White goods industry collapsed in India after globalisation, how did the Turkish firm survive and prosper? Internationalisation and investment in R&D are two main reasons.
Internationalisation
Outward foreign direct investment (OFDI) enables both small and large MNEs to
potentially enhance their competitiveness through securing access to new markets,
technologies, brand names, resources and strategic assets abroad. In their constant
search for better exploiting, consolidating and expanding their capabilities (or
resource base), firms pursue a variety of strategies, which include product and
technological diversification across fields and geographical sites . These potential enhancers of competitiveness would not be available
to firms that elected to stay focused on their own domestic economy. Moreover firms
that stay focused on the domestic market increasingly miss out on opportunities that
are available only to firms that are prepared to internationalize – opportunities such as
becoming integrated in global value chains or attracting global customers. In this paper -ACCELERATED INTERNATIONALIZATION BY
EMERGING MULTINATIONALS:
THE CASE OF WHITE GOODS- the authors document the rise of Haier, Mabe and Arçelik (from China, Mexico, and
Turkey, respectively), as successful examples of latecomer firms that managed to
upgrade their operations, evolving from the production of simple goods, generally as
Original Equipment Manufacturer (OEM) subcontractors, into new product lines
developed through their own design, branding and marketing capabilities.
Read : http://www.oecd.org/development/pgd/36317032.pdf
Arçelik was founded in 1955 to produce metal office furniture, and moved quickly
into home appliances, manufacturing Turkey’s first washing machine in 1959 and first
refrigerator in 1960. By the early 2000s it had seven production plants in Turkey to
produce a complete range of home appliances.9 The company, producing 7.5 million
units in 2004, is the leading firm in Turkey’s consumer durables, accounting for more
than 53% of domestic sales and 54% of exports. A OEM contract in the
United States was secured with Sears Roebuck in 1988 to supply refrigerators under
the Kenmore name, followed a nine years later by a similar, but much larger,
European deal with Whirlpool for dishwaters. Arcelik made
major purchases of brands in 2002 – Blomberg (a subsidiary of Brandt) in Germany,
Elektra Bregenz and Tirolia in Austria, and Leisure (cookers) and Flavel (appliances
and TV sets) in Britain. In 2004 Arçelik acquired the brand name Grundig, after the
German firm went bankrupt. (Arcelik had been an OEM supplier to it previously.)
Investment in R&D
R&D and innovation were examined in- The role of innovation in the effective international expansion
of an emerging-country firm: The case of Arçelikby .
https://www.sciencedirect.com/science/article/pii/S1877042812008968
The impending entry into its largely protected domestic market of major foreign competitors once the
Customs Union went into effect was another factor that necessitated quality improvements. The establishment of a Research and Development Center in 1991 appears to be the most critical
decision pertaining to Arçelik’s strategy of international expansion. Arçelik A.Ş., which holds the most patent applications in Turkey, ranks 74th among 270 companies on the Global Patent Filings list published in 2017 by the World Intellectual Property Organization (WIPO). Today Arçelik A.Ş. owns one out of every three global patent applications submitted from Turkey.
Patent battles
Patent suits are inevitable part of global domination. Arcelik, filed a case for patent infringement against South Korean appliances manufacturer LG Electronics and its subsidiaries in France and Germany. Arcelik claimed that LG Electronics used the Turkish firm's washing machine technology, named 'Direct Drive', in its devices under another name -- '6 motion'. LG filed a lawsuit against Arçelik and its German affiliates Beko Deutschland GmbH and Grundig Intermedia GmbH in connection with freezer door-ice making technology in LG Side-by-Side refrigerators. This was followed by infringement lawsuit against Beko Deutschland GmbH in Mannheim District Court in Germany for infringement of a patent for steam technology that protects certain garments from damage.
