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Rise of the Anatolian Tigers

27 August 2014

A group of small family businesses centres have become major international players that now present an opportunity for investors, finds Nicholas Clayton

Read more: Anatolian Tigers Turkey SME

Over the past three decades, Turkey has watched the Anatolian Tigers grow from small and medium-sized enterprise (SME) entrepreneurs in the Turkish interior to conglomerates on the country’s top company lists.

Although these business leaders have traditionally been cool to the idea of foreign partnerships, analysts say the new generation of Anatolian Tigers has global ambitions that present lucrative opportunities for investors.

The term Anatolian Tiger first emerged in the 1980s as entrepreneurs from Turkey’s conservative and underdeveloped heartland began taking advantage of the country’s liberalisation agenda to expand their businesses aggressively into companies with thousands of employees.

"Today the profile of an Anatolian Tiger company is a hard-working, family-based manufacturing firm," says Istanbul-based business intelligence specialist Gokay Turanlioglu.

During the first half of the 20th century, much of the industrial activity in central Anatolia was focused on textiles, but, as globalisation drove up competition in the sector, the industrial activity shifted to consumer goods and secondary products feeding other Turkish industries.

However, some signature Anatolian Tiger companies remained in textiles, with Taha Textile being one of the sector’s most notable successes. Founded by three families in 1988, it signed a lucrative agreement to supply fabric to French clothing company LC Waikiki that same year. It grew so rapidly in the years that followed that it bought out LC Waikiki in 1997, thus making it a completely Turkish brand.

Islamic Calvinists
In 2005, the European Stability Initiative released a report describing the Anatolian Tigers as "Islamic Calvinists" which had succeeded based on a mentality of selfreliance, thrift and reinvestment of profits. However, these qualities have made Anatolian Tiger companies traditionally less accessible to foreign investors.

Mehmet Gun, founding partner of Istanbul-based law firm Mehmet Gun & Partners, says foreign investors looking to partner Anatolian Tiger companies should be aware that cultural differences will present a number of challenges when negotiating a deal.

To begin with, the family-run enterprises that typify the Anatolian Tiger model tend not to be interested in selling stakes to strategic investors, but are open to the idea of joint ventures with foreign companies, according to Gun. But, given that many of these companies continue to be led by the entrepreneurs that built them from the ground up, they also tend to require significantly more persuasion concerning how a foreign partner can help move things forward, he says.

Nonetheless, after prospering under a booming Turkish economy in the 2000s, the Anatolian Tigers have acquired global ambitions that require close cooperation with foreign companies.

This is also in part due to a generational shift. Whereas families in central Turkey faced a lack of educational opportunities when the Tiger movement began, many of the children of the first Anatolian Tiger entrepreneurs have now studied at elite business schools across the western world.

As they have returned to take up the reins on the boards of their family companies, Turanlioglu says they have brought global vision and western business practices with them.

Gun says they are now increasingly looking for opportunities for global expansion, and provide unique opportunities for foreign firms seeking a partner to help them penetrate difficult markets in the former Soviet Commonwealth of Independent States (CIS), the Middle East and Africa, Gun said.

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