Date
28 May 2017
Israeli technology startups can make it if they are willing to challenge conventional wisdom and established practices, according to the country's top envoy in Hong Kong. Photo: Internet
Israeli technology startups can make it if they are willing to challenge conventional wisdom and established practices, according to the country's top envoy in Hong Kong. Photo: Internet

What Israel tech startups like most about Hong Kong

Since five years ago, Hong Kong and mainland Chinese venture capital firms have been flocking to Israel to scout around for opportunities.

Their investments have been increasing steadily since then, Sagi Karni, Israel’s consul general to Hong Kong, told Hong Kong commercial Daily.

In recent years, about 1,000 startups have been launched annually and quite a few of them have ended up being listed on NASDAQ.

These startups, typically small and nimble, are spread across a wide range of businesses such as consumer products, software, apps, fintech, pharmaceuticals and environmental technology.

Founders of tech startup need to have a solid understanding of technology.

The Israeli government is well aware of that. It has spared no effort in building up its talent pool through education.

In fact, a lot of founders are themselves scientists, engineers or doctors, Karni said.

About 50 percent of Israeli exports consist of high-tech products from areas such as information technology, biotechnology and agricultural technology.

Mindful of its limited domestic market, Israel has been exploring the global market.

And this is why Israel companies are attracted to Hong Kong.

Numerous Israeli tech startups want to sell to China through Hong Kong given the latter’s accommodative business environment, free flow of information and simple and low tax regime.

Karni is working with the Hong Kong government to get more Israeli firms to set up offices or regional headquarters here.

Hong Kong is seen as a springboard to the Chinese market because it is both an international city and a middleman that understands the Chinese business culture.

“China’s market is very crucial to Israeli companies. Small companies don’t have the resources and time. A Hong Kong partner can help them understand the mainland market and search for the right counterpart in China for distribution and manufacturing,” Karni said.

Speaking of Israel’s startup ecosystem, Karni said only 15-20 percent survive.

But even if they fail, there won’t be any serious impact on the economy given their small size, employing just five to 10 people each.

If founders learn from their failures, polish their management skills and technological knowhow, they can begin again when the next opportunity arises.

Karni sounded more optimistic about Hong Kong’s economy than most locals.

“To a lot of foreigners, Hong Kong is a very important gateway to China,” he said. 

“Hong Kong people should be optimistic. Look at the chaotic situation in the Middle East. I don’t suggest Hongkongers should be complaining.”

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RA

EJ Insight writer

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