Turkey’s family business sector is led by conglomerates, which represent some of the largest institutions in the transcontinental country. Family firms – of all sizes – represent 90% of the nation’s companies, and the largest of them all, Koç Holding, accounts for 9% of GDP.
The scene for family business in Turkey was set in the post-Ottoman empire with the establishment of the Republic in 1923. Previously non-Turkish ethnic groups, such as Italians, Greeks and Jews had dominated business, but the new state wanted to give a helping hand to Turkish-owned businesses.
In particular, the patriarchs of the Koç and Sabancı families – Vehbi Koç and Hacı Ömer Sabancı – laid the foundations for their businesses during the early years of the Republic. Now in their third generation, these family empires epitomise the group of industrial conglomerates that lead big family business in the country today.
Just last year, the country’s Family Business Association was established to support sustainable growth and correct institutionalisation of Turkey’s family-owned companies. The Turkish group is part of the FBN (Family Business Network), and its members include more than 40 family firms. The country’s family conglomerates tend to have strong interests in finance and industrial products. Sabancı Holding for example, which experienced 17% growth in sales in 2012 based on the previous year’s results, controls around 70 companies in sectors such as finance, cement, insurance, energy and retail.
The possibility that Turkey could join the European Union, a move that has been under negotiation since 2005, has seen the country adopt business regulations in line with international standards, making it easier to conduct business in the country.
In 2006, it made amendments to its corporate tax law, and currently has one of the most competitive rates for businesses in the Organisation for Economic Co-operation and Development, at 20%. There are three taxes on wealth – inheritance, property and motor vehicle taxes – with inheritance reaching 10% and gift taxes levied at rates not exceeding 30%.
Last year, an update to the Turkish Commercial Code, first created in 1957, simplified the process for transferring capital shares within a family – particularly from senior members to their children. Under the code most family firms are defined as corporations or limited companies.