Turkey Green Growth Policy Paper: Towards a Greener Economy
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4.6 White Goods24Situation analysis Box 4.5. The sector is highly innovation-driven. For example, 3G technologies have led to the introduction of 3G-compatible devices, and the demand for energy-efficient products is creating a new consumption trend in white goods. Turkey’s household appliances industry, which started as an assembly industry with foreign partners, has achieved tremendous progress and is now a flagship of the Turkish economy. The industry currently contributes about 1% of GDP and $US 2.7 billion exports in 2010. This sector has evolved from companies working under licensing agreements to accumulate its own know-how, carving out a niche in world markets with its own designs and technology. The sector’s core consists of around 6 large- and 50 medium-scale manufacturers, with around 500 other firms supplying parts and components. Box 4.6. The energy labeling affixed on products such as refrigerators, deep freezers, washing machines, dishwashers, electric ovens, and air conditioners presents, among other product information, the energy class (RED: least efficient; GREEN: most efficient), and annual energy consumption in kWh/year. 
In recent years, Turkish manufacturers have increasingly engaged in strategic partnerships with foreign firms, expanding overseas with mergers and acquisitions to better position themselves and improve their brand visibility in Europe, MENA and elsewhere. Today, for example, BEKO is among the top appliance suppliers in Europe and its expansion outside Turkey has helped it achieve market dominance. In response to increasing global competition, the sector has also placed emphasis on innovation and new product development Figure 4.2 White Goods Sector 
Source: TURKSTAT The sector has increasingly oriented itself towards exports, with great success. Between 2000-2010, the sector increased its exports seven-fold (Figure 4.2). This success story is due to a multi-faceted policy including: use of advanced technologies in manufacturing, significant investments in R&D projects and facilities, full adaptation to international quality standards (e.g., ISO Series of quality assurance), focus on customer satisfaction, market preferences, world-class marketing and consumer services. The alignment of Turkey’s legislation with EU harmonization and customs union requirements has also provided the sector with a competitive advantage. The sector’s long-term objective is to become a key player and a leader in the EU market. To strengthen its competitiveness, the sector is investing not only in product quality and R&D, but also in energy-efficient products increasingly demanded by the market. For example, recent labeling and eco-design communiqués have been issued for many appliances demonstrating the sector’s commitment and ability to growing green. See Box 4.6 on recent energy efficiency labeling requirements. Sector Environmental footprint. In addition to the main raw material (Cr-Ni steel) used in white goods manufacturing—currently imported with plans to substitute local production -the most important domestic components are compressors, electrical motors and plastic injection systems, which are all considered pollutant-intensive (e.g., petroleum products, chemicals and electricity-intensive products) and fall under major EU directives on waste & hazardous waste, water pollution, WEEE and IPPC. In addition, only 10-15% of the plants are regulatated in terms of energy intensity and usage of inputs meeting the EU directives. An added pressure on the sector is the emerging competition from countries like Croatia, Poland and Hungary, which will invariably have an impact on the capacity of the sector to further green its production (through the entire value chain). Sector potential The sector has good potential for further greening because of its link to market demand and emphasis on innovation and R&D. In addition to energy efficiency in production, the increased collection and reuse of metals is a major component in the sector, and plastics would have a positive impact on reducing costs and decreasing pollution. There is also a considerable gap between the requirements of the WEEE directive and Turkey’s current situation. Given the burgeoning amount of e-waste produced in this industry and because of its trade and linkages with the EU market, the sector will need to move closer to adhering to compliance with EU standards. Electronics Situation analysis Beginning with foreign license agreements with companies mostly from the US or Europe, Turkey’s electronics industry has changed and matured considerably since the late 1980s. The sector has been adding value to the Turkish economy as a flagship of innovation, quality and competitiveness and export-driven growth (1.5% contribution to GDP and US$ 6 billion exports in 2010). From 2000-2010, the sector increased its exports nearly four-fold (Figure 4.3). Figure 4.3 Electronics Sector 
Source: TURKSTAT Among its six categories of products (telecommunications equipment, Consumer electronics, computers, defense industry electronics, professional and industrial equipment, and components), consumer electronics has achieved remarkable success, accounting for over half of the European market for CRT TV sets. Driven to keep its competitive edge, the sector is investing significantly in R&D particularly in LCD display and AISC technologies. By placing an emphasis on adding value through innovation and R&D, Turkey’s electronic industry has quickly captured the local market and is now a global player. The sector provides about a quarter-million jobs in production, engineering and services, and grosses over 30 billion dollars with over one-third in manufacturing and the remaining in engineering and after-sales services. About one-fifth of this gross revenue was generated from exports. The sector is also one of the largest recipients of FDI. Foreign firms bring their technology, efficient production techniques, and contacts to the sector. However, access to finance, public support to R&D, access to qualified human resources, and issues with the legal and institutional framework, continue to hamper the growth potential of the sector (which is also the case for the automotive and white goods sectors). Sector environmental footprint. In addition to energy use, hazardous waste is the most important issue in the manufacturing of consumer electronics, including heavy metals such as lead, cadmium and mercury, which contaminate water resources and pose serious threats to human health and ecosystems. As consumer electronics penetrate deeper in the market product turnover increases and product lifespans shorten, leading to a continuous stream of hazardous waste (e.g. roughly half of the phones are replaced within a year, approximately 10-15% of which are simply discarded, 10%-15% are recycled for scrap metal, and the rest end up in a the second-hand market and/or join the municipal waste stream). Area for improvement and potential Because of these environmental issues, the sector is specifically targeted by the EU WEEE Directive. The WEEE directive imposes the responsibility for WEEE disposal on the manufacturers of such equipment, who are required to collect their e-waste free-of-charge and ensure that they are disposed of safely. However, there is a considerable gap between the requirements of the WEEE directive and Turkey’s current situation, especially given the burgeoning amount of e-waste produced. As in the white goods sector, much of the old equipment and waste is collected by informal scrap dealers and sold on secondary markets. 25 This is a pressing challenge but constitutes an opportunity for greening this economically important sector. |