The story that runs in Israel every few weeks now is “The Chinese are coming” — and it comes in a few different contexts.
The most prominent stories of the last few years were a few mega deals in the Israeli market of Chinese companies buying Israeli companies. One of the most famous ones happened in May 2014 when China’s Bright Food Group bought the most popular dairy called Tnuva, a company that for many Israelis symbolizes the country itself.
There were a lot of debates if a national symbol such as Tnuva should really be sold to a foreign entity, especially a Chinese one. What people in Israel forgot is that the majority of Tnuva stocks was sold in 2008 to Apax Partners, which is a British fund active in Israel since 1984. Back then there wasn’t such a fuss around the deal.
Another publicized deal was the selling of Phoenix insurance company to Fosun. This made headlines a few times as the deal was supposed to close by June 2015 but eventually was canceled in February 2016 as reported. This happened because of the objections of the Ministry of Finance over whether a foreign entity should hold Israeli pension funds.
Megadeals like these arise in headlines every one to two years.
Another type of deal that’s becoming very frequent now are technology deals. You hear a lot about these and it’s no wonder. In the four to five years I’ve been working with Chinese investors, I see more and more delegations coming to Israel looking for technologies.
A few examples:
There are many many other examples. Generally since 2011, there has been a 50% year-on-year growth of Chinese investment in Israel according to IVC .
These investments also lead to more and more local presence. Baidu has an office now in Israel after several investments and so other large Chinese companies declare opening offices and R&D centers in Israel. Techocode, which is a Chinese accelerator (focusing currently on artificial intelligence and MedTech) opened up for Israeli companies in Tel Aviv and Vadi ventures operating also from Tel Aviv which connects Chinese and Israeli companies.
Mr. Yoav Sade, who is in charge of China region and a Partner at Meitar Liquornik Geva Leshem Tal law firm, says: ”We definitely see an increase in the number of delegations coming in. We now have Chinese delegation visits almost every week. We are also seeing an increase in Chinese involvement in many of the deals we are advising.”
I’m not surprised by what he says and with more and more delegations coming in, there is more room now for conferences around China-Israel technology and investments (goes without saying other smaller events which are related to startups I mentioned previously). There are many of them, some that are held in Israel and some in China.
Go For Israel is an annual conference and this time is held in Shanghai. Another major conference coming up is China-Israel Innovation summit. The first innovation summit was held in January 2016 in Beijing. It’s supported by both the Israeli and Chinese government. It’s held in parallel to the DLD innovation festival in Tel Aviv (get in touch if you are around, I’ll be there).
Another event coming up a few days afterwards is Israel’s China policy conference organized by SIGNAL.
As you can clearly see, the business relations between Israel and China is growing. While Israelis may sometimes be concerned over these mega deals, the general atmosphere is that it’s a good thing: A country with leading technologies but no market doing business with a country with a huge market which starves for innovation (though I think China is catching up very quickly).
I anticipate we are now seeing the tip of the iceberg. While the Chinese conglomerates are already scouting for Israeli technologies for several years now, there are many small and medium size companies who are yet to come. Stay tuned!
Image credit by UNIDO