Maverick China’s Boaz Rottenberg in a recent China Daily article:

Relations between China and Israel strengthened after a series of high-level visits over the past year, according to the Israel Chamber of Commerce in China. Israeli Prime Minister Benjamin Netanyahu visited China last year, followed by Israel’s Economy Minister, Naftali Bennet, in July, 2013 and President Shimon Peres last month. IsCham, a non-profit organization that promotes trade and investment between China and Israel, said the visits marked a turning point in Sino- Israeli economic relations as bilateral trade grows.

Netanyahu said Sino-Israeli economic ties were “one of the main horizons for ensuring the continued growth of the Israeli economy,” which saw an eight-fold increase in Israeli exports to China over the past decade and a similar increase in imports from China to Israel.

Although China is Israel’s second largest trading partner, and the largest in Asia, Israeli exports to China amounted to only a small fraction of the latter’s total imports. Since the renewal of economic ties in 1992, Israeli trade with China has slowly increased and saw significant growth in the second half of the last decade. Israeli exports of agricultural technology were accompanied by exports of water treatment technology, telecom products, high-end medical equipment and other technology products.

However, the growth was not trouble-free. Although Chinese businesses were and are very receptive to Israeli products and technology, many Israeli firms, who are smaller in nature, find it difficult to develop and expand their Chinese business, according to the chamber. More than half of all Israeli exports are attributed to a group of less than 10 companies.

The main hurdles for Israel’s smaller exporters, who excel in European, American and other markets, are most notably the lack of resources to pursue business in such a large and diverse market accompanied by the need to adapt to different business cultures.

Good ties
The Israeli government expanded the network of Israeli economic attaches in China and introduced favorable measures and financing options to small Israeli exporters. It also set up an inter-ministerial committee to strengthen economic ties with China. The committee, chaired by Israel’s National Economic Council Chair- man Eugene Kandel, recently presented a working plan for 2014.

The plan includes meetings between joint working groups on agriculture, water, energy, high-tech and clean-tech, which will be held in both Israel and China. According to the plan, commercial ties should expand through government-sponsored long-term projects rather than by encouraging individual companies to step up exports.

“It is possible to see that interest in cooperation with Israel has grown immeasurably throughout the Chinese economy and we have the opportunity to make a significant breakthrough in this direction,” Kandel said. As more and more Chinese firms grow and develop their international business, many see the opportunities in Israel’s high-tech sector, according to the chamber.

Growing investment
During recent years, Israel has seen a rapid rise in Chinese investments in Israeli companies and start-ups, including Chinese research and development centers and acquisitions of Israeli companies.

A notable example was recent talks between China’s second-largest food manufacturer, Bright Food Co, and Israel’s largest food producer, Tnuva Food Industries, over a potential acquisition.
If the deal goes through, it will mark China’s largest acquisition of an Israeli firm, exceeding the $220 million offered by Shanghai Fosun Pharmaceutical Co in May for a 95.2 percent stake in Israel’s Alma Lasers.

In addition, $40 million of the $270 million raised by VC investor Pitango for its latest fund came from China, while Horizon Ventures, the fund of Hong Kong billionaire Li Ka-shing, was the most active VC investor in Israel last year, according to a ranking by IVC Online.

These increased investments are part of the reason that Chinese companies are increasingly aware of opportunities available for technology transfer and investment in Israel, especially in fields such as healthcare, medical equipment, environment and water treatment.

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