Boosting Rural Areas Through Business Investment

Turkey
Turkish Trailblazer: Boosting Rural

Areas through Business
Investment

Prepared by Murat okgezen
Reviewed by Aline Kraemer
Sector Consumer Products
Enterprise Class Large Domestic Company

Case Study Turkish Trailblazer: Boosting Rural Areas through Business Investment 2
Executive Summary
This study centers on a clothing business run by a female entrepreneur in Turkey. The
entrepreneur, Aynur Bekta, achieved success by breaking from conventional business
practices and investing in poorer parts of Turkey. The study discusses her business and
investment strategiesstrategies that have boosted her company and the economic and social
welfare of rural areas of Turkey.
To achieve success, Ms. Bekta and her company, Hey Textile, weaved together the clothing
industry with an innovative and forward thinking business plan.
Ms. Bekta started her clothing business at the age of 38, after a successful career in banking.
She opened her first production unit in Istanbul, like many others in the business, and within
10 years Hey Textile, also known as Hey Tekstil, had become one of the largest businesses in
Turkeys clothing industry.
On the way to business success, however, Ms. Bekta encountered several obstacles including
intense competition, an unskilled workforce in certain parts of Turkey, and elimination of
global trade barriers. In response to global competition, Ms. Bekta shifted her production
units to Turkey's poorer regions, where labor costs are lower and government incentives
helped spark regional development. Given the lack of skilled labor in the area, Hey Textile
also financed training programs (later funded by Turkeys State Employment Agency). With
the help of government incentives, Ms. Bekta opened four new production units in
impoverished parts of Turkey in six years.
Hey Textiles investment has improved the quality of life in impoverished parts of Turkey.
Income generated by Hey Textile jobs, for instance, provided money that could then be spent
in local shops and on local services. The jobs also empowered women in rural Turkey, and
provided them with income and independence.
This case study examines how Ms. Bekta clothing company helped spark this socio-
economic transformation. The study includes background information on the Turkish
economy and clothing industry, Ms. Bekta distinctive investment strategies, the
governments role as a facilitator for these strategies, her business model and challenges
overcome, strategic partnerships, lessons learned, and business and socio-economic results.

Context
Turkey bridges two continents, its borders stretch from southeastern Europe to southwestern
Asia. The country has a population of 76 million, the majority of whom are Muslim, and a
total land area of 814 thousand square kilometers.
1

Turkey has one of the worlds largest economies, with a gross domestic product of roughly
US$ 657 billion (as of 2007).
2
Agriculture contributes about 10 percent to the nations GDP,

1
CIA, World Factbook -Turkey, available at www.cia.gov [Nov. 10, 2009]
2
World Bank, Country Brief (2009): Turkey, available at Country Brief, www.worldbank.org., [Nov. 10,
2009]

while industry accounts for 30 percent and services 60 percent.
3

Due to a mixture of structural reforms that have been in place since the mid-1980s, the
Turkish economy has managed to maintain a high average growth rate in recent years. Per
capita GNI based on Purchasing Power Parity has increased more than fourfold, rising from
US$ 3,040 to US$ 12,810 between 1985 and 2007, and inflation fell to single-digit numbers
from the 100 percent levels of the 1990s.
4

Even though the countrys strong economic performance has raised average welfare, the
number of people living below the national poverty line is still 27 percent.
5
In addition, those
living in remote rural areas and in the shanty towns of large cities have been especially hard-
hit by poverty. Turkey also has large socio-economic disparities that have existed for
decades.
6

Table 1. Selected socio-economic indicators by geographical regions in
Turkey, year 2000

Region GDP per
capita
(billion TL)
Percenta
ge share
in GDP
Literacy
rate
(percent)
Infant
mortality rate
(percent)
Urban-
ization rate
(percent)
Per capita
electric
consumpt
ion (Mwh)
Share in
total bank
deposits
(percent)
Marmara 2,657 37.0 92.4 3.9 79.1 2.2 52.3
Aegean 2,130 15.3 89.8 4.0 61.5 1.8 9.9
Central 1,820 17.0 90.3 4.2 69.3 1.1 24.6
Mediterranean 1,726 12.1 88.2 3.7 59.8 1.5 6.5
Black Sea 1,396 9.5 85.8 4.2 49.0 1.0 4.2
Southeastern 954 5.1 73.2 4.8 62.7 0.9 1.2
Eastern 841 4.1 77.7 5.3 53.0 0.6 1.3
Source: Dincer et.al. (2003)

3
World Bank, World Development Indicators, [Sept.2, 2009]
4
ibid.
5
ibid.
6
Due to lack of data at the regional level, indicators for the year 2000 are used. Since socio-economic
conditions have remained largely the same, the figures provide a a reasonable approximation of current
conditions.

These disparities are also self-perpetuating due to a number of issues including regional
differences in infrastructure and availability of skilled workers. As a result, cities with solid
infrastructure and a large pool of skilled laborparticularly Istanbul, zmir and Ankaraattract
the lions share of investment. According a 2008 survey by the Istanbul Chamber of
Industry, two-thirds of the countrys top 500 industrial firms are located in these three biggest
cities. Istanbul alone hosts 227 of the top 500 industrial firms.
7

To offset such regional differences, the Turkish government enacted the Employment
Encouragement in the Underdeveloped Regions law in 2004. In 36 provinces with an average
per capita income less than US$ 1,500 (using 2001 data), the measure provides the following
incentives:
Exemption from 80 percent to 100 percent of employers share of income tax and social
insurance contributions (calculated by the minimum wage for each additional employee)
Provision of land by the Turkish Treasury or local governments at reasonable rates so
long as land is unavailable in organized industrial zones
For investors, the income tax exemption has meant savings of about 20 percent in labor costs
at minimum wage levels, and the land allocation has considerably reduced investors initial
capital requirement. The government also assumes a significant portion of the risks involved
in investing in these regions.
Even so, other national policies designed to create strong economic performance in Turkey
have not succeeded in creating employment opportunities to match. The unemployment rate
remained stuck at about 10 percent in the 2000s, and unemployment has replaced inflation as
the number one economic concern in recent public opinion polls.
Unemployment among youth is also a large problem in the country. As recently as 2006, 18.7
percent of those aged 15-24 were unemployed in the country. Youth unemployment is
especially problematic in Turkey, since this age group makes up almost 18 percent of the
countrys total population.
8

Gender is another area of economic inequality in Turkey. Although women have had equal
rights since the early years of the Turkish Republic, gender inequalities still define much of
womens status and living conditions. For instance, women in Turkey participate in economic
activity at a lower rate than men, particularly in rural areas, and earn about three times less.
Traditionally, access to educational opportunities for women is also restricted, and as a result
women have lower rates of literacy and school enrollment. They are also underrepresented in
politics and business (Table 2).

7
Istanbul Chamber of Industry, Turkeys top 500 industrial enterprises, http://www.iso.org.tr
8
United Nations Development Program, Human development Report 2007/2008, Fighting climate
change: Human solidarity in a divided world, New York UNDP, 2007

Table 2. Selected gender related indicators of Turkey
Economic activity rate (female rate as percent of male rate, aged 15 and older) in 2005 36
Ratio of estimated female to male earned income 0.35
Adult literacy rate (ratio of female rate to male rate), 2005 0.84
Combined gross enrollment ratio for primary, secondary and tertiary education, female (percent),
2005

64
Combined gross enrollment ratio for primary, secondary and tertiary education, male (percent), 2005 73
Seats in parliament (percent held by women) 4.4
Legislators, senior officials and managers (percent female) 1999-2005 7
Professional and technical workers (percent female), 1994-2005 32
Source: Human Development Report 2007/2008

TURKISH CLOTHING INDUSTRY
Clothing is one of the Turkish economys main drivers in terms of industrial production,
employment and export earnings. Nearly 8 percent of Turkeys manufacturing industry is in
the clothing sector and the industry contributes a 4.05 percent share of Turkeys total
industrial output. Due to the labor-intensive nature of production, the sectors share of
industrial employment is also three times higher than its contribution to manufacturing output
(Table 3).

Table 3. Clothing Industry in Turkish Economy
Share in total manufacturing industry added value (percent) (2004) 7.79
Share in total manufacturing industry output (percent) (2006) 4.05
Share in total manufacturing industry employment (percent) (2006) 12.94
Share in total manufacturing industry import (percent) (2007) 1.01
Share in total manufacturing industry export (percent) (2007) 11.68
Source: Dogruel and Dogruel, p.141
Raw material and labor are the two main components of the clothing industry. Raw material,
particularly knitted or woven fabrics, and ancillary materials together make up about 56
percent of the total cost of production.
9
Since raw material and labor are generated largely
from the local market (see Table 3), the clothing industry has a sizeable impact on the
development of the Turkish textile industry and its contribution to the economy as a whole is
greater than the numbers alone show.
In the mid-1980s, Turkey embarked down a path paved with bold export-oriented economic
policies. Turkish clothing companies used proximity to Europe and low labor costs to their
advantage, entering European markets with great success. The Customs Union eliminated
quotas and tariffs with the European Union in 1995, providing further access to the market

9
Istanbul Ticaret Odas, Hazr Giyim sektr ve in mallaryla rekabet gc [Clothing industry and
competitiveness with China], ITO Publications, No. 15, 2007, p.32

and strengthening Turkish exporters position in Europe.
However, as the new millennium approached, the horizon turned gloomy for Turkish textile
and clothing exporters. Beneficial quotas on textile and clothing established by the Uruguay
Round
10
,ended in early 2005. With the elimination of these quotas, Turkish exporters found
themselves in direct competition with China and other Asian countries with low labor costs.
Currently, the clothing industry employs about 1.5 million people in Turkey. The industry is
labor-intensive, with labor costs consisting of about 30 percent of total expenses.
11
Producers
are under heavy pressure to keep labor costs low to remain competitive, and even though net
wages are relatively low, many companies consider taxes and social security payments a
burden that makes them unable to compete. Therefore, tax evasion through irregular
employment is very common in the sector. Officials estimate that more than half of the
sectors workforce is employed outside the social security system.
12
The industry is also
heavily dependent upon female labor because of the cost advantage.
Turkeys clothing industry is also export-oriented, with half of the products sent abroad.
13

According to the World Trade Organization figures, Turkey is the worlds fourth-largest
clothing and apparel products provider.
14
About 80 percent of total export products are sent to
the United States and to EU countries.
15
While a few of the industrys producers export under
their own brand names, most operate as outsourced production units for worldwide brands.
The number of firms in the sector is estimated at 11,000, with the vast majority of them in
Istanbul. The bulk of the remaining firms are located in zmir, Adana, Bursa and Aydn.
16

Hey Textiles Role
17

Aynur Bekta, founder of Hey Textile, was born in 1951 in erke in Central Anatolia. At the
age of 13 she went to live with her aunt in Ankara, Turkeys capital city, to study at a better
high school. She continued her education at the Ankara Academy of Economics and
Commercial Science, and after graduating, found work in a bank. She climbed the ladder very
quickly, and became a branch manager at the age of 27. While working for the bank, she met
and married her second husband, Sreyya Bekta.
At the age of 38, after her successful career in banking, she decided to start her own business.
At first she considered starting a car dealership, but she did not have enough capital. With the
help of a friends husband experienced in the clothing industry, she then turned to clothing.

10
Uruguay Round was the 8th round of multilateral trade negotiations conducted in the framework if
GATT (General Agreement on Tariffs and Trade) and transformed GATT into World Trade Organisation
(WTO).
11
Ibid., p.32
12
Doruel Fatma and Suut Doruel, Trkiye Sanayiine Sektorel Bak [Outlook of Turkish Industrial
Sectors], TUSIAD Publications, Istanbul, 2008, p.137
13
Ibid., p.133
14
Ibid. 7, p.37
15
Ibid. 7, p.37
16
Ibid. 9, p. 138
17
Unless otherwise mentioned all information about Hey Textile is based on interviews with the
entrepreneur Aynur Bekta

She opened her first sewing factory in 1992 with US$ 75,000 in personal savings. The
production facility was in a small, rented space of 500 square meters in an Istanbul
commercial building. She began with three employees sewing product samples she could
show to representatives of international brands in Turkey. After six months of marketing her
products to potential customers, she landed her first order.
My husbands brother was working at a company which sells organic products, Ms. Bekta
said. I offered to sell [them] a non-dyed natural t-shirt. His boss [liked] the product. This
was my first turning point. In 1992, I was even selling t-shirts to Greenpeace. We earned a lot
of money.
18

The business then grew rapidly. Her husband left his banking job to join the companys
management team and guide its financial development. (The Bekta family has two sons, as
well, who have joined the family business.)
In the early 2000s, Ms. Bekta realized that Hey Textiles long-term success depended on
offering more value-added products, given that Turkeys cost advantage was threatened by
low-cost competition in such countries as Bangladesh, China, and Vietnam. As a result, she
opened a London design office in 2002, which now employs 15 people. In the past, customers
came to her with their own designs to sew, but many now visit the London office seeking
company designs.
Today the company is a well-established, successful export operation, continuing to grow its
customer base and production capacity. Hey Textile has an annual profit of US$ 500 million
dollars, employs approximately 4,000 workers and sells clothes around the world. According
to the Istanbul Chamber of Industry, in 2009 the company ranked 237
th
amongst the Top 500
Industrial Firms. In the clothing industry, the company is currently in the top 20 in terms of
employment, and in the top 50 in terms of export volume in Turkey.
Capitalizing on her success, Ms. Bekta has expanded into new areas. Presently, Hey Textile
companies operate in four different sectors: textiles, tourism, foreign trade and technology.
Furthermore, Ms. Bekta is active in civic affairs. From 2005 to 2007, she was president of
the Turkish Clothing Manufacturers Association. Currently, she is president of the Women
Entrepreneurs Board of the Union of Chambers and Commodity Exchanges of Turkey.

Business Model
Hey Textile manufactures clothes made of cotton (shirts, slacks, dresses etc.) for international
brands including Levis, Esprit, H&M, Mango, Best Seller and Tesco. Clients can use their
own designs or choose models created by Hey Textile. The company buys domestic raw
materialbasically knitted or woven fabric and ancillary materialsand transforms them into
clothes in its production facilities. Then, finished goods are sold to customers for a previously
agreed upon price. As a private enterprise, Hey Textile depends on its profits for its financing
and for business survival. The company also constantly seeks ways to reduce costs to remain
competitive.

18
Source: Interview with Aynur Bekta (September 2009)

Clothing firms operate in a very competitive market. The elimination of trade barriers and the
arrival of new players such as Southeast Asian nations have stiffened competition. World
production has also shifted towards countries with cost advantages. At the same time,
countries attracting new investment have benefitted the most through jobs created and other
spillover effects. Such competition has also inspired companies to search for new ways to
reduce costs. Since the price of raw materials is determined by the global market and more or
less the same everywhere, one way businesses reduce costs is by shifting production to
regions with lower wages.
Hey Textile has followed this business practice as well. The companys headquarters in
Istanbul initially offered many advantages. But the cost of production in Istanbul continued to
increase. Massive migration into the city also raised rents and Istanbuls higher cost of living
also added to labor costs. As a result, Ms. Bekta began looking elsewhere in Turkey. In
2004, the Turkish government also launched initiatives to develop impoverished regions.
Through the Employment Encouragement in the Underdeveloped Regions law (No. 5084),
the Turkish government created incentives to spark development in impoverished regions.
The law provided Ms. Bekta with a significant opportunity to expand her operations in
Turkey.
For her first expansion project, Ms. Bekta selected her hometown erke in the ankr
province. Ms. Bekta chose to invest in her home province to help improve its economic and
social conditions. Hey Textiles new erke plant opened for operation in 2004. The new
facility ramped up quickly and within a year earned an annual profit of US$ 75 million and
employed 400 people.
Inspired by her success in erke, Ms. Bekta then expanded Hey Textile operations to other
Anatolian provinces that also benefited from the Turkish governments Employment
Encouragement in the Underdeveloped Regions act. For Hey Textiles second production
facility, Ms. Bekta chose her husbands hometown, Hacibekta in Nevehir province.
Completed in 2006, the facility was followed by two additional investments in 2008, one in
the Tosya district of Kastamonu province and another in Batman province.
19

With the exception of the Batman operation, Hey Textile directly financed these investments.
For the Batman investment, Ms. Bekta partnered with a local investor, since she was
unfamiliar with the province and the facility is some distance from the companys
headquarters in Istanbul.
For its regional facilities, Hey Textile hires local workers while continuing to make all
strategic decisions from the Istanbul headquarters. Since many of the local workers have
agricultural backgrounds, Hey Textile sends staff from Istanbul to help with the workforce
training. The company paid the cost of workforce training until 2008, when Turkeys State
Employment Agency began funding training to mitigate the effects of an economic downturn.
Under this program, the state agency finances training costs and pays the salaries of potential
workers during the training period as long as the company agrees to hire 50 percent of the
trainees. Hey Textile has participated in this program since mid-2009.

19
See the map of Turkey (Figure 1 in the annex) for the location of the districts.

In sum, Ms. Bekta business model has been greatly influenced by the opportunity to make a
positive socio-economic contribution to impoverished regions of Turkeyan opportunity that
also boosts her companys competitiveness.
Giving money to the workers at the erke plant is like giving allowance to [my] kids, Ms.
Bekta said.

Constraints and Solution Strategies
In moving production facilities to Central Anatolia, Hey Textile faced a major hurdle the
lack of industrial skills by regional workers. Essentially, the company had to retrain farmers
to be factory workers. To resolve this issue, Hey Textile assigned experienced managers from
Istanbul to the new plants to assist with workforce training.
Hey Textile has also strategically allocated production work based on skill-level. In erke
and Hacbekta, workers primarily sew basic models, for example, leaving the more
complicated work for the Istanbul facility.
Hey Textiles clients also expressed concern about the environmental standards and working
conditions of the Anatolian facilities. Many of the companys clients require humane working
conditions, strong environmental standards and no child laborers. With these concerns in
mind, Hey Textile stresses strict labor, safety and environmental standards in its operations.
We have a Human Rights department in our factory and we are involved in social
responsibility projects, Ms, Bekta said. This brings us customers.
20

In addition, both factory buildings and working conditions have been designed to meet legal
requirements and internationally-accepted standards. Company working hours, daily breaks,
and annual leave regulations are in compliance with national law. There have been no reports
of discrimination, abuse or harassment. The company also has a worksite doctor and regularly
monitors worker health and safety measures.
Although the environmental impact of the clothing industry is minimal,
21
Hey Textile also
ensures that its environmental footprint is limited. For example, production facilities have a
water treatment system to clean waste water from washing machines. Hey Textiles
compliance with social, health, safety and environmental requirements is certified by audit
reports from the Business Social Compliance Initiative (BSCI). The reports also confirm that
the company employs no unregistered workers or child labor.
Hey Textile reinforces these audit reports with organized demonstration tours of the Anatolian
plants. Ms. Bekta also regularly invites her customers to these production facilities to inspect
the working conditions.
Another challenge for Hey Textile is its partnership with the Gnetekin Group at the Batman
plant. According to Ms. Bekta, the partners construction industry background has created

20
Interview with Aynur Bekta (September 2009)
21
Unlike the textile industry, the use of chemicals in the clothing industry is limited. The only waste is
leftover fabrics after the products are sewn. Generally, the material that arrives at the factory departs as
the final product.

misperceptions and overly-optimistic expectations of the clothing industry. The partner, for
example, expected initial profits to be similar to those in the construction sector. However,
healthy profit margins in the clothing industry are usually not achieved until at least the third
year of operation.
22

Strategic Relationships
Business relationships, particularly international partnerships, have been critical to Hey
Textiles success. The company has built its reputation on being a production unit for
established international brands and manufacturing a variety of clothes based on previously
agreed upon models, quality and price. Additionally, Hey Textile customers expect the
company to produce clothes in compliance with social and environmental standards.
Domestically, Hey Textile buys fabrics and other materials from suppliers and then creates
finished products such as t-shirts, dresses and trousers. Local suppliers also provide shuttle
services for workers and food for the company cafeteria.
The Turkish government has been a crucial partner. The government provided a major boost
for Hey Textiles Anatolia operations through its Employment Encouragement in the
Underdeveloped Regions incentive program. As part of that program, the government
subsidized new facilities through tax and social insurance exemptions. Additionally, Turkeys
State Employment Agency has financed the training of new workers since mid-2009.
Hey Textiles relations with other partners have been mutually beneficial. The clothing
industry in Turkey chiefly uses domestic goods, which creates a positive ripple effect on the
Turkish economy.
As one of the largest companies in this sector, Hey Textile significantly contributes to this
process. The economic impact of Hey Textile facilities in Anatolia are wide-spread,
particularly its contribution to regional employment. Income from local workers also benefits
local businesses through increased ability to purchase goods. Employment and capacity
building hav stimulated economic activity in these districts. In addition to salaries, workers
benefit from safe and healthy working conditionsconditions that are better than in many
other similar businesses.
Furthermore, Hey Textile has finalised a long term strategic cooperation agreement with
Espirit. According to the agreement, Hey Textile will produce the entire knitted products of
Espirits range in Turkey.

22
Interview with Aynur Bekta (September 2009)

Hey facilities in
Anatolia:
- Sewing ordered
cloths
- Training local
workers
Hey Headquarer in
Istanbul:
- Main source of finance
- Training
- Major inputs other than
labor
- Strategic management
Locals:
-Main source of labor and
some other minor inputs
- Main beneficiaries of
earnings directly or
indirectly
Foreign
Customers:
- Orders
- requests to
improve social
standards in
production facilities
orders
Sewn
cloths
inputs payments
Gnetekin
Group:
- Partnership
in Batman
Turkish Government:
- exemption from tax and
social insurance
contribution
- Financial contribution to
traning new worker
incentives
Orders and
requests
Sewn
cloths
Hey facilities in
Anatolia:
- Sewing ordered
cloths
- Training local
workers
Hey Headquarer in
Istanbul:
- Main source of finance
- Training
- Major inputs other than
labor
- Strategic management
Locals:
-Main source of labor and
some other minor inputs
- Main beneficiaries of
earnings directly or
indirectly
Foreign
Customers:
- Orders
- requests to
improve social
standards in
production facilities
orders
Sewn
cloths
inputs payments
Gnetekin
Group:
- Partnership
in Batman
Turkish Government:
- exemption from tax and
social insurance
contribution
- Financial contribution to
traning new worker
incentives
Orders and
requests
Sewn
cloths
Figure 2: Hey Textiles and its relationships

Source: Author

Results
Largely because of cost reductions, Hey Textiles profits have increased by 10 percent, even
as a global recession and stiff competition from China have hit the Turkish clothing industry
(which has suffered a 30 percent decline in profits).
Hey Textile has primarily reduced costs by expanding to Anatolia, which has lower labor
costs and a lower cost of living. Wages in Anatolia, for example, are about US$ 350 a month
in comparison to US$ 500 in Istanbul. Turkish government incentives have reduced costs,
particularly through the governments worker training programs. Additionally, the cost of
such services as worker transportation and food for company cafeterias are below Istanbul
levels.
Ms. Bekta initiatives in the Anatolian provinces have attracted attention and established her
as a role model. She has received the following awards for her contribution to the social and
economic development of Anatolia: Women Entrepreneur of the Year, National Productivity
Center (2006); Women Entrepreneur of the Year, Ekonomist Magazine (2007);
Entrepreneurship Congress Special Award, Bursa Chamber of Commerce and Industry
(2008); Schwab Foundation Award Winner for Social Entrepreneurship (2008); Distinguished
Service Award for her investments in Anatolia, Grand National Assembly (2010).

REGIONAL RESULTS
Although the erke, Hacibekta, Tosya and Batman facilities are in very different
geographical regions of Turkey,
23
each of these cities are located in some of Turkeys poorest
provinces (with erkes province is on place 59
th
in the socioeconomic development ranking
of Turkeys regions, Hacibektaon 34
th
, Tosyas on 51
st
and Batmans 70
th
, respectively).
24

Hey Textile has worked to change this regional poverty through its four Anatolian production
units. The facilities have created jobs for approximately 1,000 locals. Youngsters are not
lingering in coffee houses anymore, one business man said of the added value of the jobs.
25

The company hired 400 workers in erke and 350 in Hacibekta. Given that the population
of erke is 8,755 and the population of Hacibekta is 5,055,
26
such employment has had a
large impact on these communities.
Although the wages earned by the workers in these districts are lower than those of the
employees in the Istanbul plant, the cost of living in these locations is also well below that of
Istanbul. Therefore the minimum wage, which is difficult to survive on in Istanbul, has
significant purchasing power elsewhere in Turkey.
27
Additionally, overtime work is a
common practice both at Hey Textile and in the industry. Workers earn 50 percent above their
regular hourly rate when they work overtime, so, workers usually earn above the minimum
wage when overtime work payments are included. In addition to salaries, Hey Textile
provides workers with additional benefits (which are not required by law) including free
lunch and shuttle service to and from the factory.
Equally important, all workers are registered and their social security premiums are fully paid
by Hey Textile (an uncommon practice in the clothing industry and in the region). With such
practices in mind, one interviewed worker
28
compared Hey Textile to the government because
the benefits are similar to those of civil servants.
29

While some workers invest their earnings in physical capital, others invest in human capital,
usually their children. This is particularly common in families with two incomes. After I
started to work [at Hey Textile], I spent all of my earnings on my kids, one sewing worker
said.
30
I sent them to private learning centers. As a result now my daughter is going to a
good school.
Since all raw materials for factory production come from Istanbul, Hey Textiles direct
support of local suppliers is limited to foodstuffs used in factory cafeterias. However, income
generated by employment at the factory has helped the local economy flourish. Assuming that

23
Compare map of Turkey in the annex.
24
Diner Blent, Metin zaslan and Taner Kavasolu, llerin ve Blgelerin Sosyoekonomik Gelimilik
Sralamas Aratrmas [Socio-economic development ranking of regions and provinces in Turkey], DPT
Publications, Ankara, 2003.
25
Interview with Murat Trkgzeli
26
According to 2008 census of Turkish Statistical Institute
27
For example, rent of an apartment is about 250 TL in Hacibekta, which is about half of the minimum
wage. Rent of a similar apartment in Istanbul is about two times higher than one in Hacibekta.
28
Interview with Sreyya Avar
29
In Turkey, like in many other countries, working for the government is always considered a privilege
because of job security and for its pecuniary and non-pecuniary benefits, especially for low-skilled
workers.
30
Interview with Sreyya Avar

each worker only earns the minimum wage of about 530 TL (US$ 350), workers contribute
about 185,000 TL (US$ 120,000) to local economies each month.
In Hacibekta, for example, the main economic activity is farming and domestic tourism.
(Many Turkish Alevis visit the areas Shia-Alevi holy sites in the summer months.) As a
result, Hacibekta economy had been highly seasonal. After the opening of the Hey Textile
facility, however, economic activity now takes place throughout the year. The number of
rental and installment purchases has increased as well, and salaried workers can make regular
payments. As an added sign of the communities economic progress, merchants often no
longer ask for credit cards or other collateral when renting or selling items on installment.
31

As is the case throughout Turkey, unemployment has hit youth the hardest,
32
and in the past
the limited opportunities led to migration and crime. Such migration has now stopped or
reversed, which local officials attribute in part to the opening of the Hey Textile factories.
One college-educated employee, whose family returned to Hacibekta from zmir, said the job
opportunities provided by Hey Textile persuaded him to return with his family.
33

RESULTS FOR WOMEN
Economic participation is considered a major indicator of womens status in society (along
with education and religion). Income increases womens quality of life and provides them
with greater socio-economic independence.
Similarly, Hey Textiles investments in Anatolia have improved the socio-economic prospects
of local women. Female employees have actually benefited more than men. Roughly two-
thirds of the workers in the Hacibekta plant, and half of the workers in the erkes facility,
are women. The Hacibekta factory employs roughly 200 women and the erke facility
about 300 women.
I do not have to beg my husband for money, one worker said in an interview with a German
TV channel. I can buy things for myself and the kids. It boosts my esteem. It is a good
feeling.
34

In another interview, a furniture and electrical appliances dealer in Hacibekta said: [Before
the opening of the factory] young girls came to us with their fathers to buy their trousseaus.
They had no say about what to buy. Now, they are still coming with their fathers, but they
decide what to buy.
35

In another example of the independence created by income and employment, cleaning worker
Fatma en returned home with her children after a divorce. Her ex-husband did not pay
alimony, so Ms. Sen took a job at Hey Textile. The job has enabled her to support herself and
send her children to school. The job also allowed her to rent her own apartment.
36

31
Interview with Evren Karabacak
32
Unemployment is close to 20 percent at the national level.
33
Interview with Esat Karabacak
34
Global 3000, Globalization program on TV, Deutsche Welle, Germany, June 1, 2009
35
Interview with Evren Karabacak
36
Interview with Fatma en.

In another sign of changing gender roles, Ms. Bekta said some men in Batman now stay
home and take care of children when their wives are hired by Hey Textile a revolutionary
change in gender roles for a very traditional region and culture.
Economic activity has occurred near the factories, as well, and local women are helping shape
its development. For example, the local government in Hacibekta received a grant from the
EU to promote female entrepreneurship in the region. Ms. Bekta then encouraged a local
woman to apply for a grant to open a business making and selling sweets to workers. Hey
Textile then provided the woman with a free room in the HacBekta factory to sell her
products. The business has since flourished.
Ms. Bekta has also supported the economic and social well-being of women through social
activities. During her presidency of the Turkish Clothing Manufacturers Association, Ms.
Bekta successfully lobbied for an amendment to a law regulating freelance work. Previously,
women working from home were not registered with the local tax office and therefore were
unable to create invoices for their services. In order to find work with the larger, formal firms
that require an invoice, female entrepreneurs had to work through intermediaries. The
intermediaries created invoices in exchange for a large cut of the employees wages. Through
her efforts, Ms. Bekta changed the law so clothing companies could do business directly
with women working from home, allowing them to receive the full portion of their wages.

SOCIAL RESULTS
In the small, conservative districts of Anatolia, young men and women traditionally have had
limited social interaction. As a part of that tradition, marriages are usually arranged by
parents. The factories, however, are now creating a more social environment where young
men and women interact regularly. Some co-workers also marry.
37

The factories social environment not only brings together different sexes but also people
from different faiths. The majority of Turkish citizens belong to the Sunni sect of Islam, with
a minority belonging to the Alevi sect, a liberal interpretation of Shia Islam. These two groups
have lived together in Anatolia for hundreds of years, mostly in peace, but there have been
instances of bloody conflict and prejudice too.
38

Ms. Bekta and her husband, however, provide a ready example of the harmony that can exist
among these different sects. Mr. Bekta is an Alevi, while Ms. Bekta is from a Sunni family.
In the Bekta family, religious matters are solved in a democratic way, with each person
living according to his or her own belief. Hey Textile provides a similar tolerant, democratic
environment, enabling young workers from different sects to work together without prejudice.
In the Hacibekta region, for instance, the vast majority of individuals are Alevi but workers
coming from the other districts are mostly Sunni. So far, there has been only one reported
disagreement, one which was solved quickly through arbitration.

37
Interview with factory manager Kksal Krbyk. Mr Krbyk said that it is a common practice in this
industry. He also met his wife in Istanbul headquarter of Hey Textile.
38
For instance, on July 2, 1993 33 Alevi intellectuals, who had gathered for a cultural festival in Sivas,
Turkey, were killed when a mob of radical Islamists set fire to the hotel where the group had assembled.

In addition to the interaction among workers from different backgrounds, personal appearance
has also reportedly become more important due to the socially dynamic environment.
According to Ms. Bekta, the communitys first-ever hair salon opened in 2004, the year she
established her factory plant in erke. Today, there are three hair salons, the fact that
demonstrates the ripple effect of the Hey Textile on local businesses.

Conclusion and Looking Ahead
Ms. Bekta is an entrepreneur and true trail blazer. Rather than copying the practices of others
and investing in big cities, she chose the small districts of Anatolia. After bringing the
developmental benefits of private industry to under-developed parts of Turkey, she is now
preparing for her next project, establishing production units that will hire disabled workers.
She has many other business projects as well. Her ultimate aim, though, is to establish a
foundation and to transfer Hey Textiles obligations. She will leave the other businesses to her
sons and then devote herself to social projects.
Ms. Bekta has approached each of her investments cautiously, and quickly turned risk into
opportunity and successful business enterprises. Along the way, she has reduced costs and
maintained the companys global competitiveness. These investments have benefitted not
only Ms. Bekta and her company, but also local communities. In impoverished Central
Anatolia, Hey Textile created new employment opportunities and spurred positive economic
and social change, especially for women.
Ms. Bekta also shared her experiences and lessons learned with business practitioners,
politicians and government officials.
Ms. Bekta believes that if other businesses follow her lead and redirect their investments to
poorer regions, both the companies and the regions will benefit. As part of that approach, Ms.
Bekta advocates for investment that improves regional socio-economic conditions and the
quality of life for employees. Her approach includes positive working conditions and high
environmental standards.
Ms. Bekta believes government plays a significant role in changing business investment
patterns through incentive programs and risk sharing. For Hey Textile, subsidies provided
through the Employment Encouragement in the Underdeveloped Regions law greatly
influenced Ms. Bekta decision to investment in impoverished Anatolia. Her approach
provides a ready model for replication elsewhere.
I want to be a role model, Ms. Bekta said I am the first women who invested in Anatolia.
My success encouraged others as it makes them think: If she did it, I also can. I believe our
model is considered as an example by the others.

References
Primary sources:
Interviews
Aynur Bekta, entrepreneur, in Istanbul Headquarter, September 2009
Yldrm Dorusz, a worker in Hacibekta Hey Textile plant, September 2009
Kksal Kirbiyk, manager of Hey Textile Hacibekta Plant, September 2009
Evren Karabacak, a furniture and electrical appliances dealer in Hacibekta,
September 2009
Esat Karabacak, a worker in Hacibekta Hey Textile plant, September 2009
Murat Trkgzeli, owner of a local caf in Hacibekta, September 2009
Sreyya Avar, a worker in Hacibekta Hey Textile plant, September 2009
Suna Tunbilek, a worker in Hacibekta Hey Textile plant, September 2009
Fatma en, a worker in Hacibekta Hey Textile plant, September 2009

Secondary sources
CIA, World Factbook, Turkey, available at
https://www.cia.gov/library/publications/the-world-factbook/geos/tu.html,
retrieved Nov. 10, 2009
Diner Blent, Metin zaslan and Taner Kavasolu, llerin ve Blgelerin
Sosyoekonomik Gelimilik Sralamas Aratrmas [Socio-economic
development ranking of regions and provinces in Turkey], DPT Publications,
Ankara, 2003.
Doruel Fatma and Suut Doruel, Trkiye Sanayiine Sektorel Bak [Outlook
of Turkish Industrial Sectors], TUSIAD Publications, Istanbul, 2008
Global 3000, Globalization program on TV, Deutsche Welle, Germany, June
1, 2009
Gnetekin, Hey Tekstili icraya verdi [Gnetekin, brought enforcement
proceedings against Hey Textile], Batman Postas, (A local newspaper in
Batman), Feb. 9, 2009, available online at
http://www.medya72.com/haber.php?haber_id=4952, retrieved Nov. 15, 2009
Istanbul Chamber of Industry, Turkeys top 500 industrial enterprises,
http://www.iso.org.tr/en/ISO-500/EN-Trkiye-nin-500-Buyuk-Sanayi-
Kurulusu--ISO-500-raporunun-sonuclari.html, retrieved Sept. 2, 2009
Istanbul Ticaret Odas, Hazr Giyim sektr ve in mallaryla rekabet gc
[Clothing industry and competitiveness with China], ITO Publications, No. 15,
2007
Tosuner, Nur Erk She established the first factory in HaciBekta, her
Husbands hometown, for 3 million dollars Hurriyet, Turkish Daily, Aug.10,
2006
United Nations Development Program, Human development Report
2007/2008, Fighting climate change: Human solidarity in a divided world,

New York UNDP, 2007World Bank, Country Brief (2009): Turkey, available
at Country Brief,
http://www.worldbank.org.tr/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/
TURKEYEXTN/0,,contentMDK:20630704~menuPK:361720~pagePK:14113
7~piPK:141127~theSitePK:361712,00.html#key
World Bank, World Development Indicators, available at http//ddp-
ext.worldbank.org/ext/DDPQQ/memeber.do?method=getMembers&userid=1
&queryId=135, retrieved Sept. 2, 2009

Annexes
Annex 1. Selected socio-economic indicators by geographical regions in
Turkey, year 2000
Region GDP per
capita
(billion TL)
Percenta
ge share
in GDP
Literacy
rate
(percent)
Infant
mortality rate
(percent)
Urban-
ization rate
(percent)
Per capita
electric
consumpt
ion (Mwh)
Share in
total
bank
deposit
s
(percent
)
Marmara 2657 37.0 92.4 3.9 79.1 2.2 52.3
Aegean 2130 15.3 89.8 4.0 61.5 1.8 9.9
Central 1820 17.0 90.3 4.2 69.3 1.1 24.6
Mediterranean 1726 12.1 88.2 3.7 59.8 1.5 6.5
Black Sea 1396 9.5 85.8 4.2 49.0 1.0 4.2
Southeastern 954 5.1 73.2 4.8 62.7 0.9 1.2
Eastern 841 4.1 77.7 5.3 53.0 0.6 1.3
Source: Dincer et.al. (2003)

Annex 2. Selected gender related indicators of Turkey
Economic activity rate (female rate as percent of male rate, aged 15 and older) in 2005 36
Ratio of estimated female to male earned income 0.35
Adult literacy rate (ratio of female rate to male rate), 2005 0.84
Combined gross enrollment ratio for primary, secondary and tertiary education, female (percent),
2005

64
Combined gross enrollment ratio for primary, secondary and tertiary education, male (percent), 2005
73
Seats in parliament (percent held by women) 4.4

Legislators, senior officials and managers (percent female) 1999-2005
7
Professional and technical workers (percent female), 1994-2005
32
Source: United Nations Development Program, Human development Report 2007/2008
39

Annex 3. Clothing Industry in Turkish Economy
Share in total manufacturing industry added value (percent) (2004) 7.79
Share in total manufacturing industry output (percent) (2006) 4.05
Share in total manufacturing industry employment (percent) (2006) 12.94
Share in total manufacturing industry import (percent) (2007) 1.01
Share in total manufacturing industry export (percent) (2007) 11.68
Source: Dogruel and Dogruel, p.141

39
United Nations Development Program, Human development Report 2007/2008. Fighting climate
change: Human solidarity in a divided world, New York UNDP, 2007. World Bank, Country Brief (2009):
Turkey, available at Country Brief,
http://www.worldbank.org.tr/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/TURKEYEXTN/0,,contentMDK
:20630704~menuPK:361720~pagePK:141137~piPK:141127~theSitePK:361712,00.html#key

Annex 4. Map of Turkey

Source: CIA The World Factbook
40

40
https://www.cia.gov/library/publications/the-world-factbook/maps/maptemplate_tu.html. Retrieved on 26th
November, 2010.


November 2010
The information presented in this case study has been made available to the company in
subject to ensure its accuracy and is accurate to the best of the authors knowledge. The views
expressed in the case study are the ones of the author and do not necessarily reflect those of
the UN, UNDP or their Member States.
Copyright @ 2010

United Nations Development Programme
All rights reserved. No part of this document may be reproduced, stored in a retrieval system
or transmitted, in any form by any means, electronic, mechanical, photocopying or otherwise,
without prior permission of UNDP.

This case study was drafted in accordance with the GIM 2.0 research design.
Design: Suazion, Inc. (NJ, USA)
For more information on Growing Inclusive Markets:
www.growinginclusivemarkets.org or gim@undp.org

United Nations Development Programme
Private Sector Division, Partnerships Bureau
One United Nations Plaza, 23rd floor
New York, NY 10017, USA

Boosting Rural Areas Through Business Investment

Uploaded by

Copyright:

Available Formats

Boosting Rural Areas Through Business Investment

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Boosting Rural Areas Through Business Investment

Uploaded by

Copyright:

Available Formats

Turkey

Turkish Trailblazer: Boosting Rural

You might also like