We have invested heavily in R&D over the last two decades. In 2018, we acquired official R&D Center Certification from the Ministry of Industry and Technology so that our R&D and innovation activities will benefit from the governmental incentives. R&D is one of our main strengths, and we want to add more competencies on top of this. Every year, we are launching new, value-added products for several industries such as tubes and pipes, defense, automotive, aerospace, home appliances, aluminum, iron, and steel. ✖
The Kanık Group of Companies serves a variety of sectors through its three subsidiaries: Özka Lastik, İlka Plastik, and IRC Automotive. What major competencies do these companies share?
Kanık Group and its subsidiaries manufacture based on a fully domestic capital model. All of our subsidiaries are large exporters to the world’s major markets. We also create our technological infrastructure ourselves and produce our own machinery in-house by Turkish engineers and workers in our R&D units, without having to import. Looking to our three subsidiary companies, there are obvious common features between IRC and Özka—IRC is in the automotive sector and Özka is in the tire sector, an automotive sub-industry. Also, Özka provides some raw materials to IRC. Second, there are major competencies between tires and plastic—the sector where Ilka operates. Plastic factories produce some of the mid-products used in production of tires. All three have connections to each other.
Could you break down Özka Lastik’s revenue by sector and where you expect to see demand growth in the near future?
Özka Lastik manufactures tires in the fields of agriculture, construction, logistics, and defence with a daily capacity of 130 tons in the categories of garden/ field, trailer, tractor, combine harvester, construction machine, forklift, pickup/ van, and military vehicle tires. Whereas 72% of our annual turnover is from the agricultural group and 25% is from the industrial group, the group that produces pickup and van tires constitutes the 2% and the defense industry 1% of our annual turnover. In the agricultural and industrial group, radial tires constitute the 25% of our total turnover, while the conventional tires constitute 75%. According to the market research we have carried out, we have found out that the agricultural tire market we are involved in has a market share of 60%; the industrial tire market has 33%; and other OTR tire market has 7%. It is projected that these shares will be stable in the near future. However, in the near future, a growth in the radial tire production is anticipated both in agricultural and industrial tire groups, mainly in European countries and all around the world. We also aim to increase our work on the defense and aerospace industries in the future. They are difficult sectors to work in, but they are areas where we have capabilities and would like to expand.
“Our goal for Özka Lastik is to increase our market share in the markets we are involved in and to enter new markets such as Latin America.”
IRC Automotive exports 90% of its products. What hedging strategies do you employ to shield the company from an individual market’s auto sales slowdown?
Although the vehicle sales are stable in the current business cycle, a decrease in sales are anticipated in the long term. That is a factor that will cause economic stagnation. One of the ways to cope with such a global effect is to diversify the market strategy as much as possible. Today, more than 90% of our total sales are from exports. We have a system that watches and monitors world markets in our sector constantly. As a result, we have diversified our markets.
What are your plans and primary objectives over the next 12 months?
Our goal for Özka Lastik is to increase our market share in the markets we are involved in and to enter new markets such as Latin America. By continuing with our success from 2018, in which our exports grew by 440%, in 2019 we plan to reach our goal of a turnover of TRY681 million. With our new investment that will be completed by 2020, our daily production capacity of 130 tons will be increased by 55%. By being able to produce 200 tons a day, we will be able to meet the needs in current and new markets. ✖