Building a New Empire: Germany’s Turkish Entrepreneurs

CNBC Business Magazine, Sept 1, 2011

Half a century after the first ‘guest workers’ arrived, entrepreneurs in the Turkish community are playing a vital role in Germany’s economic success

When Mehmet Aygün arrived in Berlin’s Kreuzberg district in the 1970s he worked in a fast-food restaurant and dreamed of setting up his own business. Now he’s in charge of an empire, running both the Hasir restaurant chain in Berlin and Titanic Resorts and Hotels, which has properties in Turkey and Germany.

With the 50th anniversary of Germany’s guest worker agreement with Turkey approaching, most headlines focus on the challenges of integration. Yet there are also numerous success stories, such as Aygün’s, that point to a thriving Turkish-German entrepreneurial culture.

Some 650,000 Turks came to West Germany in the decade or more that followed the labour recruitment agreement signed in October 1961. And while the influx of low-skilled workers required for the country’s booming post-war industry was halted in 1973 by the recession that followed the oil crisis, the so-called ‘guest workers’ had already started bringing family members over.

While most had initially planned to stay for just a few years, the majority eventually began to settle down and put down roots. The community is now thought to be around 3.5 million strong, the largest ethnic minority in the country.

According to Andreas Goldberg, director of the Centre for Turkish Studies (ZfT) at the University of Duisburg-Essen, those with Turkish roots are more likely than ethnic Germans to be self-employed. Indeed, the ZfT estimates there are more than 80,000 Turkish-German businesses, employing at least 300,000 people, and with an average annual turnover of around €450,000.

“They are natural-born entrepreneurs,” says Goldberg. “They are willing to work long hours, something that never bothers good business people.” Guest workers, he argues, were not used to the idea of a social safety net to fall back on. “One had to help oneself or no one else would.”

Suat Bakir, director of the Turkish- German Chamber of Commerce (TD-IHK), agrees. “Even if a Turk has a little shop, where he earns less than he would as an employee, he is still independent,” he says. “He feels he is his own boss and he also has a higher standing within the community.”

The Titanic-Hasir empire is a prime example of that entrepreneurial spirit. After working in his uncle’s restaurant, Aygün set up his first Hasir outlet in 1978. Now he has seven restaurants (one Italian and six Hasirs) of his own.

In 2003, he established the Titanic hotel chain in Turkey in partnership with his brothers, who were still back home. Today they have six hotels in Istanbul and one, their flagship resort, in Antalya on the Mediterranean coast, which has 600 rooms and an average occupancy of 94%. During the quieter winter months, around 80 football teams from Europe, among them Werder Bremen, avail themselves of the eight full-sized football pitches near the hotel for training purposes.

Expanding into Germany, the company opened a business hotel in Spittelmarkt, near Berlin’s central Alexanderplatz, in March. The €7m refurbishment of an East Berlin office block created 226 rooms, and prices start at €75 a night, breakfast included. But the Titanic chain has even greater ambitions, with construction starting this summer on a five-star hotel at the exclusive Gendarmenmarkt square just off the upscale shopping street Friedrichstrasse. It is due to open next year.

“The hotel will have around 200 rooms, and we are working with the architects Patzschke & Partner, who refurbished the Hotel Adlon [the five-star luxury hotel next to the Brandenburg Gate],” says Aytac Aygün, Mehmet’s eldest son and the head of the company’s European hotel operations. “Our combination of being the investors, construction company and hotel management company is unique.”

Sitting in the Spittelmarkt hotel restaurant, he comes across as older than his 24 years. He studied hotel management in Switzerland, where he also perfected his English. Aygün says the continued expansion of the business is down to his father, who is always “very hungry” for ideas that will lead to growth. “I think that is one of the attributes an entrepreneur has to have in order to be successful. If you feel satisfied and think, ‘Okay I have achieved enough,’ then you cannot grow. You always have to look for innovation.” The Aygün empire’s origins were similar to many of the first successful immigrant businesses in that it was focused on the Turkish market in Germany. The first self- employed Turks supplied their neighbours with foods and products from home, not easily available in their adopted land.

“There was a real boom in the Turkish grocery business,” says Gülsen Fidan, a financial consultant to people setting up new businesses. “A few guest workers set up their own shops and then other people saw how well they were doing and did the same.” Comfortable with its own niche, that first generation didn’t dare enter into other markets, but that has changed in the past 20-30 years. “There is no longer a ‘typical’ Turkish company” says Bakir of the TD-IHK. Now these companies operate across all business sectors, from IT consulting to mechanical engineering to renewable energies.

Turks are particularly well represented in IT, with success stories such as Crytek, which produces video games for PCs and next-generation consoles such as Far Cry and Crysis. Founded in 1999 by Avni, Cevat and Faruk Yerli – who grew up in the Bavarian city of Coburg, the sons of a Turkish guest worker – the Frankfurt-based company has studios in Ukraine, Hungary, Bulgaria, South Korea and the UK.

Another example is Solitem, founded by CEO Ahmet Lokurlu, who came to Germany in the 80s to study for a doctorate in engineering. He stayed to work as a researcher and lecturer before hitting on a business idea in 1993 to create cooling systems using solar energy. “In the south we have a different relationship to the sun,” he says. “When someone from the north thinks of the sun, they think of warmth, but we think of cold. As an engineer, I started to think how to use the sun to cool.” After years developing his system, he established the firm in 1999.

Headquartered in the city of Aachen, in the west of Germany, Solitem also operates a solar plant in Turkey. Its emission-free solar-energy systems are used for hot water generation, steam generation, heating, cooling and power generation, and also provide climate control for a growing number of hotels and hospitals in the Mediterranean region, where air- conditioning can be responsible for up to 40% of energy consumption.

Lokurlu says he was motivated both by a desire to set up a business and concern for the environment. “What we are really doing,” he says, meaning humanity generally, “is destroying the entire planet.” He has won close to 20 awards, including the Energy Globe Award, and was named a Hero of the Environment by Time in 2007.

Kobil Systems, based in Worms, western Germany, also arose from the desire to create a new product. Founded by Ismet Koyun in 1986, it is now one of the leading providers of security technology for online banking. Koyun first came to Germany as a teenager in the 70s to study computer science. From his student accommodation he began working on developing his ideas to improve PC security. “Sometimes one just wants to do something different,” he says. “I saw that PCs were becoming increasingly vulnerable, so I worked to make them more secure.”

The company, which has a staff of 120 and an annual turnover of €25m, is now a leading provider of mobile high-security IT solutions in the area of digital identities. Its clients include Société Generale and Commerzbank, and in Turkey it has 80% of the banking security market.

Sadly, success hasn’t dispelled the stereotypes. “When I tell people I am a businessman, they often think I run a kebab restaurant or a grocery shop,” says Koyun. “When I tell them I own a hi-tech company, they look at me askance.”

Solitem’s Lokurlu, who has doctorates in engineering and philosophy, adds: “When you say ‘foreigner’ in this country, then people often understand that to be someone who is illiterate, who cannot speak the language fluently, who lives in isolation, in a ghetto. But that is an incorrect image.”

However, Turkish-Germans do see themselves as sometimes having a different mentality from their German counterparts, one that can be advantageous in the business world. “I would see them as fundamentally more determined and dogged in their mentality,” says Fidan.

The ZfT’s Goldberg says Turkish- Germans are often more willing to take risks and are very dedicated, and Bakir of the TD-IHK argues that there is a strong sense of solidarity within the community that helps them to weather crises. “They are supported by friends and family, including financially,” he says.

Some contend that the young generation born in Germany take their cues from both cultures. “Being punctual, organised and disciplined are all positive aspects of a German upbringing,” says Fidan, who was born in Germany after her parents moved there in 1971. “On the other hand, as a Turk, one is more open, more interested in getting to know other people and more customer-orientated.”

Aygün certainly feels that the combination of being German and Turkish has helped him in business: “I think Turks are very practical people, able to solve things immediately, whereas Germans are very disciplined. And we kids of the guest workers, we are a product of this mix.”

Lokurlu points out that being rooted in two cultures makes Turkish-Germans more open to third cultures, so that business dealings with people from different countries becomes easier. “This synergy between the two cultures is an advantage,” he says. “When a person comes from just one culture, then they only have those parameters. It is an unbelievable treasure to have these two cultures in you. That is the basis of my success.”

A study by PricewaterhouseCoopers Germany, called Turkish Entrepreneurs’ Recipes for Success, surveyed 150 business owners in 2009 and found that many of them saw the combination of German and Turkish characteristics as key to their own achievements.

Yet those differences in mentality can sometimes be a hindrance. Goldberg says that some Turkish-Germans, by being less risk-averse, can be prone to creating a company before doing the groundwork. “Some don’t seek enough advice before they get started,” he argues.

Even community solidarity can have drawbacks. “Normally, companies require a business plan and many conversations in order to convince a bank that their idea is viable,” says Goldberg. But with many Turks, the start-up capital comes from family or friends. “That means you can found a company quickly, but there is a danger that all the money will be lost. And that is not just an individual disaster, but one for the whole family.”

Another issue facing businesses is racial discrimination. “In this, entrepreneurs are no different from the other parts of society,” says Bakir of the TD-IHK. “Discrimination still exists and it can only be eliminated through more interaction and information.”

Koyun says Kobil Systems’ success speaks for itself, but when he was starting out he encountered difficulties. “When I went to big companies and suggested that we work on a project together, sometimes they would look at me strangely and ask if someone from Turkey was even capable of this. But now, after years of experience, it doesn’t happen very often.”

In fact the PricewaterhouseCoopers study found that a third of Turkish business owners felt they had experienced discrimination; another 47% partially agreed. Some of those surveyed said they were convinced that they were more strictly inspected by officials, had more difficulty securing bank loans and were disadvantaged compared with other companies when it came to the awarding of contracts.

Norbert Winkeljohann, chairman of the supervisory board at PwC Germany, carried out the study. “On the whole it shows how successful and integrated many Turkish business owners are in Germany,” he says. “Despite sometimes difficult circumstances, they have achieved a lot.”

He warns, however, that even the perception of discrimination could pose a danger to the German economy. “Even if subjective feelings also play a role here, we in industry and politics should pay very careful attention to ensuring equal treatment,” he says. “Otherwise Germany’s image as a business location could suffer in the long term.”

Originally published in CNBC Business Magazine:

http://www.cnbcmagazine.com/story/building-a-new-empire/1442/1/

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