China seeking technological edge in IsraelJul. 8, 2013
Many consider China the world's industrial zone. Most gadgets spawned by the digital revolution are made in China, but cheap labor is no longer the country's main drawing card. And China itself has mushroomed into an enormous market for consumer products and services.
China's consumer power and production prowess haven't been enough to turn it into a technology powerhouse, but this barrier is falling. Large Chinese companies have lots of money to invest, and they've been doing so in infrastructure and natural-resource projects throughout the world. Now they're tackling technology. Chinese companies and investors are sniffing around Israeli high-tech, as recent transactions attest.
Israeli entrepreneurs realize the importance of Asian markets; all emerging markets, actually. But when seeking out investors, buyout suitors or strategic partners, they instinctively turn to North America or Europe. Multinational development centers operating in Israel are almost all under Western control – for now, anyway.
So Israel is increasingly emphasizing its trade relations with China. Economy Minister Naftali Bennett flew to China Saturday for his first official visit abroad. Bennett's choice was no coincidence. Prime Minister Benjamin Netanyahu preceded Bennett with his high-profile visit to China at the beginning of his new term.
"Every year the volume of activity with China grows, and each success generates another wave of activity," says Chief Scientist Avi Hasson, who accompanied Bennett to China. He says that in 2013 China will be No. 1 in terms of the number of joint ventures with Israeli companies in programs run by the Chief Scientist's Office.
The problem is finding business models," adds Yoav Chelouche, co-chairman of Israel Advanced Technology Industries and a partner in Aviv Venture Capital.
"Israeli companies have a problem selling in China, and there are concerns about copying, particularly for software companies. It's clear that the business models of Europe or the United States don't come into play. On the other hand, everything is huge, everything is done quickly, and there's plenty of willingness to invest in technology. We have to understand that they want the newest and the best."
The issue of intellectual property is what particularly worries companies weighing a joint venture with the Chinese. "The Chinese are more aware of the intellectual property issue," says Chelouche.
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