TBY talks to Turan Erdoğan, CEO of Vestel, on the company's unique production model, R&D, and moving into manufacturing smartphones.

Turan Erdoğan
Born in 1955, Turan Erdoğan graduated from ITU’s Faculty of Mechanical Engineering in 1976. He has an MBA from Brunel University, in England. After returning to Turkey as manager in a various companies, he joined Vestel in 1988. In 2013, he was promoted to oversee Vestel’s foreign trade department, and was appointed Executive Board Member. From 2010 to 2014, he served as the first Turkish Board Member of Digital Europe, Europe’s largest ICT Confederation. He is currently CEO of Vestel.

Vestel sells and exports Japanese and European brands to the European market. Are there plans to sell Vestel's own brand within Europe and other markets?

At Vestel, we call it the “hybrid model;" we produce under other brands, under our own brands, and under licensed brands. I believe it is a unique system. What you normally hear is that you should be either an own-brand company or an OEM/ODM company; however, Vestel shows that this kind of hybrid model is also possible. You can use your own brands and produce for other brands. But when we say produce for other brands, it doesn't mean we are only a manufacturer. Now what we call ourselves is an OEM, or even OEM 2 or 3. We design the product, we produce the product, and in some cases we even market the product for the brand owners. This places us two steps ahead of only being an OEM. Vestel is one of the pioneers in this respect. For example, we license Sharp for white goods across Europe. That means we design, manufacture, and market Sharp products, and the Telefunken brand, in Europe in electronics. We will continue this way, but, of course, now we are also promoting our brand in Vestel, in Turkey, in neighboring countries and we are also considering marketing Vestel in other countries. It is a matter of time.

How does Vestel use R&D to remain innovative and competitive?

This is a crucial issue in every company operating in consumer electronics or domestic appliances. We have to have strong R&D, which is one of the reasons why Vestel is so successful. Right from the beginning, we gave the utmost importance to R&D; our R&D department is one of the largest in Turkey, employing almost 1,200 engineers in several locations. However, we still have to increase these numbers, because the customers' requests change frequently, and in order to incorporate these changes in your products you need a strong R&D force. It is sometimes technology-driven products, sometimes market-driven, but these days the technology is moving so fast that if you don't follow it closely, you may fall behind the trend. And, of course, the product management group does a similar thing. It is the largest challenge to keep up with technology and features. TVs are changing almost every six months, and you have to introduce new models all the time; the same goes for mobile phones. In white goods, it is a bit better from the manufacturer's point of view, because you normally use your refrigerator or your washing machine for a few years at least. In the white goods area, the quality and the level of service must be perfect, and people are requesting more features at a lower price; therefore, you have got to have continuous cost reduction systems to compete with other products price-wise and feature-wise. It is a strong yet difficult market. And the solution is R&D.

With the new Venus phone model coming out, how does Vestel plan to compete with the foreign mobile phone operators in the country?

We have been manufacturing smart TVs and tablets for some time. Mobile phones are actually similar to them, though you add a SIM-card, an antenna, and some other features. Basically, it is still a smart product, like a tablet, which you can use to talk. This is what we call converging. In consumer electronics converging is what happens with IT products, and I think the mobile phone is the perfect example as well. The consumer's features are merging with IT features in one product, such as the smartphone. First of all, Vestel can't afford not to go into this business; we have to. If you look at the other companies, Samsung or LG for example, they also used to be consumer electronics companies, but now they have moved into the smartphone business. It is a natural and inevitable step for any consumer goods company to be a smartphone manufacturer. Hence, if we can compete in smart TVs and tablets, why can't we compete in smartphones?