“Whether you are engaging in a merger, establishing a law firm with someone, or partnering with a foreigner in a big business, for a good partnership, the parties must have a clear vision of the future, be open to change, have the mentality to solve problems within a win-win approach, value interdependence, trust in the promise made and actions taken, sharing information and giving feedback are the most important features. Partners fall to loggerheads mostly because their vision of the future is not clear.”

If you are partnering with a foreigner, of course, different cultures come into play. But first, since it is a partnership, it is necessary to look at the basic dynamics that make up the partnership. There are many motivations to combine horizontal or vertical forces and partner with companies from the same sector. These can be listed as: launching new products, leading technology and developing game-changing innovation, reducing costs, increasing efficiency, strengthening sales and distribution, increasing scale in supply, creating a logistics pool, reducing infrastructure costs, increasing penetration in retail, cooperating in unprofitable parts of the business, accessing cheaper financing, opening up to new markets, improving cash flow and so on.

Once a partnership is formed, it has the following advantages for partners: They share profits and risks. They do things by adding their individual strengths and preferences. Synergy is brought and more well-balanced decisions are made. It is expected to provide friendship and emotional support in challenging times. Business opportunities that cannot be handled alone can be taken into consideration.

In partnerships, things may not always come out as planned. Inevitable conflicts and unmet expectations are the biggest problem areas. Then, the following issues are encountered:

The battering of the parties in intense emotional conflicts. Reduced productivity for employees and partners. Waste of time with non-work-related matters. Loss of income upon termination of partnership. Additional costs of conflict and separation.

Whether you are engaging in a merger, establishing a law firm with someone, or partnering with a foreigner in a big business, for a good partnership, the parties must have a clear vision of the future, be open to change, have the mentality to solve problems within a win-win approach, value interdependence, trust in the promise made and actions taken, sharing information and giving feedback are the most important features. Partners fall to loggerheads mostly because their vision of the future is not clear. If these visions are not shared in the first place or if one of the parties changes its vision, the partnerships usually become complicated because the expectations will differ.

Besides, if the partner is a foreigner, of course, things get even more complicated. Right here, two researchers working at Hofstede's company called Hofstede Insight, the cultural researcher I mentioned earlier, divided the cultures of the countries into seven as competitors, organizers, the connected, the reciprocators, diplomats, the marathoners and the craftsmen, and explained the characteristics of each as follows:

Competitors: Such cultures do not care about uncertainty and love to fight. This cluster includes the United States, Australia, New Zealand and the United Kingdom. These cultures score high on the "individualism index" and view negotiation as a competition. They view failure as part of the game, but do not believe any rules govern the negotiation. Even the bosses can criticize their companies.

Organizers: They believe in the significance of structured organizations and follow the rules. Organizer cultures value structure and everything that goes with it, however, it is not hierarchy that governs them. Organizers respect their superiors according to their competencies. In organizer cultures, things are done following a certain method and step by step.

The connected: They believe in clarity and expect you to believe in the same. Connected cultures value individuality. They ignore the hierarchy and accept people without worrying about their status. They believe in strong ties with others and seek consensus. They don't mind uncertainty, because they think long-term to a certain extent. Connected cultures are democratic, but if you're not a part of the potential customer network, it can be difficult to walk through their door, let alone partnership. Diplomats: Such cultures value individual freedom and respect hierarchy. Diplomatic cultures, especially France and Belgium, acknowledge the hierarchy because they do not like public conflicts and prefer to make prearrangements to avoid them.

The Reciprocators: People in such cultures interact through the exchange of favors. This culture likes certainty and does not appreciate the public posting of differences. Cultures of reciprocity operate based on the "You scratch my back and I'll scratch yours" mentality. In cultures of reciprocity, partnership negotiations take a long time and you may find that the process can go back and forth.

The Marathoners: They can hide their true goals. Marathon cultures, like those in Asia, view bargaining or partnership issues as a permanent process. Individuals in such cultures honor those higher in the hierarchy. They want to get ahead, get praise from their peers, and earn financial rewards. They accept uncertainty as part of the game. Marathoners can hide their true goals from you.

Craftsmen: They pay as much attention to details as a surgeon. Artisanal societies - in fact only Japan is in this category- believe in meticulous attention to detail, even in mass production. The Japanese take pride in their dedication to aesthetics and details. Focusing on the relationship first, the craftsman regards both the big picture and every little detail as important.

Yıldız Holding experience covers almost every country's culture

Although we first started with exports, we have undoubtedly provided the greatest experience in the field of partnership with the joint ventures we have realized within Turkey. Our foreign partnerships have been a kind of preparation for us, at least at the thought stage, in our opening up to the world. With these partnerships, we may not have achieved all the advantages we hoped for in technology and competition. Our partners have found trust in us in the local market they want to be in. They traveled with us with our local experience and our strength in the market.

The global company we established under the name of pladis in the biscuit and snack sector became the third largest biscuit company in the world. Likewise, we are the largest food company in Turkey, England, the Middle East, and North Africa.

Although we were thinking of opening up to the world at the beginning of the 1990s and even dreaming of today, our immediate goal was to establish partnerships with foreigners in the strategic area we deem necessary. Today, conditions have changed for some categories. In this case, we have both ongoing partnerships and those we have terminated. The contribution of each of them to our business, including the partnerships we terminated, has been extremely significant.

ALL OFFERS CAME FROM OUR PARTNERS

In partnership with foreigners, the first offer usually comes from them and they want to acquire us. We have always rejected this option. When they decided to invest in the field of food, the results of their research always pointed to us. Sometimes our strategy to partner with foreigners coincided with their offers. Our first foreign partner was Cerestar in 1993. Cerestar was the largest in Europe on starch and glucose. Its owner was Begin Say, one of the largest producers of beet sugar. We partnered with them. Why? Because glucose production in Turkey seemed to be non-existent. Very small amounts. Glucose is technically a necessary sugar. If there is no glucose, chewing gum, chocolate coated, and similar products go to sugar on the shelf. It was not available in Turkey and its price was higher than sugar, even on a dry matter basis. However, technically it should be cheaper and after we invested, its price dropped. After that, other foreigners and locals invested in the same field. The market has settled into a proper course. Cargill is the company doing this business on a large scale in Turkey. Years after our partnership with Cerestar, Cargill acquired Cerestar. Cargill has its own large-capacity factory in our country. Also, since Cargill bought Cerestar globally, we had become a 50/50 partner in Pendik Nişasta in our country. We were rivals with Cargill, but we became inevitable partners at the end of the day. Cargill was making the same production in its own factory as the one we do in our partner factory. We both were making good money. No problems arose. As Pendik Nişasta, we used to pay licenses to Cerestar for some productions. After this partnership, we didn't pay licenses anymore and the business continued like this for years.

THE STORY OF PENDİK NİŞASTA

But for the first time, a partner and we couldn't like each other. I don't know whether it's for the reasons I mentioned above. Let me explain why;

I explained above. In the 1980s, the investment of a global company called CPC and Vaniköy, a 100% domestic company, used to process corn and produce glucose. In the end, only Vaniköy (Süleymangil Family) survived and glucose was being sold at exorbitant prices. The family had made a new investment for capacity increase, but they were in a financial stalemate. Kent (Yakup Tahincioğlu) and we (Ülker), its two big customers, became partners of the company to maintain the investment because this vertical integration investment was essential for supply and cost matters. But later, as a result of family discord, they transferred their majority shares to Cargill, which made a very tempting offer to enter Turkey. At that time, Cargill (A. Blankenstein) told us that they will make an attractive payment to us adding that they would not recommend us to stay with them. I didn't understand him then. But right before the first Eid Al-Fitr, they had made a hefty increase in glucose prices. This put us all in a difficult position because orders were taken before the holiday, prices had been already fixed. We took Cerestar as a partner and established Pendik Nişasta Sanayi İşletmesi as a strategic business because of such monopolistic attitudes. We even received incentives as "Strategic Investment". It was the first comprehensive starch and derivatives manufacturing company in the country. But alas, Cargill later acquired Cerestar and we willy-nilly became a 50/50 partner. Our strategic investment went for nothing. Pendik remained an efficient, profitable but stale business and our share was finally sold. May it do the acquirer good!

For example, another family company, Arcor, is an Argentinian company. A large chocolate confectionery company. It is very successful, especially in Latin America. Because in Argentina, sugar is 250 dollars per ton, in Turkey it is 1000 dollars. It is not feasible to import it, too. Of course, we have to do agriculture in our country and protect the sugar farmers, but if we want competitive industry and employment growth, we must make agriculture competitive as well. If sugar becomes this expensive compared to the world, all prices will increase because sugar is the input of all food. It is a main source of energy. If you make sugar expensive, you cause great injustice to the low-income people who work with muscle power and need more energy.

Let me return to our partnership. When we decided to produce baby food, we brought in an expert from Nestle. After establishing the baby food factory, Hero from Switzerland came and said "Let's be partners". I accepted this proposal taking future opportunities into consideration and we made a good partnership in the end. Our partnership no longer exists, we only do sales and distribution, but we had done a good job together. Then came the American Kellogg's in 2005, and we founded Kelloggs Med with them.

In 2009, we established the Continental Confectionery Company with Gumlink, one of the largest chewing gum companies in Europe, and started the production of chewing gum and confectionery with the latest technology. Today, the export of the factory in Çorlu has exceeded the production for the domestic market. In 2010, we made a joint venture agreement with the world spice leader McCormick. In the same year, we made a partnership agreement with Eckes-Granini Group, the leading fruit juice producer in Europe, to establish a new company to operate in the fruit juice sector. But since we left some categories in our global journey, these companies are no longer in our structure.

We also established a joint venture with SCA on personal care, in 2011. In 2012, we made an agreement with Japanese Nissin on instant noodle production, and we ended these partnerships due to our decision to focus on our main business.

As I said, we continue with some and broke up with others. But we gained a lot of experience. The articles of association and general assembly minutes of these companies are registered and announced with corresponding years. There is information that researchers can benefit from on many issues such as company structure, working conditions, monitoring and control mechanisms, etc. Of course, it is necessary to mention also the managers and lawyers who are experts in this field.

Would I recommend joint ventures to young entrepreneurs who want to develop their own businesses and open up to the world? Under certain conditions, I would say yes. They will benefit. And they have to decide on their own as a result of certain inquiries whether the conditions are suitable or not. For example, joint ventures should not be limited to the domestic market. It is also important which geographies other than Turkey will be included. I think the first stage should be close places, both geographically and culturally. I think it is necessary to move the joint ventures to the post-Ottoman lands. Sharing the financial risks, expanding the distribution network and supply power had been very important in the joint ventures we established in Turkey. These three points had made partnership possible immediately. In this context, with your partners, you need to find an answer to the question “why should we be together?” In my opinion, today and in the future, it is necessary to decide which joint ventures are strategic and which are opportunist. What is the importance of joint ventures for Yıldız Holding's vision? What are the geography and financial risks, what are the advantages for the partners and for us? What should be the scope of joint ventures, which categories should they cover, what should be in the future? How should we combine them with our global strategies? After all, how much know-how and experience do we gain from these, what will it do for us in the future?

Adding more questions to these and reviewing them, determining the status of each category, joint venture, market, it is useful to create a strategy thereafter. Then, we can run our relationship with our partner accordingly. This will be advantageous for both parties.

It is very vital for young entrepreneurs to make such inquiries for the future of their business. Based on my experience, I can say that there are challenges in partnering with foreigners. The first is long distance, and the second is the different corporate cultures that are fed by the cultures of the countries such as competitors, organizers, associates, the reciprocators, diplomats, marathoners and craftsmen. In Joint Venture companies, it is necessary to develop not only the merger of businesses but also their corporate culture. Then we need to approximate geographic distances. This requires empathy. We solve this problem by putting ourselves in the other person's shoes. When I look at Poland, I say, “Poles and Hungarians look alike”. I look at history, I see the Austro-Hungarian Empire. Although the Austrians do not go for the Germans, I know that the Germans eat what they like. And Hitler was Austrian. This is how foreigners perceive us when they come here. We've all read history. What was in our history? There was the Ottoman Empire. Then, these are the locations where our joint ventures can reach the easiest. That's our goal. Why? Because every time I go, they offer Turkish Cuisine. Actually, what they describe is Ottoman Cuisine. Doesn't matter whether you go to Greece or Lebanon, you order the same farci. That's the case even in Pakistan. This is a culture. What interests us is the culture of living and food. If you say to the waiter "bring me your favorite food" within vast geography including Tel Aviv, it turns out to be one you like, too. We should not neglect the development in this direction.

If you are going to do a joint venture, don't do it only for Turkey. Rather set your eyes on our former borders, as I said. If you say these markets are a bit risky, I would respond, isn't 'venture' a bit of an adventure anyway? Of course, provided that you manage the risks appropriately…

*From Murat Ülker’s blog