“Turkey is the eighth-largest manufacturer of wool textiles and apparel; it exports wool, yarn, fair hair, and fabric. Apparel industry Turkey was the fifth prevalent provider in the world market and the second leading in the European market in 2003. Due to rise in both national and worldwide demand, the home textile business in Turkey has presented a stable development in fabrication and exports. “Among the foremost markets for Turkish textile are Germany, United States, France and the United Kingdom” (Dodd Parrish, Cassill, & Oxenham, 2004). Turkey makes a range of towels dependent on the size and the end use. These towels include those for bath, face, hand, kitchen, guest use, and washcloths. Additionally, the terry towels are known as the ‘Turk Fabric’, ‘Turkish Fabric’ or ‘Turkish Toweling’.
United States as the Suitable Market
United States was chosen as the suitable market, because it has a high demand for the Turkish towels. According to De Janquieres, the U.S. textile market that embraces the bath category is an emerging sector of home textiles (2004). In 2004, the bath category improved by 2.8% in sales to reach $ 3.7 billion, 51% of which was towels at the cost $1.881 billion. In the same way, the total amount of imported terry woven towels and washcloths to U.S. was 131,837,000 dozens valuing $1,359 billion in 2004. Towel utilization was 38,834,000 dozens for the first quarter of 2005 in the United States. “United States decidedly trades in towels because the cost of production is extensively high” (Yilmaz, Cassill, & Powell, 2007).
Outstandingly, the importation of terry towels by United States has developed with a range of 275% between 1989 and 2003. In connection, Turkey has progressively extended its share of towel shipment notwithstanding the prices surpassing the world average. “The catalog dealers sell the Turkish bath towels at prices well above the US usual prices due to their quality” (US International Trade Commission, 2004). Turkey scaled from the 22nd to 5th place in the midst of foreign suppliers of terry towels from 1989 to 2003.
According to U.S. Current 2005, Turkey was the 19th textiles and apparel exporter to the United States in 2005. Turkey is one of the world’s most important towel manufacturers by the capacity and value. Turkey has a vibrant, dedicated and economical textile industry that produces high-quality towels. There is also quick turnover in the production, which is carries out at lower cost. It creates better competitiveness in the global market. The high turnover of Turkish towels escalates market dependability of the United States. Turkish Towel Company espouses American strategy, improvement and marketing policies. Moreover, the great population of United States provides a good number of customers for the use of Turkish towels.
Method of Transportation to Use
Air transport is essential for the circulation of high value to bulk goods. Turkey has a great number of scheduled flights destined to more than 90 airports of several countries. The aviation sector is comprised of airlines, airports, air navigation and other essential ground services that make up the air transport infrastructure. It accommodates nearly 425,000 tons of air freight to, from and within Turkey.
As a result, it creates an economic benefit for its consumers, passengers, and shippers. For instance, during 2009 merchants spent about 1.5 billion on the transportation of air cargo. Air transport is advantageous because it has high speed compared to other means of transport. It is also a reliable means of transportation the Turkish towels.
The improved connectivity gives Turkish-based businesses greater access to foreign markets. It also encourages exports and increases competition. In this way, enhanced connectivity emboldens firms to specialize in areas where they possess a comparative advantage. Conveyance of large cargos of towels to the United States relies on air transportation.
Shipping is another means to transporting the Turkish towels to the United States. About 14 days are required to dispatch the towels from Turkey to the United States compared with that from East Asia. Notably, Turkey lacks the proximity benefit to the U.S. market that Canada and Latin American countries have. Fortunately, it has the proximity advantage to the European Union. Turkey is one of the prominent non-EU apparel exporters to the European Union. Air transport is an innovative industry that provides access to global markets and generates trade. It facilitates international trade promoting economic growth and development.
While transporting the towels, pre-shipment financing is required by an exporter to meet working capital needs. In addition, post-shipment financing is required by exporters to offer sales on deferred payment conditions due to the competition in international markets. Financial assistance is provided by Turkish commercial banks or directly by Turk Eximbank when shipping the towels to United States.
Breakdown of Cost and Tariff
The cost analysis is the systematic process of identifying individual elements that make the total cost of a good, service or package. Importantly, it assigns a dollar value to each element. Alternately, the values of individual items are expressed as a percentages of the total cost. The importers, such as United States, should know that if the price of the towels is higher than the breakdown, then Turkey is charging exorbitantly. On the other hand, if the charge is considerably lower than the total cost, then Turkey is probably taking a loss for working with the United States.
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According to the European Institute of Purchasing Management, the procedure for determining the cost of production is a three-step process. The first step involves the establishment of the cost structure. Specifically, the United States should gather information to understand the elements and drivers of the costs of those elements. Secondly, the importing nation has the duty to check whether the offers received for the elements are consistent or not. It pertains comparing price and establishing the reasons for variance. Thirdly, the United States should negotiate based on the findings and follow up with additional negotiations on the factors that impact cost fluctuations.
Cost breakdowns are beneficial in qualifying the price indicted to the client and keeping sellers and providers responsible. It also allows both companies and consumers to identify specific reasons for fluctuations in the price. For instance, “the Bangladesh produces terry towel products that are low-end, average-quality towels mostly with $3-7 per kilogram” (Siddiquee, Asif, & Rahman, 2014).
Turkey is one of the candidate countries to the European Union (EU). As a result, it obtained an exclusive right to participate in the Customs Union. Apart from having proximity to the European Union Market, it as well has the duty free access. The recurrent variations in exchange rates and taxes critically affect the cost effectiveness of towel exporters. The exporters experience losses of proceeds in case of the weakening U.S. dollar. The cost of Turkish towels is aggregating due to high taxes on labor.
Consequently, the abolition of quotas is a chief problem facing the Turkish textile and apparel exports. It was cut off by the international textile/apparel quota regime. Such resolutions ascribed to competition from lower-cost manufacturers in the East Asia Pacific region.
As a result, the Turkish towels are facing much more stern competition in the global market coming from countries contending on a cost basis. In addition, Turkey lacks free trade agreements with the United States. Due to this situation, sometimes Turkey turns out to benefit less from a cost standpoint, as indicated by retailers and apparel suppliers.
A tariff is a tax executed on imported products and services. In most cases, taxes are used to limit trade, as they raise the charge on imported goods and services making them more costly for consumers. Turkey’s tariff has its founding on the Harmonized Commodity Description and Coding System (HS). The tariff system embraces the ad valorem rates and non-ad valorem rates. The ad valorem rates apply on total lines, while the non-ad valorem apply on specific, mixed, compound, and variable duties.
The tariff is composed of 214 bands including ad valorem equivalents. Notably, Turkey lacks periodic taxes, but maintains the statutory tariff. Turkey’s tariff demonstrates varied appreciation that is positive for such industries as textiles and apparel. Such escalation is most distinct in food, beverages, and tobacco products. Tariff rationalization would grant more transparency in the tariff system, lessen the need for concessions, and help enhance competitiveness.
Turkey’s trade regime encompasses such enticements as duty and tax concessions, finance, marketing support, and promotion. Under the government’s procurement regime, deliveries of Turkish origin are eligible for price preferences of up to 15%. These regulations on tariff have played an imperative role in moving Turkey towards the competition-based and consumer-welfare-oriented economies. Turkey applies no trade agreements, either countrywide or globally, other than those recognized by the United Nations Security Council or other local organizations to which it belongs. Similarly, registration and documentation requirements apply when Turkey is exporting towels to the United States. Lastly, the global average import duty rate for cotton Turkish bath towels is 16.3%, with a minimum of 0% and a maximum of 55%. Tariffs give a price benefit to locally manufactured products over the related imported goods. They also elevate proceeds for administrations.
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Marketing Strategies to Be Utilized
Progressive marketing approaches should be employed so as to stand out in the global competition of Turkish towels exporters. First, establishing an agent or agents in the United States will effectually intensify the exportation rates. The role of the agent or agents will be to provide the exporter with the pertinent information concerning the demand of Turkish towels in the United States. Moreover, it is the obligation of the agents to evaluate the policies used by the competitors in the U.S. market.
Alike, the officials ought to keep in touch with the upcoming information regarding the sale of Turkish towels. It is the obligation of the agents to communicate with the producers of Turkish towels concerning the interests of suppliers, customers, and prospective clienteles. Moreover, the exporter is accountable for developing relations with merchandising customers in the United States. Once there is a trusted relationship with the retail customers, there will be tranquility in the marketing procedure. Targeting other retail customers will become simple, and the customer base will vastly upsurge.
Furthermore, the exporter ought to capitalize on the strength of “Turkish Cotton” and brand equity ‘Turkish Towels’. The accessibility of sufficient cotton in Turkey places the States at a better position than the nations that have to import raw materials to produce the towels. The easy availability of cotton empowers Turkey to produce significant quantities of more high-quality towels than other countries. In the marketing strategies, the exporter should accept this fact as an added advantage. Brand equity value, both generic and specific, accounts for a massive percentage of a value-added strategy.
In order to become globally competitive, the manufacturers of Turkish towels should consider improved branding and differentiation. Such a move will meet the retailers’ standards and upturn productivity. Branding encompasses attractive design of the Turkish towels. It is worth noting that the key profits come to the upper end of the apparel value chain, which is original design (ODM) and original brand manufacturing (OBM). Therefore, Turkish home textiles should pay attention to ODM and OBM to benefit from the extra value they offer.
Hence, Turkey should focus on the product differentiation so as to influence customers with its marketing. The process of product differentiation comprises concentrating on increasing the quality and enhancing the value that consumers get, rather than focusing on mass production and reducing costs. In so doing, Turkey will obtain a strong position and reputation in the United States market.
Marketing strategies should also entail product and labor specialization. Product specialization stimulates and enhances differentiation, which increases the flexibility of the productive process. Job specialization escalates quality and productivity as well as improves time-saving methods. If Turkey puts these strategies in place, it will be able to respond to variable market conditions and obtain a competitive advantage.
The producer firms should vertically integrate and focus on becoming a home textile producer with a full package solution, since the buyers are looking for specialized one-stop-shop, expert and vertically integrated suppliers. Through vertical integration, the producers can lower the lead times, because it attracts a quick response to business needs. In order to thrive in the worldwide markets, Turkey needs to invest more to lower the cost of production and raise the quality by improving manufacturing processes.
United States Import Requirements
Unless specifically exempted by law, all imports into the U.S. are subject to customs duties. There are no overseas exchange controls over expenses for imports. Under the applicable items in the Harmonized Tariff Schedule of the U.S., all products entering the U.S. are subject to tax obligation or duty-free admission in relation to their organization. The import duties can be ad valorem or specific. According to the country of origin, the rates of tax may vary.
Entry in United States
When a consignment reaches the United States, the trader of record that is the proprietor, procurer, or accredited customs broker elected by the owner, buyer, or consignee, will file official admission papers for the imports with the port administrator at the goods’ port of entry. Imported goods are have officially entered until after the shipment has arrived within the port of entry, conveyance of the merchandise has been sanctioned by CBP, and appraised duties have been paid. It is the trader of record’s accountability to organize inspection and discharge of the goods.
Labelling and Marking Regulations
Imported goods are obligated to be marked with the country of origin in the English language. The United States require that the marking should be permanent, legible and conspicuous. Correspondingly, additional labeling is required on textiles and apparel, cosmetics, food and flammable fabrics.
Harmonized Commodity Description and Coding System
The Harmonized System (HS) is also referred to as harmonized commodity description and coding system or tariff nomenclature. It is an internally standardized system comprised of names and numbers to classify traded products. The World Customs Organization (WCO) is an established and sustained system where the contracting parties are indebted to base their tariff programs. It is founded the basis of all countries’ tax schedule all over the world. WCO standardizes customs executions and offers consistency for member states. It also creates wide-ranging variations in the Harmonized System nearly every five years.
As a case in point, World Customs Organization made detailed deviations in the Harmonized System in 1992, 1996, 2002, 2007 and 2012. These changes take in the newly-entrant goods to the market and integrate the codes of products whose trade volume is correspondingly small. Every product traded out or traded in from a state is accorded with a Harmonized System code. The website of World Customs Organization makes available the list of countries/economies using the Harmonized System. Globally, 207 nations and markets make use of this scheme. Therefore, the Harmonized System organizes a common foundation for global trade statistics and all countries’ customs tariffs. It is a worldwide cataloging system used for all commodities traded across many countries.
In the Harmonized System, every procured product is ordered in accordance with certain rational and systematical frameworks. Registration of products in customs is based on the foundation of these codes. Hence, every group of products/goods has a Harmonized Code. The HS is a general trading language for products and is an obligatory instrument for both product coding and worldwide trade. In other words, the Harmonized System Code can be well-defined as the identification number of all products in customs procedures.
The system is operated by more than 200 countries and economies as a basis for the collection of international trade statistics. Besides, the Harmonized System’s numbers are used by customs authorities to categorize products for the claim of customs duties and protocols. A high percentage of the world trade is classified in terms of the Harmonized System.
In every country’s tariff schedule that is expending the Harmonized System, 2-digit, 4-digit, and 6-digit codes are similar all over the world. These encryptions indicate the same product or product group in these countries. However, every state can use different systems for their prerequisites to determine the types of products.
In the Harmonized System, products are branded horizontally and vertically, according to such classifications as crude and natural products, unrefined, semi-processed and processed products. This scheme can be realized in the whole tariff schedule. For instance, polymers of ethylene as a crude product is coded in heading 3901. Products can also be classified in chapters 01-83 and considered according to the purpose in chapters 84-97.
In order to certify standardization of interpretations, as concerns the Harmonized System Nomenclature, WCO issues Harmonized System Explanatory Notes. These notes contain WCO’s endorsed arguments on the subject. The notes are transformed and dispensed in English and French every five years. Lastly, organization of textiles and textile articles are found in Section XI from chapter 50 to chapter 63. The Harmonized Code for Turkish towels in the United States is 6302.91.0050 with MFN of 9.2%, and the sales tax depends on the state.
Turkey is a comprehensive competitor in towel production with increasing exports. It is a value-added leader in towels that has a strong textile and apparel industry structure. Turkey’s exports have amplified in both value and volume offering an economic gain in the global market. Turkey is well-situated to compete in the global arena and be a governing supplier of towels. It has one of the utmost spinning, weaving, dye-finishing and apparel production aptitudes in the world. The United States decidedly depends on the Turkish towels for their high quality. It has been explained why the United States is the right market for Turkish towels. Extensively, it also has also expounded on the appropriate means of transportation to be used when conveying the Turkish towels to United States. There are also detailed regulations in the country importing the towels and the harmonized commodity description and coding system.