MEANS OF EXCHANGE

Turkey 2011 | FINANCE | INTERVIEW

TBY talks to Sırrı Şimşek, Chairman of Turk Barter, on the development of the barter sector, an alternative means of financing.

Sırrı Şimşek
BIOGRAPHY
Sırrı Şimşek began his career in 1992 at Tüpra, where he was the General Manager. He later worked as the General Manager at Ekonomix between 1998 and 2009. He then went on to found Turk Barter in 1998, and currently acts as Chairman.

Tell us about bartering, since this is a relatively unknown form of modern trade. How does it work?

Bartering is basically an alternative financing system. It was, of course, the first form of trade before the invention of money. Today it stands as an alternative to the use of money. Bartering has advanced to the point where it can be done by card and check. You open an account at a barter bank in much the same way as at a normal bank. The account-holder states what products or services they want to exchange; basically, what they offer, and what products they are willing to trade their products for. Our banking system helps our customers get into contact with each other so they can exchange what they need.

What sort of services do you offer?

We've developed a whole range of services, including barter leasing, barter tourism, barter health, barter construction, and barter media. We've even converted some into companies in their own right. For example, we have a completely independent finance company that specializes in barter insurance. Our goal is to meet the needs of those who have problems finding credit on the finance market. You can even reclaim or pay off your debt by bartering your products. It's an alternative system of financing, payment, and trade. We help companies with marketing, we help them reduce their stock, we help them raise their production capacity, and we help them protect cash savings.

How widespread is barter in Turkey?

Actually, a lot of companies in Turkey and around the world already engage in some form of unofficial bartering; advertising companies produce ads for goods, construction firms receive construction materials as payment for apartment units, but the only company that engages in official corporate bartering is Turk Barter. We introduced the bartering system to Turkey in 1994.

What about the rest of the world? How common is barter in international trade?

We recently participated in the 31st International Reciprocal Trade Association Convention in the US, where there were representatives of 42 barter exchanges from all over the world, including China, Singapore, South America, New Zealand, France, Portugal, and the UK. Turk Barter has been a member of the International Reciprocal Trade Association since 1994. I'm a member of the board of directors and I head the European committee. Our aim is to raise awareness of the value of the barter system in the global community.

Given the mistrust in financial markets of late, what makes bartering an attractive and viable trading alternative?

When you receive credit from a bank you must repay it with hard currency and with interest. In the bartering system you don't have to pay interest, and it enables trade in goods and services for those who might otherwise lack financing. Furthermore, since you're exchanging products, it enables traders to increase sales, move inventory, conserve cash, and utilize excess production capacity.

How do potential member companies react when you approach them with your system?

When we prepare a barter project for a company, it's always designed specifically for that company, taking into consideration its products, its needs, and its interests. So it's very rare that they don't agree to our proposal. Furthermore, we're preparing special custom-made projects designed to enable all our member companies to participate in the barter system.

How many members do you have?

We have 5,600 members. Also, our membership is constantly growing, but we keep a close watch on growth to so as to maintain a balance between supply and demand.

Do you have any new projects you're working on to spread the appeal of barter?

We have several. Our newest and biggest project involves online bartering on the www.barterfirsati.com website. Anyone can become a member of that site, including individuals. It's still on its test run, but it will be launched soon. We expect it to have a huge effect in retail. To give an example, even those who bought time-share apartments that they no longer use can now trade them online thanks to this site. We also have a joint project with MasterCard that we expect will bring about a revolution in the way we do trade. It's the first such system in the world.

How is the barter system regulated?

We've made a proposal for the legal regulation of barter trading in Turkey so that the trade can have legal protection. We handed the proposal to the government and we're waiting for a response. At present, barter companies are considered commercial companies, but we think they should rather be considered as finance companies, and they should thus be tightly regulated and controlled. However, we believe that there should be specific legal parameters for bartering just as there is for other financial institutions. The implementation timescale of such regulations is then dependent on the government.

Is the barter market constituted primarily of SMEs or are there also larger firms involved?

There are many large firms and holdings. The only thing that is crucial for us, regardless of the size of our members, is that we maintain a balance between demand and supply. In the same way that you can use money everywhere, you can also use barter.

How do you establish the values of bartered commodities?

We use the prices that already exist in the market. Nothing changes in that respect. If something is worth $1,000 then it's still worth $1,000. We don't set our own prices, and this applies whether you're buying goods or services.

How do you see the barter market developing in the coming years in terms of the unification of the different international barter goods?

The majority of bartering companies are in the US, and there are also many in Europe. Unfortunately, because large firms haven't been participating and investing in barter trade, the majority of companies operating in Europe remain small. In addition, there is a large bartering company in England, and there is also now a Chinese bartering company supported by the Chinese state. In one year they obtained 300,000 members! So we are seeing barter companies that operate in large economies obtaining a lot of members. There are also barter companies in Canada, Brazil, Spain and elsewhere, and it's growing every year.

What role do you think barter trade will have in the modern world? Do you think it can be a realistic alternative to modern banking?

Yes, it is. Because when the banking system collapses, the world shakes to its core. It's a system based on the printing of money that is not linked to a standard commodity like gold or an actual manufactured good. You have the problem of inflation, of strong currencies dominating weaker currencies. But in the barter system every product or service has a real value that corresponds with other products and services. So barter is more of a “real" economy. Take the recent mortgage crisis for example: the world economy ended up going into a downward spiral precisely because the system was based on exaggerated housing prices. You don't have such bubbles in a barter system. When the barter system becomes regulated and integrated like the banking system, I believe it will be a very powerful alternative to traditional banking. There is always a debate about the dollar, or what will happen to the euro. Everyone is looking for an alternative method of trade and I believe that what we're looking for, what will answer these problems and questions, is the barter system.