In reply to Jianjian Gong’s Question: Do Israeli High-Tech Start-Ups Merely Seek to Make “Quick Money”?

January 29, 2014

Outbound Investment (Israel)

I have been enquired the following question on LinkedIn. This article serves as my response.

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Do Israeli High-Tech Start-Ups Merely Seek to Make “Quick Money”?

Thank you for taking the time to raise this important question. It clearly manifests a point that Israeli start-ups must take into account while negotiating with their Chinese counterparts.

I believe that the question arises in large part due to cultural differences between Israel and China. I am hopeful that this short reply will assist in the mutual understanding and the promotion of cross border investment between our people.

Outbound investment requires a combination of skills: finding the right opportunity, finding the right target, and effectively managing the transaction and the new investment – or as you say in Chinese, 天时地利人合(meaning ‘”right timing, right place, right people”).

Most importantly, it requires an understanding of the business environment, the law, and the culture – which is the focus of my practice.

The Chinese and many other foreign investors are interested in purchasing Israeli companies, which are renowned for their technological innovation, and excellent research and development capabilities.

The Americans have a long tradition of investing in Israel (since the 1980s) and are regularly investing in Israeli start-ups on a large scale.  The recent acquisition of Waze by Google, whom invested over a billion dollars in the Israeli software company, is an example of the impressive exits that Israeli companies have made.

The phenomenon of Chinese investors investing in Israel is a relatively new trend – as the Chinese and the Israelis are coming to learn more about each other.

What appears to Chinese investors as a desire to make “quick money” relates largely to the pace of doing business. Israelis are accustomed to a fast-paced, forthright and direct working environment, which often appears to the foreign observer as aggressive or simply arrogant behavior.

In contrast to China, US and Israeli companies are accustomed to a much faster way of doing business.  Therefore, for some Chinese investors, it appears that the Israeli companies are only interested in making a “quick buck”.

We need to remember that since, in many cases, the target company is in the high-tech industry, and technological innovation companies have a relatively short shelf life: speed is of the essence. A prospective purchaser must expect a fast-paced environment.

The statistics are clear – Israeli companies are at the forefront of innovation. Moreover, the Chinese are investing abroad in larger numbers and have a keen interest in Israeli companies. There are many great opportunities to combine the strengths of our nations.

The American billionaire, Warren Buffett recently stated that Israel is “the most promising investment hub” outside of the U.S., and the Chinese billionaire Li Kay Shing has invested a great deal of money in Israeli high-tech and education (for more details go to The Secret is Out: Chinese are Investing in Israel in Billions).

Quoting from the Israeli Prime Minister Netanyahu during his last visit to China: “If we offer a marriage between Israeli technology and Chinese manufacturing and global marketing capabilities, we can have a winning combination.”

No doubt that outbound investment in Israel requires careful planning, understanding of the cultural differences, and a deep familiarity with the legal and business environment in both China and Israel.

For more information about the incentives offered to Chinese investors, you are invited to read my article Doing Business In Israel:  A -Guide For Chinese and- International Investors.

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Amit Ben-Yehoshua is a dual citizen of the United States and Israel and is licensed to practice law in California and Israel. Amit holds a Masters Degree in Chinese law from Tsinghua University of Beijing. Amit focuses on cross-border investment with a focus on China, US and Israel and works at the Shanghai branch of Da Cheng Law Offices.

Amit is a co-founder of the Israeli Chamber of Commerce in China and the Israeli Chamber of Commerce in Shanghai and served as a member of both of their respective Board of Directors.

Amit currently serves as the Vice Chair of the China Committee of the American Bar Association, Section of International Law, and is the Chief Editor of the China Law E-Bulletin; a periodical publication of the American Bar Association.

Amit can be contacted at amit.ben-yehoshua@dachenglaw.com.

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