China-Israel trade ties
Rebecca Fannin, founder of Silicon Dragon, at the event in Tel Aviv on Jan. 29. (photo from silicondragonventures.com)
Perhaps unlikely partners – 6,000 kilometres away from each other – Israel and China are cooperating and collaborating on business and investment deals worth billions of dollars. But it’s a not-so-hidden secret that China has been falling in love with Israeli start-ups, entrepreneurs and high-tech in general. And the feeling’s mutual.
The phenomenon was discussed Jan. 29 at an event called Silicon Dragon Israel, held at WeWork Sarona in Tel Aviv. Silicon Dragon events have occurred around the world since 2010.
Forbes contributor and author Rebecca Fannin is founder of Silicon Dragon, which boasts a 30,000-strong network of executives, entrepreneurs, venture capitalists and angel investors. She recently noted in Forbes that “several mega-funded Chinese tech startups are poised to go public this year or next,” with a potential combined worth of a quarter-trillion dollars.
There are likely to be Israeli fingerprints in some of those, and other recent, deals, given how Royi Benyossef, developer relations manager of Samsung Next, explained, “They’re mesmerized by Israel and their technology-exporting capabilities…. The idea that it’s a ‘start-up nation’ leads the Chinese to believe this is a place they want to invest in.”
Benyossef was on the panel discussing how key Asian corporations are leveraging Israel tech knowhow. He was joined by the director of investments of Singtel Innov8, Gil Prashker.
In another panel, moderator Simon Weintraub of Yigal Arnon and Co. explained the best way to cooperate with investors, especially when dealing with cultural barriers. As Yahal Zilka, managing partner and co-founder of Magma Venture Partners, explained, “In one word, building trust…. That doesn’t happen in one day.”
By way of example, Zilka said the GPS mapping app Waze “failed twice, miserably” in China. “And it all had to do with trust, nothing else. It clearly is a different interaction, pace and activity.”
Avishai Silvershatz, managing partner, Infinity Group, added, “The short answer is, be careful. Nothing in your experience will give you the experience to enable you to understand it. You have to have local partners, and be careful with them as well – it takes … years to understand. You have to be smart. There’s a lot of money to be made, because there’s as much money to be made as lost.”
One jolt for which most investors were unprepared was a recent government intervention. Weintraub said that, in 2016, business interaction from China was at an all-time high, until the authorities there “cracked down on the outflow of currency.” He said, “It caused tremendous uncertainty for 2017 … but now they’ve eased some of those restrictions.”
Zilka noted that the bureaucracy in China is comprised of “very complex structures.”
“In the same way that [Donald] Trump says ‘America first,’ the Chinese are saying ‘China first,’” explained Silvershatz. “They want investments to go towards their own strategic interests and goals. This is the ‘party line.’ It’s government, then corporate … so long as the government has their way.”
This panel also included Ehud Levy of Canaan Partners Israel, Aaron Mankovski of Pitango Venture Capital and Nathan Low of Sunrise Israel Tech Capital.
Independent of the event, some academics weighed in on why the Israel-China business relationship works so well.
“It’s different in organizational culture,” Daniel Galily, a former lecturer at Beijing-Geely University, told the Jewish Independent. “The educational system in China places great emphasis on discipline and obedience to superiors, while the Israeli educational system and the Israeli army encourage students and soldiers to think about new ideas and to solve problems in situations of uncertainty. The Chinese understand that, and so they strive to integrate the Israeli creativity to their economy, and also strive to learn how to combine creativity in to their economy.”
Dave Gordon is a Toronto-based freelance writer whose work has appeared in more than 100 publications around the world.