Challenges while promoting investments from China in Israeli technology companies

China and Israel are 2 ancient cultures which share great respect for each other and the same values; however there is much difference when it comes to the business culture

The two economies complete each other. On the one hand, there is much innovation and many game changing technologies in Israel (some are new and some are not so new), however, the Israeli market is small and when Israeli companies wish to develop and breakthrough, they usually look for the western markets and in addition, Israel as a small country has a relatively small circulation capital. The Chinese market is huge (and also in Asia in general) and it has large resources and capital (also as a part of the change in the shifting of capital from east to west) and on the other hand, it has interest and will to locate and use innovative technologies which can support its growth for the increase of consumption, increase of exportation and mainly to improve the quality of life of its people

When we established “China Israel Synergy”, our vision was to develop the business base exiting already to promote “smart” investments from China in Israeli technology companies, which following the investment these technologies will be implemented in China. Indeed, during the last year we saw a sort of “awakening” in activities side by side with many challenges which I will state some of them here

Size– Chinese companies which are relevant to the investment issue are usually big. Israeli technology companies are usually small

Technology– companies and investors from China usually look for relatively big companies who already have sales cycles while the business opportunities are in a different kind of companies

Business model– Chinese companies and investors prefer to gain control while the Israeli companies look for an investment in return for 10%-30% (depends of the amount invested and the evaluation) of the company’s stock

IP– a very fundamental issue for Israeli companies, the Israeli economy and the government, especially since in many cases part of the basic technology does not come from the civil market

Manufacturing- Chinese companies wish to transfer all the manufacturing to China while Israeli companies wish to do it gradually and in many cases some of the manufacturing does not include the technological core

Market– the Chinese market is very important for the Israeli companies, however many of them are active in the western market and the activity in China is in addition to other markets and not instead. The Chinese companies mainly care about the Chinese market, and the ability to step out to the world market

Agreements– for Israeli companies and Israeli in general, the signing of an agreement means the end of a process (after all is agreed). For the Chinese business people, the signing of an agreement (usually there are few levels of agreements and it’s regarding usually partial agreements) is sometime part of the process of the negotiation

About the author


Leave a Reply

You must be logged in to post a comment.