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ISTITUTO NAZIONALE PER IL COMMERCIO ESTERO Jewellery in Turkey Prepared for ICE-Ufficio di Istanbul Istanbul March 16, 2007 Ağa Hamamı Cad. Ağa Han No:1/6 Cihangir, Beyoğlu 34433, Istanbul Tel: (212) 252 2460 Fax: (212) 252 2430; E-Mail: [email protected] Web Site http://www.IBSResearch.com Registered in Istanbul, No. 214984/162536 TABLE OF CONTENTS 1 II Introduction ................................................................................................................. 1 Economic & Social Factors ........................................................................................ 2 2.1 GDP..................................................................................................................... 2 2.2 Inflation ............................................................................................................... 3 2.3 Unemployment .................................................................................................... 3 2.4 External Trade Balance ....................................................................................... 4 2.5 Political & Economic Topics .............................................................................. 4 III Economic Trends in Jewellery ................................................................................ 6 IV Foreign Trade .......................................................................................................... 8 V Cooperation Opportunities between Italian and Turkish Companies ....................... 11 VI Legal Framework .................................................................................................. 13 VII Imitation and Brand Counterfeiting ...................................................................... 14 VIII Contacts................................................................................................................. 15 THE JEWELLERY SECTOR IN TURKEY An Introductory Market Analysis March 16, 2007 1 Introduction L’UFFICIO DI ISTANBUL DELL’ ISTITUTO NAZIONALE PER IL COMMERCIO ESTERO (ICE) is interested in developing economic relations between Turkey and Italy and encouraging joint ventures and trade opportunities between Italian and Turkish companies. In February 2007, ICE commissioned IBS Research and Consultancy (hereafter referred to as IBS) to carry out an introductory market analysis on the jewellery sector in Turkey. The aim of the research is to give Italian companies an up-to-date overview on the Turkish market for jewellery with the aim of supporting Italian exporters and importers as well as those companies wishing to invest locally. IBS is a leading Istanbul consultancy and has been working with ICE since 1990, covering different sectors, including textiles, packaging, food, printing and publishing, furniture, agricultural machinery and equipment, franchising and shipyards. IBS carried out detailed research and conducted interviews with sector experts, associations and players to understand recent development and the opportunities for Italian companies involved with jewellery in Turkey. The research was carried out between March 1 and 22, 2007. IBS 1 II Economic & Social Factors 2.1 GDP In the first three quarters of 2006 Turkey’s GDP growth was 5.6% compared with 6.7% growth in the first three quarter of 2005. In 2006, the GDP is estimated to reach $390.4 Bn at current prices, 6% up in volume terms on 2005. The CAGR (compound annual growth rate) between 1991 and 2006 was 4.2%, one of the highest in the OECD area. Declines were seen in GDP in 1994 and 2001 due to the financial crises in those two years. Another decline was in 1999 when a major earthquake hit the Marmara region, Turkey’s industrial heartland. GDP IN TURKEY, 1991-2007** At Current Prices GDP, Bn $ GDP, Growth 450.0 10.0% 400.0 8.0% 350.0 6.0% 4.0% 300.0 2.0% 250.0 0.0% 200.0 -2.0% 150.0 -4.0% * SPO estimate ** Government program GDP, Bn US$ GDP Growth (1998 fix prices) 2007** 2006* 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 -10.0% 1995 0.0 1994 -8.0% 1993 50.0 1992 -6.0% 1991 100.0 Source: SPO Major contributors to real GDP growth in the first three quarters of 2006 were private fixed investment (with a growth rate of 18.8%) and exports of goods and services (growth rate 4.1%). In 2007, Government foresees 5% annual growth; IBS expects medium-term growth to be between 4.5% and 6%. Inflation may stay closer to 10% than earlier hopes of 5%. There has been a major improvement in public finances, leading to lower absolute interest rates, though Turkish real interest rates remain among the higher in the world, one of the key factors contributing to the strength of the Turkish lira. IBS 2 In 2005, Turkey was the 17th largest economy in the world on purchasing power parity basis (PPP basis) with a GDP of $552 billion, and 20th on a normal value basis with a GDP of around $350 billion. It comes behind Korea and Mexico, both of whose economies are about twice as large as Turkey’s, but well ahead of Poland, Greece and Ireland. If the country’s large unofficial economy is allowed for, it would rank higher. Foreign direct investment, which had trebled in 2005, doubled again to $19.8 billion, stimulated by successful privatisation of state-owned assets and improved economic fundamentals. Turkish inflation – largely tamed End-year Change 100% Financial crisis 90% 80% 70% 2.2 Inflation 60% 50% CPI WPI 40% 30% Introduction of New Turkish Lira 20% IMF Stand-by Agreement 10% 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 0% 1995 During the 1980s and 1990s, Turkey combined one of the highest long-term inflation rates in the world with continuing growth. In the past five years, inflation has largely been brought under control. Source: State Institute of Statistics In 2006, the inflation rate started to increase mainly due to the high depreciation of the Turkish New Lira and also due to high petroleum product prices. The consumer price index increased by 9.7% in 2006. The Central Bank forecasts a rate of 5.1% for end2007, though most private sector economists expect a rate of 7-8%. INFLATION (End Year CPI and PPI, %) 1993-2001 2002 2003 2004 2005 2006 2007* Consumer Price Index 77.5 29.7 18.4 9.3 7.7 9.7 5.1 Producer Price Index 76.6 30.8 13.9 13.8 2.7 11.6 n.a. * Central Bank forecast Source: SPO 2.3 Unemployment Turkey is known for the hard work and motivation of its labour force. The difficult economic conditions of recent years have led to higher unemployment and lower real wages. The unemployment rate in Turkey has been increasing gradually, from 6.4% in 1998 to 9.6% in 2006, despite the recovery of the Turkish economy in the last five years. IBS 3 LABOUR FORCE STATISTICS OF TURKEY 2004-2006* Civil Population 15+ Years Old ('000) Labour Force Supply** ('000) Unemployed People ('000) Unemployment Rate (%) 2004 49,906 24,290 2,498 10.3 2005 50,825 24,566 2,520 10.3 2006* 52,000 25,056 2415 9.6 Change 2004-06 4% 3% -3% * 2006 4th Quarter ** Labour force = employed + unemployed Source: SIS With Turkey’s current unemployment rate one of the highest in the OECD, the Turkish government has made combating unemployment a prime target. The government seeks both to curb the underground economy and to boost employment. 2.4 External Trade Balance Both exports and imports continued to grow in 2006 when exports grew 15.9% to $85.1 billion, while imports grew 17.3% to $137.1 billion compared to 2005. The trade deficit was $51.9 billion, compared to $43.3 billion the previous year. The overall current account deficit in 2006 was $31.3 billion, compared to $22.8 billion in 2005. The main factors behind Turkey’s high current account deficit can be summarized as follows: Increasing imports due to high GDP growth rates; 87.5% of total imports consist of investment and intermediate goods Appreciation of the Turkish Lira. Increasing imports from China Changing composition of exports, in addition to textile and ready-wear exports, automotive and machinery exports are becoming important. Increases in oil prices In 2006, automotive and spare parts led exports, earning Turkey $15.5 billion and recording a 22.9% growth compared to 2005. They were followed by the ready-wear sector at $13.9 billion, a 2.1% growth compared to 2005. Textiles and raw materials were the sixth biggest sector in exports, earn ing $5.6 billion in exports, up 14.7% compared to 2005. Textiles and ready-wear together accounted for 22.8% of exports in 2006. 2.5 Political & Economic Topics Turkey is a parliamentary democracy. The Grand National Assembly, the country’s parliament, is elected for five years, with the last elections held in 2002 giving the Ak Party of Recep Tayyip Erdogan two-thirds of the seats in the Assembly, with only onethird of the popular vote. The only other party elected to the Grand National Assembly is the CHP, the Republican People’s Party, although the True Path Party (DYP) has since become represented through transfers. The CHP is led by the 68-year old Deniz Baykal, IBS 4 a veteran socialist who many believe has outstayed his welcome. The other parties all failed to win the 10% of votes required to enter the Assembly. The next elections are due by November 2007. In May 2007, President Sezer’s term ends and the Assembly has to re-elect him, or, far more likely, choose his successor. Turkey has long been recognized as a country of potential. Realising this potential depends on economic and political stability and continued reform. The crises in the past two decades were primarily due to political instability, weak regulation, poor macromanagement, or a combination of these factors. STABILITY IN TURKEY Factor Situation International Good relations with EU, USA, and Russia. Reasonable dialogue with Iran. Concerns over growing role of Kurds in Iraq. No appetite for an active role in Middle East where it is ‘front-line’ state. Problems with Greece now mature, but issue of Cyprus threatens Turkey’s EU progress. Growing role as a transit country for natural gas and oil. 4 Political Strong, single-party government, wary relations between civilians and armed forces. 3 Economic Growth resumed, with inflation largely tamed. 3 Social Unemployment 10%, but strong social and family coherence. 3 Role of Islam Secular state, with constitutional checks on use of Islam and armed forces playing watch-dog role 3 Terrorism Kurdish terrorism in slight revival. Bomb attacks on Jewish and British targets in November 2003. Otherwise, high level of personal safety. 3 Risk Rating 1, low, to 10, high Source: IBS, March 2007 IBS 5 III Economic Trends in Jewellery Turkey's jewellery production has been growing for the last 15 years after the government privatised gold imports, authorised the establishment of a gold exchange, and permitted gold banking. Prior to this, the industry had been living in a state of semilegality and virtual siege. Turkey’s jewellers produced 222 tonnes fine gold equivalent of jewellery in 2006. This production is equivalent to 296 tonnes of jewellery gold. Additionally, over $500 million of precious stones were imported in 2006, according to the deputy chairman of the Istanbul Chamber of Jewellery: mostly of these imports were unregistered due to the high special consumption tax applicable on precious stones. Approximately 37% of jewellery demand is accounted for by domestic consumers, 18% is exported directly and 23% is exported indirectly. The majority of the remaining 22% is used in minting and hoarding and a small part is exported as bullion. FINE GOLD BALANCE, 2003-06 Fine gold tonnes Bullion Imports Temporary Bullion Imports Jewellery Imports Scrap Total Supply 2003 214 12 6 55 287 2004 251 13 7 60 331 2005 269 12 12 62 355 2006 193 10 13 86 302 Jewellery Exports Luggage Trade & Tourists Jewellery Sales to Locals New Coin Minting & Hoarding Bullion Exports Total Demand 53 70 99 48 17 287 60 73 130 49 20 332 68 77 138 54 20 355 53 69 113 61 6 302 Jewellery Fabrication Total Fabrication Jewellery Offtake New Coin/bar Offtake Total Offtake Source: World Gold Council 217 264 152 47 199 256 304 191 48 239 271 324 200 53 253 222 283 167 61 228 On the development of the sector, Selami Ozel, CEO of Favori, a leader jewellery producer, says: “The sector made its greatest move forward in early 1990s, since then experiencing significant changes in production, wholesale and retail structures. Having resolved its infrastructural problems including gold exchange, gold banking and inflationary accounting, the sector now faces the challenges of being a global player. We have to upgrade our sector-specific training standards and shift from family managed companies to professionally managed corporate structures.” IBS 6 Emphasizing that Turkey has realized significant developments in both domestic and export markets in the gold sector since the early 1990s, Murat Akman from the World Gold Council, sets the reasons for the success achieved as the liberalisation of gold imports and the permission given to gold banking. "Following the liberalization of the gold market, production quality increased in the first instance and later imitation products were replaced by the works of our designers. In recent years, following jewellery trends abroad has begun to be replaced by activities to create and lead the fashion in the jewellery world." The main developments in the last decade are as follows: Shift from very small manufacturing workshops to industrial plants: Now, there are two manufacturers with more than 1,000 workers and around 100 manufacturers with more than 100 workers. A decade ago, the biggest manufacturers were with around 100 workers. Branded jewellery: The larger producers have created their own brands and established retail chains. In addition to some 30,000 independent jewellery stores, franchise stores have begun to be established. Now, around two hundred jewellery stores have begun to try to create a brand name. However, at the consumer level in export markets, Turkey has not been able to create its own brand/s.. Manufacturing technology and design: The bigger manufacturers were able to upgrade technology by importing up to date machinery and employing metallurgical, mechanical and industrial engineers. The machine park of the industry has been upgraded and a good level of technology has been reached. Exports: The sector has progressed remarkably in the two decades and Turkey has entered the list of countries with annual exports of over 100 tonnes. Diamonds have been gaining popularity. With inflation declining in the last couple of years, jewellery companies, just like their counterparts in other sectors, have been forced to focus on operating profits and to start to diversify their product ranges. The share of jewellery with precious stones and, in particular, diamonds, is estimated to have risen from around 7% to over 15% in recent years. Tendency to import: The deputy chairman of the Istanbul Chamber of Jewellery states that there is a tendency, which accelerated in 2006, towards importing and selling in Turkey, rather than producing here. He believes that the main driver triggering this tendency is the increasing per capita income. IBS 7 IV Foreign Trade There are three types of exports. One is the export often referred to as official, comprising shipments abroad by jewellery producers and traders. There is also the ‘luggage trade’, sales to freelance exporters, often made in the Laleli district of Istanbul. The third element are products that tourists buy for themselves and take home with them. No official figures are available for either luggage trade or tourists’purchases, but combined they are generally assumed to be slightly over official exports. Official exports totalled $1.32 billion in 2005 and $1.75 billion in 2006, according to the Turkish Statistical Institution (Turkstat). The statistics of the Istanbul Precious Minerals and Jewellery Exporters’ Association differ from the Turkstat data: they calculate jewellery exports as $1.07 billion in 2005 and $1.17 billion in 2006. The difference is mainly attributable to the gold (tariff code no 7108): Turkstat gold export figures are $135 million for 2005 and $632 million for 2006, while the Association gold export figures are $19 million for 2005 and $108 million for 2006. In terms of the volume exported, the EU was Turkey’s biggest client. In terms of price, the North American market purchased the most jewellery from Turkey. Turkey exports jewellery to 136 countries. Gold-made jewellery exports comprise over 90% of all jewellery exports. The major destination countries for jewellery exports were the USA, the United Arab Emirates, Italy, and Germany. Turkey imported fine gold varying in between 193 and 269 tonnes in the last four years. In jewellery, Italy ranks first with $151 million while in imitation products China and India lead the market. JEWELLERY FOREIGN TRADE, 2004-06 $ ‘000 2004 2005 2006 IMPORTS Pearls and Precious Stones Precious Metals Jewellery Gold Others Total 24,479 52,535 178,907 3,484,521 28,428 3,740,441 34,927 58,365 238,847 3,894,736 37,105 4,226,875 31,613 67,540 292,178 3,980,301 109,141 4,371,631 EXPORTS Pearls and Precious Stones Precious Metals Jewellery Gold Total 989 7,977 964,573 90,407 1,063,946 2,743 17,358 1,170,304 135,357 1,325,763 1,724 32,628 1,084,127 632,939 1,751,418 Source: Turkstat IBS 8 2004 Countries $ (‘000) JEWELLERY IMPORTS, 2004-2006 2005 Countries $ (‘000) Countries 2006 $ (‘000) NATURAL OR CULTURED PEARLS AND PRECIOUS STONES (7101-7105) Belgium 10.730 Belgium 13.121 U.A.E India 2.311 India 7.823 Belgium USA 2.232 Hong Kong 2.424 India Thailand 1.629 Switzerland 2.237 Hong Kong Switzerland 1.389 Thailand 1.736 Thailand Israel 1.055 Ireland 1.699 China Hong Kong 1.047 U.A.E 1.411 South Korea Ireland 988 USA 1.242 USA China 609 China 1.041 Israel Others 2.490 Others 2.193 Others Total 24,479 Total 34,927 Total 8.909 7.286 3.290 2.092 1.924 1.825 605 426 371 4.884 31,613 PRECIOUS METALS (7113 to 7117) Belgium 19.123 Germany Germany 11.237 Australia South Africa 6.962 Switzerland Polond 6.327 South Africa Sweden 3.393 Belgium Israel 1.423 Sweden Switzerland 1.266 France Italy 1.003 Poland France 523 Israel South Korea 434 Italy Others 846 Others Total 52,535 Total Switzerland Germany South Africa Italy USA Austria France Spain U.K. Others n.a. Total 24.070 8.650 5.460 2.016 604 278 261 106 3 26.091 n.a. 67,540 JEWELERY, GOLDSMITHS' AND SILVERSMITHS' (7113 to 7117) Italy 79.365 Italy 102.134 Italy U.A.E. 20.042 U.A.E. 33.867 China China 16.867 China 24.394 U.A.E Thailand 15.573 Thailand 20.956 Thailand USA 14.530 USA 14.860 USA South Korea 8.245 South Korea 11.496 South Korea India 4.113 India 6.942 India U.K. 3.751 Hong Kong 5.104 Hong Kong Hong Kong 3.088 Germany 3.846 Germany Others 13,333 Others 15,250 Others Total 178,907 Total 238,847 Total 150.852 29.888 25.488 21.766 12.980 8.460 8.117 7.263 5.673 21,691 292,178 GOLD (7108) Switzerland 2.052.761 South Africa 699.916 Luxemburg 443.042 U.K. 141.755 U.A.E. 48.437 Australia 31.088 USA 24.084 Others 43,436 Total 3,484,521 Source: Turkstat IBS Switzerland South Africa Australia U.A.E. Germany Sweden USA Others Total 18.557 8.271 6.311 5.989 5.659 4.702 2.455 1.832 1.320 1.061 2.208 58,365 2.750.736 936.970 76.084 46.292 14.978 14.250 11.661 43,793 3,894,736 Switzerland South Africa U.A.E USA Russia Germany Italy Others Total 2.486.535 1.308.404 40.258 37.988 16.716 10.156 9.192 71,051 3,980,301 9 JEWELLERY EXPORTS, 2004-2006 2004 2005 $ (‘000) 2006 Countries $ (‘000) NATURAL OR CULTURED PEARLS AND PRECIOUS STONES (7101-7105) U.S.A. 655 U.S.A. 1.806 Greece Thailand 96 Thailand 437 Romania Russia 77 Australia 121 n.a. Ataturk FTZ 52 Belgium 96 n.a. Australia 32 India 70 n.a. Hong Kong 25 Greece 57 n.a. China 18 Ukraine 24 n.a. U.K. 11 Ataturk FTZ 17 n.a. Others 23 Others 115 Others Total 989 Total 2,743 Total 11 5 n.a. n.a. n.a. n.a. n.a. n.a. 1.708 1,724 Countries Countries PRECIOUS METALS (7106 to 7112, excluding 7108) U.K. 5,198 U.K. Germany 2,006 Switzerland Switzerland 282 Germany Norway 149 U.A.E. Romania 90 Thailand Italy 62 Italy Cyprus 48 U.S.A Iran 34 Belgium Others 108 Others Total 7,977 Total $ (‘000) U.S.A Romania n.a. n.a. n.a. n.a. n.a. n.a. Others Total 18 8 n.a. n.a. n.a. n.a. n.a. n.a. 32,603 32,628 JEWELERY, GOLDSMITHS' AND SILVERSMITHS (7113 to 7117) U.S.A. 351,578 U.S.A. 371,277 USA U.A.E. 135,558 U.A.E. 196,292 U.A.E Germany 48,435 Italy 57,211 Italy Italy 47,740 Germany 49,961 Germany Israel 38,531 Russia 47,614 Russia Russia 31,733 Spain 43,782 Spain Libya 30,172 Israel 38,098 Israel Spain 28,132 Lithuania 34,797 Poland U.K. 26,218 Lebanon 33,032 Lithuania Lithuania 24,910 Libya 32,523 U.K. Others 201,566 Others 265,718 Others Total 964,573 Total 1,170,304 Total 294,253 179,396 63,476 59,254 46,069 43,469 38,024 30,753 25,402 24,094 279,937 1,084,127 GOLD (7108) Switzerland U.A.E. Ataturk FTZ Germany South Korea Italy Lebanon Others Total 44.377 43.830 797 471 327 247 163 194 90,407 U.A.E. Switzerland Ataturk FTZ South Korea Germany Lebanon Hong Kong Others Total 7,366 2,570 2,439 2,364 1,611 252 170 161 425 17,358 70.745 60.432 1.802 1.102 414 328 242 292 135,357 Switzerland U.A.E Italy n.a. n.a. n.a. n.a. Others Total 348.747 160.332 2.980 n.a. n.a. n.a. n.a. 120.879 632,939 Source: Turkstat IBS 10 V Cooperation Opportunities between Italian and Turkish Companies Turkey’s jewellery industry has become increasingly self confident. It believes that its larger companies are efficient, low-cost producers who, deprived of international renown, have compensated for this by becoming extremely effective at marketing abroad. That said, many believe there are considerable advantaged of cooperating with Italian companies so as to take advantage of the cachet of the “Made in Italy” label. The companies interviewed by IBS differentiated between the opportunities for and value of cooperation for large companies and for small and medium enterprises (SME). Most interviewees focused on Turkey’s capability of producing quality products at lower cost compared to Italy as a basis of collaboration between the two companies. Level of technology and advanced marketing networks of Turkish companies were also cited as factors contributing to a potential collaboration. Below are some quotations from the interviewees: Alper Hazar, the Deputy Chairman of the Istanbul Chamber of Jewellery “Turkish companies first tried to penetrate export markets via a strategy of cheap labor and low prices, while Italy left the lower-end markets and transferred part of its production to Romania. “The larger Turkish companies have technology and capital, so why should they cooperate with Italians? Cooperation between the SMEs in both countries seems more feasible. Even smaller companies in Italy have the power to set trends. We can work as subcontractors and lower prices further through transferring production from Istanbul to other parts of the country. The competitive advantages of Turkey include its fast delivery capability, ease of communications and level of production quality. “It should be difficult for small-scale Italian companies to produce/import from China as they cannot maintain a permanent presence in China to control the process, while larger companies can afford this. Therefore, it is more feasible for Italian SMEs to cooperate with Turkey. “We export hand-made jewellery, sometimes semi finished, to Italian companies and they add this to their product portfolio and export under the Made in Italy label. And we buy finished, trendy and technological products from them.” Murat Akman, the World Gold Council's General Director in Turkey “Turkish companies are able to produce quality products at a lower cost compared to Italians, meeting the design and quality requirements of global clients in a fast and flexible manner. Turkish companies can deliver at the highest speed and quality standard. Moreover, in recent years, they have reached the stage where they can launch trends, lines and colors at the same time as Italians through working together with international designers and cooperating with fashion setters, while previously they used to learn such things from the Vicenza fair. “On the other hand, Italians, although they are not flexible and customer-oriented, benefit from the fact that the Made in Italy label is superior to Made in Turkey in export markets and there are Italian companies which have established their brand IBS 11 names among the final consumers in these markets. I believe very successful partnerships can be established combining the production capacity, customeroriented approach and drive for success of Turkish companies with the high brand value and image of Italian goods.” Haluk Sarıaltın, Export Director of Goldas According to Mr Sarıaltın, the two countries can cooperate mainly on three areas: Design: Turkey obtains services of independent design houses in Italy Technology: Turkey obtains production technology from Italy. This should cover production of custom-made machinery together with transfer of production process and knowhow as well as related consultancy services. Subcontracting: Both medium scale and large Turkish companies, including Goldas, should be open to serve as subcontractors to Italian companies. Currently, Turkish companies prepare their collections and send these as “no-name” products to their counterparts in Italy. Exclusive subcontracting is not widespread. He added that: “Turkish companies have not been able to establish themselves as a brand name. As Goldas, we have been focusing on this issue since 1995, creating a couple of brands and opening up stores abroad. Yet we are not a brand.” According to Mr Sarıaltın, the advantages of subcontracting to both parties are as follows: “Turkey has the experienced workforce in this area and Italy can use this, at least for the products directed to competitive markets, i.e. products addressing to the middle group. In general, Turkey needs to create employment for its large workforce, while large companies, including Goldas, need to do mass production, producing commodity products in great volumes since they, like others of our first 100 jewellery companies, employ between 100-2,000 people.” On the dilemma that Turkish textile manufacturers face that subcontracting and brand creation do not go hand-in-hand, Mr Sarıaltun says: “Textile and jewellery differ from each other to a great extent. Branding is of utmost importance in textiles, while in jewellery maybe only 10% of the total market has a brand name.” He added that Turkey is ahead of Italy in marketing: ”Italians sell their products almost while they sit at their houses. Even the smallest Italian jewellery companies are able to sell to the whole world taking advantage of the “Made in Italy” umbrella. As such they can afford to stay as family companies, without bothering themselves with marketing and expansion problems. On the other hand, as Turkish companies, we are all over the world with our marketing people and we can help Italians to grow through our wide marketing network abroad and high production capacity at home. In sum, Turks with their marketing and financing capacity and Italians with their production technology and design skills make a good combination.” IBS 12 VI Legal Framework Turkey has a well established legislative base for the protection of intellectual property, harmonizing its legislation on industrial property rights with that in the EU prior to its customs union with EU countries in 1996. It has enacted laws on protection of trademarks, industrial designs, patents/utility models and geographic indications. The Turkish Patent Institute has been established for the purpose of registration and protection of such industrial property rights. The main system concerning the protection of industrial rights is based on registration, which is similar to that of the European Union and the other countries that are party to the Paris Convention. Turkey has ratified and acceded to the European Patent Convention and established specialized courts in intellectual property matters. It is party to over ten international agreements, including the Brands Law Agreement and the Hague Agreement on International Registration of Industrial Designs (Geneva Text). By acquiring a sound set of IPR rules and a transparent and reliable monitoring system, Turkey creates better opportunities for strengthening foreign investment. Despite these positive steps, however, implementation remains an area for concern and piracy and counterfeit remain serious problems in the country. Diamond, pearl and coloured precious stones which are imported in order to be used in jewellery production are subject to a 20% special consumption tax. In retail sales, diamond, gold, pearl and coloured precious stones are free from value added tax. IBS 13 VII Imitation and Brand Counterfeiting Turkey has always been a trend follower, selling to export markets at lower prices, according to the experts and practitioners interviewed by IBS. Mr Hazar argues that this trend is now turning around, with exact copying of foreign brands being replaced by producing products similar to the best sellers. He believes this too will decline over time. The single most imitated brand in Turkey is Bulgari; this is sold by almost 30% of the jewellery stores, according to Mr Hazar. Murat Akman, the World Gold Council's general director in Turkey, comments: "In recent years, the act of following the jewellery trends abroad has begun to be replaced by activities to create and lead the fashion in the jewellery world. Previously Turkish companies learned the trends, lines and colors in jewellery from the Vicenza fair. In recent years, they are working together with international designers and cooperating with fashion setters, launching the similar products to the market concurrently with the Italian companies.” On this issue Haluk Sarıaltın, Export Director of Goldas said: “Our companies used to imitate the foreign brands one-to-one. But as export activities and tourism develop, jewellery companies have attached increasing importance to creating their own designs. Today, the first 100 companies employ their own teams of designers. In Goldas, we have 20 people solely engaged in design work. There are also some free-lance designers in the market place. This imitation and counterfeiting business is something to disappear as time goes by.” The Turkish jewellery industry has brought the imitation/counterfeiting issue on to its agenda starting from 2003. The Chamber of Jewellery Manufacturers has been organizing meetings and seminars to promote the concept of design since 2004. In Goldnews a section is allocated to design. The Chamber of Jewellery Manufacturers has been supporting design schools at the secondary and tertiary levels and helping graduates in their employment. Cases alleging imitation have become more frequent since 2005. In 2006, with the aim of combating counterfeiting, the Chamber of Jewellery founded the Committee to Combat Against Imitation Design as a facilitating mechanism. IBS 14 VIII Contacts Sector Journals: Altın Dünyası (Turkish) : Monthly newspaper. By Yayın Dunyası Gazetecilik. Website : www.yayindunyasi.com Gold News (English-Turkish) : Bi-monthly. Jewellery. Website : www.goldnews.com.tr RFJ World (English): www.rotaforte.com.tr Quarterly. Safir Dergisi (English – Turkish). Website : www.girisimyayincilik.com By Istanbul Chamber of By Bi-monthly. Rotaforte. Website : By Girisim Yayıncılık. Sector Associations: Turkish Association of Jewellers (Istanbul Precious Minerals and Jewellery Exporters’ Association) Address: Dıs Ticaret Kompleksi, A-Blok Çobançeşme Mevkii, Sanayi Cad., 34530 Yenibosna, Bahçelievler, Istanbul Tel:212-4540000 Fax:212-4540001 Website: www.taj.org.tr e-mail: [email protected] Istanbul Chamber of Jewellery Address: Piyerloti Cad. Saka İş hanı No: 11-13 Kat:3, Cemberlitas, Istanbul Tel: 212-5162757 Fax: 212-5161278 Website: www.iko.org.tr e-mail: [email protected] World Gold Council Turkey Office Address : Mim Kemal Öke St. , 8/4 Dost Apt. , Nişantaşı, Istanbul Tel: 212 225 29 63 Fax: 212 225 1913 Website : www.gold.org E-mail : [email protected] IBS 15 Major Turkish Producers, Importers and Distributors Altınbas Aris Arpas Atasay Bag Jewellery Baymonte Favori Goldas Golden Line Gulaylar Kozan Kuyumculuk Regold Roberto Bravo Sade Is Sezgin Jewellery Zen Turizm IBS Address Tel Fax Web site Divanyolu Caddesi No:80 Sultanahmet , Istanbul Nuruosmaniye, Şeref efendi Sok. No: 53/1 Eminönü, Istanbul Fatih Cad. Gülsever Sok. No:26 Merter 34010 Istanbul Merkez Mah. Sedir Sok. No: 7, Yenibosna, Istanbul 62 West 47th Street, Suite 1607, New York, NY 10036, USA Nuruosmaniye Cad., Orient Centre, Kat 7, No:707, Nuruosmaniye, Istanbul Yalçın Koreş Caddesi No:48 Güneşli / İstanbul Tel: 24. Kayalar Sok., Merter, Istanbul Merkez Mh. 29 Ekim Cd. No: 6, Yenibosna,Istanbul Nuruosmaniye Cad. No 63, Cagaloglu, Istanbul Nuruosmaniye Cad., Serefefendi Sok., Ipek Han Kat 1 No: 32/4-5 Cagaloglu, Istanbul Vezirhan Cad. No.72-74 , Çemberlitaş, Istanbul Vezirhan Cad. No: 101 Çemberlitas, Istanbul Serefefendi Sok. No : 20, Cagaloglu, Istanbul Gümüşpala Mah. Şükrü Bey Durağı E-5 Yanyol No: 140/A Sezgin İş Merkezi Kat 4 Avcılar, Istanbul Molla Fenari Mah. Şerefefendi Sok. No:35 Eminönü,İstanbul 212-520 57 91 212 518 13 74 212-520 57 94 212-5181376 www.altinbas.com www.e-aris.com 212-5579120 212-6523366 212-382-2232 212- 5048167 212-382-2562 www.arpas.com.tr www.atasay.com www.bagkuyum.com 212-5220200 212-5220205 www.baymonte.com 212-410 26 26 212-4102727 www.favori.com.tr 212-6374000 212-639 72 05 212-5192828 212-520 7800 212-6374007 212-693 70 94 212-5280227 212-5207781 www.goldas.com www.goldenlinejew.com www.gulaylar.com www.kozan.com.tr 212-520 23 85 212 520 03 87 212-5267969 212 694 84 39 212-526 42 212 513 50 63 212-5264074 212 694 84 35 www.regold.com.tr www.robertobravo.com www.sadeis.com.tr www.sezgin.com.tr 212-520 00 44 212-520 04 46 www.zenpirlanta.com 16 Sector fairs Sector Fairs in 2007 Fair İstanbul Jewellery Show I Gold Antalya 2007 3. Çukurova Altın ve Mücevherat İstanbul Jewellery Show II GOLD ANKARA 2007 IBS Date 21-25 March 12-15 April 20-22 April 30 August-2 September 22-25 November City Istanbul Antalya Adana Istanbul Ankara Organizer Rotaforte Reklam Fuar Sereks Fuarcılık Start Fuarcılık Rotaforte Reklam Sereks Fuarcılık 17 IBS 18