Hong Kong is a vital hub for the booming trade and other economic links between Israel and China. The territory offers a platform for financing and legal protection for high-tech companies and is Israel’s second biggest market for polished diamonds.
China is Israel’s largest trade partner in Asia, with bilateral trade worth over US$11 billion, and Israel’s third largest global partner.
At an Israel National Day event in Hong Kong last month, consul-general Ahuva Spieler noted that 56 Israeli companies had their Asia/Pacific headquarters in Hong Kong.
“There is increasing interest in Hong Kong and mainland China by Israeli companies because of Hong Kong’s vitality and importance in the Asian market,” she said.
“Israel and Hong Kong have so much in common. The population is roughly the same and largely made up of immigrants. We both place a great deal of importance on education and family values. And, like Hong Kong, Israel lacks natural resources and we have to invent and re-invent ourselves from time to time. It’s worth noting that, in 2016, around 40 percent of the venture capital flowing into Israel came from China, and Hong Kong’s role as a super connector is valuable in that.
“The friendship between the Jewish and Chinese people is historical and based on mutual respect and shared values. This makes us natural and great partners in the past, present and the future.”
According to Israel-based IVC Research Centre, between 2010 and 2015 Chinese investment in Israel had increased each year by 100 percent. The country has around 6,000 start-ups.
“While the Chinese market holds great potential for Israeli start-ups, this market is extremely complex for Israeli high-tech companies, far more familiar with the US and European markets where they face far fewer cultural and language barriers and more familiar business practices,” IVC said in a report.
The most precious asset of these companies is their technology and inventions; many fear these are not safe from piracy and imitation in mainland China. They are more comfortable with the intellectual property and patent protection system of Hong Kong.
One of the main drivers of Sino-Israel economic ties in Hong Kong is Ronnie Chan, chairman of Hang Lung Properties. In March, Chan chaired the GoForIsrael conference in Tel Aviv. The event attracted more than 1,000 participants, including over 70 Chinese investors and business leaders. There were panel discussions on investing in Israeli companies in biotech, pharmaceuticals, digital healthcare and medical technology.
Over the last three years, seven Chinese multinationals, including Huawei, opened innovation and R&D centers in Israel.
In early May, Alibaba chairman Jack Ma visited Israel, with a team of 35 executives. He met Prime Minister Benjamin Netanyahu; the two men exchanged views on the future development of Artificial Intelligence, Big Data, network security and other topics. Last October, Alibaba announced plans to launch an Israeli research hub as part of his global “DAMO Academy”– The Academy for Discovery, Adventure, Momentum and Outlook.
One of seven R&D centers worldwide, its Tel Aviv office will focus on disruptive technologies such as computer vision, along with fields like data intelligence, the Internet of Things, fintech, quantum computing and human-machine interaction. Alibaba has already invested in Israeli start-ups in fields ranging from augmented reality (Infinity AR and Lumsus) to search engine tech (Twiggle) and cybersecurity (ThetaRay).
Hong Kong is a center to obtain finance for Israeli start-ups and their Chinese partners. Last September, Sisram Medical did an IPO in Hong Kong, becoming the first Israeli hi-tech firm to go public on a Chinese stock exchange. Fosun Pharmaceutical owns a controlling stake in the firm; Fosun is owned by mainland tycoon Guo Guangchang.
Hong Kong is Israel’s second largest market for polished diamonds, accounting for nearly 30 percent of total exports of them. The Israeli Diamond Industry organizes national pavilions at three shows in Hong Kong every year, in June, September and November. Israel is one of the world’s three major centers for polished diamonds, alongside Belgium and India.
“It is mainlanders who buy the most expensive diamonds,” said one Israeli trader in Hong Kong. “We are talking of pieces that sell for tens of millions of dollars. The diamond companies like Hong Kong for the same reason as do other Israeli companies – the legal system, the stability and as a gateway to Asia.”
Hong Kong’s Chief Executive Carrie Lam attended the Israel National Day evening. “There is much we can learn from Israel when it comes to innovation and technology, a sector I believe to be essential to our continuing success in this 21st century,” Lam said. She asked Israeli companies to participate in the government’s efforts in this sector.
Lam pointed out that nine members of the Legislative Council Panel on Commerce and Industry made a trip to Israel in July 2017 to learn more about the nation’s innovation and technology development.
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