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Asia

China woos Turkey after logistics deal with Greece

Chinese PM Wen Jiabao and his Turkish counterpart Erdogan have overseen the signing of eight deals. Wen's visit comes as there has been some resentment in Turkey about China's plan to make rival Greece a logistics hub.

Chinese PM Wen Jiabao and his Turkish counterpart Recep Tayyip Erdogan spoke for two hours on Friday

Chinese PM Wen Jiabao and his Turkish counterpart Recep Tayyip Erdogan spoke for two hours on Friday

On his trip to Greece last week, Prime Minister Wen Jiabao promised to help support the cash-strapped country emerge from its debt crisis. Part of his delegation of ministers and businessmen was shipping giant Cosco head Wei Jiafu.

Cosco secured the contract to run container terminals in the port of Piraeus near Athens in 2008.

The project to transform the port into a huge trading hub has panicked the Turkish logistics sector, as well as the textile industry.

Greek Prime minister George Papandreou, left, and his Chinese counterpart Wen Jiabao at the Acropolis

Greek Prime minister George Papandreou, left, and his Chinese counterpart Wen Jiabao at the Acropolis

Turkey tries to protect share of EU textile market

With half of the textile goods on the European market already from China, Turkey is worried about how it will be able to protect its 8 percent share.

Hikmet Tanriverdi, from ISKIB, Istanbul’s association of textile manufacturers, is worried that China will set up assembly facilities in Greece.

"If state power is behind the project and it becomes easier for more goods to transit there, then we will have a problem," he says. "If half-finished products are sent to the port so that lower import tariffs are paid and are then finished without much work, then we will have a huge cost problem. It will also be a problem if the ‘made in’ label is changed."

He is convinced that European consumers still think the quality of Turkish products is higher.

Turkey could lose significant advantages

The Turkish China expert Selcuk Colakoglu agrees that Turkey will lose some of significant advantages: "Turkey had the advantage of being able to produce small amounts fast. With the Chinese taking over Piraeus, Turkey will lose the advantage of being closer to Europe. This is a reason for concern."

Colakoglu is also worried that Chinese producers will store their goods in Piraeus and will thus be able to react faster to small and spontaneous orders from the EU than Turkish manufacturers.

Ankara also has a strategic worry, he says, because Turkey suggested it become a logistics hub for China a long time ago "but Beijing’s view was that Turkey should have offered an advantage. Such as creating an alternative sea route to deliver Chinese goods to the European, North African, Middle-Eastern and Russian markets via Turkey."

He adds that the Piraeus port deal might well have put paid to Turkey's chances of being a transit route for Chinese goods.

Hopes that brands will opt for quality

Producers in Turkey are still thinking about how they can defend their position on the EU market.

China has plans to turn Greece's largest port into a logistics hub

China has plans to turn Greece's largest port into a logistics hub

But Tanriverdi says the textile manufacturers are counting on quality: "Today most Turkish manufacturers, especially the big makes, are subjected to strict monitoring. They produce according to EU standards. We can't keep up with competitors in the Far East, where labor is cheap, there are fewer labor rights, and where sometimes children have to work. But we think that the makes that are worried about quality and image will keep producing their goods in Turkey."

Moreover, China seems aware of Turkey’s misgivings. Wen Jiabao is after all in Turkey to deepen economic and political cooperation between the two countries. On Saturday, he is expected to meet businessmen in Istanbul before leaving the country.

Author: Cem Sey/ act
Editor: Thomas Baerthlein

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