Date
18 October 2017
Avi Hasson, Chief Scientist at Israel's Ministry of Industry, Trade and Labor, says China has become a key investor in his country.
Avi Hasson, Chief Scientist at Israel's Ministry of Industry, Trade and Labor, says China has become a key investor in his country.

Israel aims to be next hotspot for Chinese investors

China could become the top investor in Israel this year in terms of the number of joint projects between Israeli and foreign companies, taking the slot currently occupied by the United States, according to a senior official from Tel Aviv.

“Three years ago, we had almost zero [mergers and acquisitions deals] from China,” Avi Hasson, Chief Scientist at Israel’s Ministry of Industry, Trade and Labor, said in an interview Monday. “But the situation is changing.” 

“Traditionally, about 75 percent of the money raised by Israeli start-ups come from foreign investors… mostly from the US and Europe. But from last year, investments from Asia, mostly China, are becoming much more significant,” he told the Hong Kong Economic Journal’s EJ Insight.

The comments came as Hong Kong and Israel authorities signed a memorandum of understanding to establish a cooperation framework. Under the deal, which was inked in Hong Kong Monday, Hong Kong’s Innovation and Technology Commission and the Israeli Chief Scientist’s Office will jointly push collaboration on technology projects between companies from both sides.

The cooperation framework will help companies, venture capitalists and research academies from the two sides to meet each other and find suitable partners, Hasson said. The Israeli government has so far signed 50 similar agreements with other countries, provinces and cities, he said.

Besides, start-ups with good potential may even get funding from an incubator program managed by the Chief Scientist’s Office, he said. When they develop after two to three years, the firms can raise funds directly from venture capital funds or strategic investors, he said.

Some Hong Kong firms have already made forays into Israel in recent years. 

In November 2012, Hutchison Water International Holdings, a unit of Li Ka-shing controlled conglomerate Hutchison Whampoa (00013.HK), acquired Kinrot Holdings LP, a technological incubator that was founded in 1993 as part of the Israeli Incubator Program. 

Li shows the way 

“Li Ka-shing is the most active investor in Israel and has done very well,” Hasson said.

In January 2011, Sorek Desalination Plant, in which Israel Desalination Enterprises Technologies owns 51 percent and Hutchison Water owns the remainder, won a government tender to build and operate the largest desalination plant in the world with a planned total capacity of 150 million cubic meters.

In October 2011, Li’s Horizons Ventures, together with Kleiner Perkins Caufield & Byers’ Digital Growth Fund, invested US$30 million in an Israeli online traffic and navigation company Waze Inc., which was acquired by Google Inc. (GOOG.US) in June 2013 for about US$1 billion.

Last September, the Li Ka-shing Foundation, a charity arm of the Hong Kong billionaire, announced a donation of US$130 million to Israel Institute of Technology to help set up a new school called Technion Guangdong Institute of Technology, in southern China’s Guangdong province. The project will be located near the Shantou University which was founded by Li.

Hasson said it is an interesting project and he hopes to visit the institution some day. In June 2012, Hutchison Whampoa offered to acquire 75 percent stake in Israel’s Scailex Corp. Ltd., which bought Hutchison’s Orange Israel brand in 2009. But the deal didn’t materialize for business reasons, and not due to regulatory hurdles, he said.

Other than telecom, “we have about a thousand biomedical firms and a lot of companies across different technology sectors”, Hasson said.

In April 2013, Shanghai Fosun Pharmaceutical (Group) Co. Ltd. (02196.HK, 600196.CN), a unit of Fosun International Ltd. (00656.HK), announced it was buying a 96.6 percent stake in Alma Lasers Ltd. (ALMA.O), an Israel-based medical equipment maker, for US$240 million.

Strategic priority

“Today we can see more and more examples of Asian players coming into Israel,” Hasson said. China is definitely a strategic priority to Israel, especially after Chinese Premier Li Keqiang {李克強} held talks with Israeli Prime Minister Benjamin Netanyahu in Beijing last May.

The Israeli government wants to use Hong Kong as a jumping board to extend its business cooperation with China, Sagi Karni, Israel’s Consul General in Hong Kong, said in the same interview. 

“Hong Kong is a gateway to China and also the biggest direct investor in the country,” Karni said. Israel wants to gain experience from Hong Kong’s businessmen, who have the best connections and knowhow on how to do business in China, he said. 

Hasson also said the cooperation framework between the Israeli and Hong Kong governments will provide a safe platform for Israeli companies that want to enter China but are worried about their intellectual property rights.

In fact, the Chinese government is aware of these concerns and is taking significant measures to protect intellectual property rights, Hasson said. “Today there is a much better environment in China than five years ago.”

– Contact the reporter at jeffpao@hkej.com

RC/CG

Chief reporter at EJ Insight

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