The winner is the one who produces
Kazakh-Turkish group Teksan is an example of successful transformation of a trading company into a manufacturing enterprise. Starting operations initially as the importer of electrical products, today, this company is purely a domestic producer. We asked Mustafa Beyaz, CEO of Teksan Group, to share with us how they have managed to achieve this result.
Teksan was incorporated in 2000 in Turkey and initially was focused on trading in lighting equipment. As an ordinary trading company, Teksan started operating in the market of Kazakhstan in 2004. The first thing we did as a company – was to open a branch office in Almaty, and with the time, our products appeared in all regions of Kazakhstan. At present, exclusive distribution centers operate in 12 cities across Kazakhstan.
We always wished that our customers would be able to buy any high quality products related to electricity and lighting in one outlet at an affordable price. At present, we have in sale about 7,500 items of lighting and electrical products that range from light sources for the indoor and outdoor lighting, to the switchboard and cable products. This is our main advantage in the market, making us the No.1 Company in the terms of range of products in Kazakhstan.
However, after we had gained experience as a trading company, we were sure we needed to set up our own production in Kazakhstan. This adds to our opportunities, reduces the term of delivery of products to customers and its cost. For example, in Turkey production costs are much higher than in Kazakhstan. In this case, a local manufacturer can respond more quickly to the changing needs of the market.
In this regard, in 2012 in the village of Kasymbek, Zhambyl district, Almaty region, we set up a factory Teksan Kazakhstan Invest with a total area of 13,000 m². Moreover, in the creation of local production, the owner of business invested 100% of its own funds, without resorting to borrowing.
We understand that the results of the investment will not be felt immediately. Nevertheless, eventually the one who produces will win, but not the one who resells. Especially, it is in view of the fact that in terms of quality, it is not just enough to say that our products are superior to Chinese, Turkish or Russian analogues, our products are much better than them.
We started our production with the manufacturing of items that are in the most demand. Today, we produce about 150 different products, totaling about 150 thousand units a month. All products have certificates of compliance for serial production and meet the quality standards GOST RK. Also in 2013, the company was given a certificate of domestic producer CT-KZ.
The quality control system provides for the strict control at every stage of production, so I can say for sure that we can participate in projects of any scale.
Local manufacturers often face the lack of raw materials and component parts in the market. To what extent is this topic relevant for you? What challenges do you face?
The complexity of production in Kazakhstan lies in the fact that the manufacturer has to do everything on its own. In other countries, there is a developed network of specialized companies. For example, at the very beginning we faced a big problem – we even had to halt the production process because we were not able to repair the molds. Unfortunately, there is no such a service in Kazakhstan, and we had to place orders for that in other countries. Generally, it is a sore point for many productions. Thus, in 2013 we made a decision to set up our own tool shop Teksan Mold, where we now do and carry out repair of molds and dies.
On the one hand, it creates additional problems, and on the other side, opens new opportunities. Starting this year, we began developing Teksan Mold as a separate strategic direction, providing tool production services to other companies and manufacturers that include design, modeling, fabrication, heat treatment (nitriding), testing of molds, cutting dies, dies for volume bending, blow molds, molds for fusible alloys and so on.
The second point I would like to draw attention to, including the attention from state bodies is the high cost of raw materials and component parts, which we often have to import from abroad. Transportation costs increase the cost of production. In my opinion, benefits on taxes, customs duties and the VAT for manufacturing companies would make local products more competitive.
In terms of organization, there were no major difficulties. We constantly saw support from the local authorities. We chose the village Kasymbek as location of the plant for a number of objective reasons: this village is close to Almaty and the trunk routes and it has all necessary infrastructure, such as natural gas, water supply, electricity substation, and most importantly, human resources. There had been no such production in the village prior to us. With the emergence of the plant, where more than 200 people work now, the welfare of the local population has improved. We pay to them on time and provide three meals a day to them at the expense of the company and a hostel to those who are non-locals.
How does your service system operate?
Our service operates in every city where we have a branch or distribution center. If a problem appears during the assembling, we send our specialist to fix it. Such situations often happen in small towns, where they have large power surges. We are able to send the product to the plant and find out the source of the problem. If it is a manufacturing defect, the product will be replaced without doubt.
Apart from the control at each stage of production, our lighting laboratory makes calculations of lighting for all products. All lighting products pass measurements on lighting by using the Dialux program. Its developer is the German company Dialux, known throughout the world. I am proud to note that we had become the first of its partners amongst domestic manufacturers.
Do you have any plans to expand the production?
Our range of products is constantly growing, new technologies are introduced. The plant has become a kind of experimental platform. We started producing LED lamps for indoor lighting, are now considering the possibility of producing LED products for outdoor lighting, metal furniture, and switchboard equipment. A separate direction is molding machines. We can produce any shape and produce any plastic parts. Regarding the potential of the metal processing workshop I mentioned above. The manufacture of cable channels is developing as a separate direction. However, the main priority for us is still lighting.
Kazakhstan is heading for the EXPO-2017, new technologies, energy conservation and efficiency. What can Teksan offer in the light of this?
We are already taking part in the program of transition of electric lighting of Almaty to energy saving systems. We have two brands of LED lamps: Technolight LED and Ecolite LED for all light fixtures. I believe that this line of products is in the most demand, because if energy-saving light bulbs have problems with recycling, the LED products do not have such problems. I think that next year most of our products will be equipped with LED light sources. This is a big advantage both for the buyers and the country as a whole.
Of course, we would like to work in projects of EXPO-2017, since there are no such products at the moment which we would be not able to produce. Here, we rely on the support of domestic producers from the state.
From the very beginning, our company was focused on the markets of Central Asia and Kazakhstan, because this region is the most promising in terms of economic growth and investment. We look forward to expanding the market in view of the creation of the Eurasian Economic Union and Customs Union. Although our company is still quite young, we already have experience in supplies of our products for export to neighboring countries – Kyrgyzstan and Uzbekistan. Now we are considering the possibility of opening branches in Moscow, Yekaterinburg and Novosibirsk. At the end of this year, we will open a branch office in Bishkek, and in the next year in Dushanbe. Next year in Kazakhstan we are going to open branches in Taldykorgan, Taraz, Kyzylorda, Petropavlovsk and Kokchetav. Despite some difficulties, we are aimed at the development of new products and intend to do it professionally.