Nurettin Eroğlu - Bloomberg Ht Ali Çağatay ile Anahaber - Canlı Yayın 05.03.2019

Thank you, Ali Bey.

Yes, Ali, we're from Central Anatolia — from Aksaray, right at the very center of Turkey. If you put a crosshair on Turkey, it's at the exact midpoint, from Selçuklu origins. Of course, during the years of migration to Istanbul — first there was a migration to Europe in the early or mid-60s, and then from the 70s onward, a migration to the big cities from rural areas. We came to Istanbul in '76 as one of those families. We're eight siblings — five brothers. When we first started working, we began as apprentices in Cağaloğlu, at a place making men's clothing. We started from the very bottom, from ironing. By '83, we had done our military service too, learned the craft of tailoring. In '83 we set up our own business — a 65-square-meter workshop. For two years we did contract work from that workshop. Then we took over the place we'd been doing work for as our own store, went into trading, and started selling throughout Turkey. In the beginning we sold in Mahmut Paşa and Mercan, then to Anatolia — because our capital was very limited, and if one buyer defaulted, we'd be wiped out. Then in '87-'88, we went fully into Anatolia. Actually, I mentioned this before — we started with children's anorak jackets, those khaki coats, you know the period, military-style parkas. Winter items sold well, summer items didn't sell so well. Actually, we got into denim to balance our summer and winter production. We entered denim in '87. Then outside Turkey, in the early 90s, you know, first Russia was reached through Poland, then Ukraine, and then Russia started coming directly to Turkey. We fully started in the early 90s. The name of our firm at the time — our brand was called 'Kulis.' When we started going international, the name 'Kulis' didn't really work well with foreigners. A colleague who's still with us said, 'Let's foreign-ize this,' and in today's terms, we made it 'Colins.' Actually, Colins comes from that. In April — with the famous April 5th decisions and the infamous crisis — it pushed us completely out of the domestic market and toward abroad. The 1994 crisis.

From '94 to '98 — actually, the Eastern Bloc countries that Gorbachev dismantled, we were the group and family that benefited most from textiles in those Eastern European regions. From '94 to '98 we were entirely focused on Russia. We were producing goods for cash payment — it was tremendous. We had just finished a factory and built our second large one — a 10,000-meter facility. We built the second one. Then in '98 the Russia crisis hit — the ruble went from 6 lira to 24 lira overnight. That crisis also pushed us into production for major international brands.

And after that, we split the business in two. We said the brand side would operate separately and the production side would operate separately. And it's been that way ever since. Production is entirely — we produce about 25% for our own brand and about 120... well, the rest we produce for major brands — all the big ones you'd know that also operate in Turkey. I won't name them to avoid advertising. Our production is based in Çorlu, Aksaray — mainly in Turkey — and we also have two factories in Egypt now, both garment and fabric. We sell 20% of everything we produce to ourselves, and about 18% of the fabric and ready-made garments we also buy from outside. We're actually a very interesting group — we go from cotton all the way to retail. We also have our own shopping malls, and inside those malls we have our own stores. In this integration, we looked into it — in the world, going from cotton to retail like this... some have fabric but no garment production, some have garment production but no brand. So with our brands, we currently have 750 stores worldwide — 200 in Turkey, the remaining 550 abroad.

If we talk about production — right now we've activated the fast second phase of our Aksaray factory, we're expanding it and trying to keep production as much as possible in Turkey.

Right now 16,000 people work directly. If you count indirect, it reaches 50,000. 16,000 are on the payroll.

About 6,000 of those 16,000 work in production in Turkey. The rest work in Egypt and in stores. The countries where we're most concentrated in retail are Russia, Ukraine, Kazakhstan, Saudi Arabia, Morocco, Belarus, Poland — we're present in all these regions. Right now, we are the group with the most stores abroad in Turkey. These stores aren't in back alleys — they're in city centers. For example, in Moscow, right at Manezh exit, Tverskaya — our flagship store, number one — it's our own property. These are in the best locations of cities, the biggest stores in shopping malls.

Let me put it this way — these 20 million are only what we produce within our own facilities. Actually, as Colins and Loft, we also source about 50 million more from outside.

For the ones we sell in Turkey, of course we buy from local firms. For price competitiveness. For the ones we sell in countries like Russia and Ukraine, we source entirely from India, China, Bangladesh, Egypt — from producers outside our own production. Out of the 20 million, 3 million pairs of jeans we make under the Colins brand. The remaining 17 million we make for those 10 major brands I mentioned earlier. Actually, you didn't mention this — we also have knitwear garment production. There we produce 6 million units of knitwear. So within our own facilities, if you combine trousers and T-shirts, that's 26 million — T-shirts, what we call T-shirts, both thin summer ones and thicker winter ones, hooded sweatshirts, winter products.

No, we were already producing very well, and there's the price advantage of course. Since we entered Russia in '94 — when you look at it today, we've covered serious distance. The Colins brand is very well known in Russia — 76% of Russians know it. That means 76 out of every 100 Russian citizens know us. We're present in every city with over 400,000 population. We're in Ufa, we're in Siberia — we're spread throughout. And consistently with the same quality and same service. All stores are our own stores — not franchise system. And we can bring the money from a sale in Siberia to Turkey within two days.

Actually, we have so many factories — about 250,000 square meters or more. If you count 750 stores, only a fraction are being renovated. Not including the new ones — just the renovations. We're doing about two shopping malls a year on the textile side. We have to, because of the stores, because of the factories. As a family we're quite large. In 2008 we decided to enter real estate too. We have a strong aesthetic side, a very creative side — textile people have that quality. Plus I have a passion for branding. Since 2008, in less than 10 years, we completed 17 projects. 17 projects totaling approximately 2.5 million square meters. At around $500 per square meter, that's roughly a 1.5 billion dollar investment portfolio. This includes not only residential — we have all types. We have 4 shopping malls, about 6,000 residential units, around 250,000–300,000 square meters of office space, and 100,000 square meters of logistics. So logistics plus residential plus offices plus malls. We've completed all 17 projects. Most are in Istanbul, we have a mall in Fethiye, one in Antalya.

Actually, the reason we entered real estate was primarily Russia and Ukraine. But there, it's like contract work — similar to contract production in textiles. You can be a subcontractor for a company appointed by the Russian state, but that doesn't suit our concept. Only the build-sell model suited us. We tried hard. In build-sell, both in terms of trust and regulations and other factors, we weren't quite brave enough to go there — maybe in the future.

Right now our brand is growing rapidly, about 20% each year. We're really focusing more on the Asian side — Pakistan, India, China. Those regions especially. India in particular. Of course, Russia and the countries I mentioned, we're already fully present there. Egypt is both a production base and where we're concentrating more on our own brand. In terms of production in Turkey, we're focusing especially on the eastern side, Central Anatolia, at our large factory, cutting and developing employment in those areas.

Thank you, Ali Bey. Stay well everyone.