The conflict between Russia and Ukraine has led to a surge in energy and raw material prices, coupled with the impact of the epidemic. Many countries, including Europe and the United States, have been mired in inflation, and Turkey is one of the hardest-hit areas. “Romantic” Turkey has encountered real inflationary pressures.
According to data released by the Turkish Statistics Institute, the CPI rose by 78.6% year-on-year in June, ranking first in the world and setting a new record for the country in 24 years. People’s basic livelihood of food, clothing, housing and transportation was seriously affected. In the first half of the year, a large number of small and medium-sized enterprises in Turkey closed down. At present, Turkey’s exchange rate has depreciated by 23.31%, and the ratio of total foreign debt to foreign exchange reserves is as high as 732%. It has the highest debt risk among emerging market countries.
In view of the current deteriorating economic environment in Turkey, when shipping to Turkey, in addition to strictly abiding by local customs regulations, you must also beware of “Turkish scams”, do risk warnings, and take timely countermeasures to avoid losing both money and money.
Large container ship passes through Turkish port city Istanbul
The two main drivers of high inflation in Turkey are cutting interest rates and loosening monetary policy.
The conflict between Russia and Ukraine has led to rising energy and raw material prices, coupled with the impact of multiple rounds of substantial interest rate hikes by the Federal Reserve this year. Turkey has chosen not to raise interest rates to reduce inflation, but to cut interest rates to promote economic development. Since September 2021, the Central Bank of Turkey has cut interest rates for four consecutive months, lowering the benchmark interest rate by a total of 500 basis points.
Turkey’s interest rate cuts have caused the Turkish currency, the lira, to continue to depreciate, exacerbating inflation. In 2021, the Turkish lira depreciated by approximately 44%, and in the first half of 2022 it depreciated by another 22%.
In addition to the interest rate cut policy that is contrary to the Federal Reserve, Turkey’s loose monetary policy is also a poison to quench the thirst for economic development and is another major driver of high inflation. Since 2014, Turkey’s annual money supply has grown at a rate of nearly 20%.
First, inflation increases business operating costs and reduces consumers’ purchasing power. Affected by this, a large number of small and medium-sized enterprises in Türkiye announced their closure in the first half of the year.
Furthermore, currency depreciation has caused energy costs to rise. In June, Turkey’s household and industrial electricity prices increased by 15% and 25% respectively, and natural gas prices increased by 30%. As a result, devaluation and inflation have become a vicious cycle.
According to data released by the Turkish Chamber of Commerce and the Federation of Commodity Exchanges, in the first five months of this year, more than 7,500 companies in Turkey closed down. Among them, as many as 2,000 companies closed down in May alone, an increase of 259.7% compared with the same period last year.
Things to note when shipping to Turkey: Beware of buyer scams and pay attention to return regulations
Currently, Turkey has fallen into a vicious cycle of sharp depreciation of the lira, serious inflation, and rising total foreign debt. High debt will trigger economic and financial crises. Previously, Sri Lanka’s debt crisis and bottoming of foreign exchange led to national bankruptcy.
At present, Turkey’s foreign exchange reserves are a drop in the bucket compared to the size of its foreign debt, and Turkey’s trade risks are relatively high. Under the current economic situation in Turkey, importers are likely to engage in foreign trade fraud due to cost pressure. The infamous “Turkish Scam” is a typical example of foreign trade deception.
Türkiye Scam:
Turkish Customs has relatively unfavorable regulations for foreign exporters:
Before the ship arrives at the Turkish port, the shipper needs to register the goods in the name of the consignee. After the goods arrive at the port, the consignee (buyer) should complete the delivery procedures within 45 days, otherwise the goods will be confiscated and auctioned.
After 45 days, the consignee can apply for two extensions of 30 days each time without submitting a reason for the extension. After that, the consignee can apply for another extension of delivery (30 days), but needs to explain the reason for the extension to the customs. With the cooperation of the consignee, the goods will usually not enter the auction process within 135 days after arrival at the port. However, during this period, there will be costs such as port detention and terminal storage.
In addition, Turkish Customs stipulates that once the goods are included in the customs auction list, the original importer shall be the first purchaser.
Many unscrupulous companies in Turkey have taken advantage of the loopholes in the above regulations. First register a shell company, trick the Chinese seller’s goods into Turkish customs, and then use various means to delay the time, leading to the final customs auction, then buy the goods at a very low price, and then sell them at a high price to share the stolen goods.
Therefore, when shipping to Turkey, firstly, pay attention to the relevant regulations on resale or return to avoid the goods being confiscated and auctioned; secondly, try to use letters of credit for payment.
If you need to return:
1. The consignor (seller) submits a written statement to the customs, explaining the reasons and reasons for the return (if payment has not been received), and requests the goods to be returned;
2. The consignee (buyer) issues a statement agreeing to return the goods (if the goods are authorized OEM products, the buyer also needs to submit a statement indicating that he agrees with the seller to sell his products);
3. The consignor (seller) pays customs clearance fees, ocean freight, terminal handling fees (THC), loading fees (Loading Fees) and other fees (in practice, it is basically impossible to force the consignee who has not received the goods to bear the above cost).
Warm reminder: When shipping to Turkey in the near future, in addition to the goods themselves, you should also pay attention to payment methods and channels, and preparation.Cargo, packaging, customs clearance procedures, shipping, transportation insurance, bill of lading, foreign exchange settlement, etc.
Turkey is one of my country’s important trading partners and a major partner country along the Belt and Road Initiative. In recent years, bilateral trade has grown rapidly. Especially in 2021, the trade volume between China and Turkey was US$34.23 billion, a year-on-year increase of 42.2%.
Among them, China’s exports to Turkey were US$29.19 billion, a year-on-year increase of 43.5%. Mineral products, base metals, chemical products, machinery and equipment, and textile raw materials are my country’s main commodities exported to Turkey.
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