TOYO Matbaa Mürekkepleri CEO'su Yakup Benli | Patronlar Anlatıyor

Thank you, nice to be here.

I'm doing well, thank you. İzmir is fine.

Yes, I actually came to Manisa a little while ago, but İzmir is quite beautiful, like spring. We came to Bursa together with Hakan Güllü. We're visiting our Bursa office. The weather here is also good and sunny, but it's certainly cold.

Of course. Toyo Matbaa Mürekkepleri, as it's currently known, actually started in 1968 as DYO Matbaa Mürekkepleri under Yaşar Holding, as Turkey's first ink production facility. It continued under Yaşar Holding until 2016, when 75% of the shares were transferred to Toyo Ink, a company founded in 1896 in Japan. Then in 2019, the remaining shares were acquired, and from January 2019 onward, the company has continued as 100% Japanese capital. In 2010, we moved from the facility we shared with DYO Boya in Bornova to the Manisa organized industrial zone, and we've been operating at this facility since 2010.

Of course, you're right. The first thing that comes to everyone's mind is fountain pen ink — actually, fountain pen ink is the question I'm most often asked, whether we produce those. But generally speaking, as you said, there are inks used for printing newspapers and magazines, inks for book printing, various brochures and so on — offset inks. Beyond that, there are inks used in the packaging sector: printing on corrugated cardboard, on paper, on flexible packaging. There are inks for printing on all metal packaging products. There's screen printing for hard plastics and promotional materials, inks that print on glass. It's actually a very broad sector, but it's generally concentrated on the industrial side.

Actually, the concentration is — if I'm not mistaken, in 2016, when we divide it into printing and packaging, the printing sector was always ahead of packaging until 2016. Since 2016, the packaging side has been consuming more ink than printing worldwide, and this trend is continuing. As a result of digital media and the transformations in newspapers, the packaging side is now a more concentrated sector globally.

Of course. Ink is essentially pigments — the coloring substances called pigments — bound together with carriers and binders, with their physical and chemical structure formed to make them suitable for printing. If we talk about its history, ink actually dates back to around 2500 BC. Even in Turkey, those who know might be aware that Mimar Sinan collected soot from 4,000 lamps burning in the Süleymaniye Mosque, melted it with oil, and blended it to make ink, which was of such high quality it was reportedly used for all official correspondence. But its earliest discovery was in China, where it was used to darken the inside of cuneiform inscriptions. It was also used in Egypt and many other places. Its industrial use first began in the 18th century with a Frenchman named Pierre Lorilleux, who opened an ink factory. Before that, all printing houses produced their own ink. Even painters made their own paints. It was Pierre Lorilleux's factory in 1818 that turned ink production into a commercial activity. In Turkey, the first industrial-scale production occurred in 1968 with DYO Matbaa Mürekkepleri.

Yes, DYO Matbaa Mürekkepleri. They were a quite visionary group. Of course, later they separated — the current Japanese company bought it out. But they themselves continue in the paint sector. Still, Selçuk Yeşer entering production when nothing existed in Turkey really shows that vision.

I can't give very precise information about the total market, but it's estimated to be around 60,000 tons and 200 million dollars. Globally, the ink market is over 10 billion dollars. In Turkey, most of the world's major players already have production here. Interestingly, five of the world's top 10 ink manufacturers are Japanese — I don't think that's a coincidence; I believe it's related to the importance they place on packaging. Like many product groups in the chemical sector, ink is unfortunately import-dependent in terms of raw material inputs. There are also inks that come from abroad. Some companies produce certain things here and bring in others from their other locations for production optimization. As for exports, there is a significant export business from Turkey, but unfortunately, the sector runs a trade deficit — our imports exceed our exports.

I don't know the total sector export. But for your own exports, what do you do?

That's right, around 10 million dollars annually. Not bad at all, really.

Yes. Which countries do you send your exports to?

We export to almost all neighboring countries — starting from Macedonia, then Bulgaria, Greece, Romania. In Western Europe, we export to France and England. In the Middle East, Iraq. To Russia and the Turkic Republics. In North Africa, Egypt, Tunisia, Morocco, Algeria — we export to that region. And now we're making efforts to increase our exports to sub-Saharan Africa. In the last few years, exports to Kenya, Sudan, and Ethiopia have started and are continuing. The effort in that area is ongoing.

No. Toyo Ink Group first expanded in the Far East after Japan, then made an investment in America, subsequently acquired a company in Belgium, and then bought DYO Matbaa Mürekkepleri. DYO Matbaa Mürekkepleri is the single location that produces the entire product range for the group in a wide geography from India to America. America has its own company, but for Europe, West Asia, Russia, and all of Africa, this facility was planned as both a production and sales location, and we continue to work in this direction.

In terms of imports and exports, you mean? Well, approximately 80% of ink is raw materials, and 70% of those raw materials come from abroad. Since our exports are at about 120%, we actually have a current account deficit of around 40-50%.

Yes. There are reasons for this. First, raw materials need to be produced at a global scale — very large investments are required. Second, some raw materials are mineral-based, so production happens in whichever country the mineral is mined in, as that's the most feasible location. Import flows to certain locations worldwide because of this.

In ink, since it covers a very wide range, there are products that sell for 30 euros and products that sell for 3 euros. It's not classified as a high-technology product, but it falls in the medium-high technology group. I would estimate the average is more than double the 1.6 dollars you mentioned — up to 30 euros for some products, which means there is value added. But since it's raw material-intensive, it is indeed challenging.

When the pandemic first emerged, none of us knew what it was, and we were all in a very difficult situation. On top of that, the US-China trade wars came into play, along with many other factors that negatively affected supply security and flow. However, as I mentioned, the prominence of food packaging globally became apparent. Increased food needs, changing consumer habits, and the importance of safe food — for instance, in the early days of the pandemic, many people felt the need to wash products from the market with soap and water. Access to safe food became extremely important, which was a positive development for the packaging sector. Since there wasn't much slowdown in food consumption, the packaging-based sectors didn't experience significant negative impacts. But of course, supply difficulties and the cost issues of recent times have affected us as they have everyone.

Currency movements affect an import-intensive sector like ours very negatively. I have an example I always share: we sell on average with 120-day terms. So when we issue an invoice today, the money we collect is from an invoice issued 120 days ago. There was a period when the euro was 10 lira when we issued the invoice, and by the time we collected it, the euro had reached 17-18 lira. Since 80% of the invoice goes to raw materials that are imported, when you collect 100 euros, the raw material cost alone is 80 euros. So the fluctuation has a seriously negative impact on companies' capital. The current stabilization is positive, but this sensitivity will persist until we can raise exports to a certain share of total revenue.

Yes, except for certain periods of the pandemic, we've been working intensively on this for 45 years. As I said, sub-Saharan Africa is not an easy geography to reach, and the pandemic also negatively affected this. We banned all employees from flying for nearly a year — planes were really unreliable at the time. This seriously affected international travel. Most customers didn't accept any suppliers or visitors during this period. We're now starting to open up again.

Yes, that is our target — to reach those levels where exports are at 40-50%.

First of all, shipping prices increased roughly sixfold. Far East freight rates saw about a sixfold increase, then dropped to 4-5 times, and unfortunately, once certain prices reach a level, they don't come back down as fast. The US-China trade war contributed to this, along with ships unable to dock due to COVID. It's very negatively affecting us. One advantage we had was that before the pandemic reached Turkey, we were already somewhat aware of the situation through our factory in China. We had started stockpiling efforts beforehand to ensure supply security. Of course, there were serious difficulties and cost increases on both the import and export sides, but I'm proud to say we've managed to get this far without putting any customer or trading partner in a difficult position. During those early pandemic days, we even tried creative solutions — we set aside about 20 people as a backup team at home in case the factory was shut down, so they could produce essential products for customers.

Yes, but there's a positive side. When container prices reach 130,000 dollars, transporting certain goods from China to Turkey or Europe becomes no longer feasible. This increases the importance of more local, nearby suppliers. This is actually a potential and advantage for Turkey in terms of European exports. Europe also saw that while many places shut down during the pandemic, Turkish suppliers found ways to fulfill their commitments with proper isolation measures. This has increased our credibility as a supplier.

Well, first of all — before getting into the commercial dimension, let me mention the cultural dimension. Japanese people feel close to Turks. Not many people know that 2019 was declared as the Year of Turkey in Japan. Culturally and in terms of business compatibility, they find Turks and Turkey close to them. And as Japanese firms come here and achieve successful results, other firms see this as an example. Japanese investment groups tend to move together, so successful investments by one encourage others. The first reason is the successful investments seen after coming here. The second is that Turkey is located right at the center of Africa, Russia, and Europe — an excellent position. Europe is a huge but highly regulated market, especially in the chemicals sector, with many legal regulations that differ from the Far East. For Far Eastern investors, starting directly in Europe isn't easy. Turkey serves as a location where they can adapt to this region, first through exports to these markets, and later grow further.

Investment environment is the key word. The investor needs to feel safe and not face extra difficulties. There's a Japanese community of about 1,000 people who meet regularly. In Istanbul, there are several investment agencies that guide Japanese firms toward investments in Turkey — they're all working to attract them. Despite the currency volatility after 2018 perhaps causing some apprehension, I believe this will continue. When we asked one group what they needed, the lack of a Japanese school in İzmir was a concern. While Istanbul has schools for their children, helping expats maintain a social life here through small measures could make it very easy to attract investors. Turkey is always a growing market, and despite concerns about the education system, we have a very qualified workforce. Toyota, for example, considers Turkey's human resources among the strongest in their entire global group. This advantage will continue.

The European Green Deal will affect all Turkish firms targeting Europe. To put it in perspective, Bill Gates has a book about escaping the climate crisis. He mentions a figure: 51 billion tons of carbon dioxide emissions currently, and during the 2020 pandemic, this only dropped by 5%. So even with such a massive disruption, only 5% reduction occurred. We need much more innovative approaches, while remembering that 1 billion people still don't have regular access to electricity, and 40% of them live in sub-Saharan Africa. The European Green Deal sets demanding targets and requires work, but we must do this for the world's future and our children's futures. For us specifically, the fact that the EU action plan was prepared by the Ministry of Trade and that the Paris Agreement was signed shows Turkey's intention and progress. We've measured our own carbon emissions and started preparing action plans to reduce them. We even participated in the UN Global Compact's Climate Target Acceleration project. And there's the EU's Carbon Border Adjustment Mechanism — Europe is protecting itself because as firms invest in green and sustainable resource use, they don't want unfair competition or polluting investments moving elsewhere. It's essentially meant to trigger everyone worldwide to take action. There are difficulties, but I believe Turkey can handle this, as it has with many other challenges.

Indeed. As I mentioned, if even a pandemic only reduces total carbon emissions by 5%, achieving results without doing very different things is — as Einstein famously said — impossible. You can't get different results by doing the same things. Innovation comes into play. In our R&D center, which is accredited by the Ministry of Trade and Industry, we've developed a product group that's the only one of its kind within the Toyo Ink group — we're the first to develop it. We're now working on marketing it across all group companies from Malaysia to Indonesia. These are low-odor, low-migration inks that won't affect food in terms of smell or taste. When we stack many such efforts together, perhaps we can reach these targets. But I want to emphasize — regarding plastic use, sometimes lobbies go too far in labeling plastic as bad. We need to remember that packaging plays a crucial role in delivering safe food to people and preventing food waste. We need to find the right balance.

Thank you.