Pandemic, Ukraine-Russia war, events in the Middle East and more… Topics that directly affect global trade are increasing. Countries that see the devastating consequences of concentrating production in a single country are looking for a reliable supplier besides China. If Turkiye can take the right steps, it can become a prominent country in the new era…
In recent years, we have been witnessing important events that directly affect world trade. Although some signs appeared beforehand, the biggest break was undoubtedly experienced during the Covid-19 period.
What happened in the process has led to the questioning of the approach of especially Western countries, which says, “I can have it produced cheaply in China, easily transfer it to any part of the world, and sell it with a higher profit margin.” In addition, during the pandemic period, it was painfully experienced how concentrating investment, production or supply chain in a single country could lead to troublesome consequences.
The expected recovery after the pandemic did not come due to the global recession, the Russia-Ukraine war, the world’s geopolitical blockade, the rapid development of technology shaking the global production dynamics, and some other changing balances.
Naturally, the world, especially two giants such as the USA and the European Union, has begun a new search for investment channels and supply chains. The agreements, new trade routes or development plans we hear from different parts of the world these days are reflections of the new era.
At this point, one of the most important questions is how Turkiye can be positioned in the new order? It is difficult to predict whether we will be able to directly use the fact that ‘Anatolia is in a unique geopolitical position’ in global trade. However, Ankara appears to have a historic opportunity in front of it if it takes the right steps.
‘The West’ wants production soon
The pandemic is very important in showing how a disruption in China affects the world. Due to the lessons learned from both that period and subsequent developments, the EU wants to focus on production as close as possible, known as ‘near-shoring’, in the new process.
In its most basic form, this concept means that countries that are close to each other can trade more. It is aimed to progress faster in an environment where the solution to the problem becomes more difficult as distances get longer.
When we look at both Turkiye’s geopolitical position and 2023 foreign trade figures, it is evaluated that an alternative process may begin between the EU and Turkiye. The EU, our largest partner in exports, ranks first as in previous years, with a total of $104.3 billion, according to last year’s official foreign trade data.
As you may remember, Ankara increased its exports to non-EU European countries by 8.3% last year, despite the stagnation in the markets.
What does the concept of China+1 mean?
Another important issue today, when geopolitical fragility has seriously manifested itself, is the desire to implement the China+1 concept. The main purpose here is that the idea of concentrating investment or supply channels in a single country is not as attractive as it used to be.
For a while, the world flocked to the ‘fastest and cheapest’ option, and China rose to the leading role of the supply chain from the end of the process. Nowadays, the ‘safe trade’ approach has gained importance instead of ‘cheap and fast’.
The road map considered for the solution, in its most general form, is to include alternative countries in the global supply chain. However, the main point that should not be forgotten at this point is that this change will not happen from today to tomorrow. According to the reports of the Organization for Economic Co-operation and Development (OECD) and the IMF, China’s influence in this field seems to continue in the coming years, even though it was seriously injured, especially during the pandemic period.
Vietnam, India and other countries can be alternatives to China
There are different opinions about countries that could be alternatives to China. Here, some countries stand out with their population, production capabilities and proximity to relevant markets.
Vietnam, which has a population of approximately 100 million, is one of these countries where the USA says ‘We want to raise our relationship to the level of a comprehensive strategic partnership’ and everyone from Germany to Russia, from China to other countries in the region pays attention.
Another option is India, which the USA describes as an ‘indispensable partner’, which continues to buy cheap energy from Russia despite the embargoes and attracts serious investments to the country. However, it is not in a structure that can fully adapt to the sensitivities of European companies, such as low carbon emissions and ‘green production’.
Thailand, Mexico, Malaysia and some African countries are alternative stops with similarly pronounced names.
Is Turkiye an ideal option?
The answer to the question of where Turkiye will be positioned in a period when the search for alternative production regions and alternative routes is increasing is very important. Because this process has a value that can directly affect the future of the country in political, economic and sociological terms.
Could Turkiye be a good alternative for the West, which wants production in areas close to itself? First of all, Ankara somehow managed to turn the wheels during the pandemic period and the Russia-Ukraine war.
Considering the alternative logistics axes and energy corridors that have been talked about in recent years, Turkiye is again positioned at the center. Being in the middle of a logistics network worth trillions of dollars, experience in many different sectors, and well-established infrastructure and superstructure capabilities are other advantages that stand out.
One of the common points that representatives from different sectors meet on the subject is that an ‘efficient, fast and economic’ network in the region cannot be established without Turkiye. The positive news to be received in sectors such as automotive, ready-made clothing and white goods during the reconstruction of the supply chain is not a surprise. According to some people who follow the process closely, Ankara must take steps in areas such as digital economy, artificial intelligence, green technology and high value-added production.
As a result, if a correct road map can be implemented, Turkiye is expected to achieve significant gains by taking advantage of the opportunities that may arise for alternative countries.
Source: Trthaber / Prepared by Irem Yildiz