Official China is very impressed with Israel, officially. According to Yongjie Chen, deputy general secretary of the China Center for International Economic Exchanges and a member of the Chinese Communist Party’s ruling body, the Politburo, Israel is “the best place in the world for China to invest” to acquire the technology the country needs to solve its environmental and social problems.
If China was reluctant to fully embrace Israel in the past for fear of angering Arab countries, things have changed, said Chen. Speaking to the Times of Israel in an exclusive interview, Chen said that there had been a significant change in the Chinese approach to the Middle East in the past 10 years.
“It’s true that, in the past, the government favored the Arab side more, but in recent years the emphasis of the government has been on rapid technology development,” said Chen, “and that is why cooperation with Israel, which has that technology, is growing.” Chen could not promise that China would always vote Israel’s way on UN Security Council resolutions, “but you can see that, in recent years, we have conducted a much more positive political policy towards Israel.”
Chen and nearly two dozen other Chinese government officials were here for the first-ever Israel-China Economic Summit. Nearly all of them were in Israel for the first time, taking in the sights and scenery of the Start-Up Nation and shopping around for technologies they can take home to help solve China’s manifold problems. The summit was attended by several MKs, including Robert Ilatov, David Rotem and Agriculture Minister Yair Shamir, and was organized by a group called the Israel China Interflow Association (ICIA).
Much of the technology that China needs revolves around environmental issues, according to Chen Gang, mayor of Xianghe City, located outside of Beijing. Although China has a reputation for whitewashing problems, Gang and other officials on the trip were forthright in describing the issues the country faces. China is a big place, and different parts of the country place a different emphasis on the kind of technology it is interested in developing.
In the Beijing area, that would be green tech, Gang said in an interview Wednesday on the second day of the summit. Because of heavy pollution in Beijing and its suburbs, “environmental technology, water technology and renewable energy systems are very important to us.” Now on his first visit to Israel, Gang was just getting to know Israeli high-tech, but was already very impressed.
Chen is also very impressed. Although in Israel for the first time, Chen knew all about Israeli technology because of his work in economic policy. “I knew Israel was a leader in technology, and I also knew it’s accomplishments were out of character for a nation of its size, with the kind of technology you would expect only in bigger countries, but you have to come to Israel to understand what the term ‘Start-Up Nation’ really means.” Words alone, he said, cannot express the level of innovation and entrepreneurship in Israel.
At the opening plenary of the summit Tuesday, a plan was unveiled for a massive high-tech industrial park to be developed in Xianghe, a county 45 km outside of Beijing. A section of the park is to be dedicated to Israeli innovation in high-tech with the goal of bringing Israeli companies and research facilities to serve as an entry point to the Chinese market.
“We, the government of Israel, are doing all we can to eliminate obstacles to encourage better business cooperation between the two countries,” Shamir said at the summit. “I advise everyone to walk side by side, hand in hand, in order to enhance the economic development between the two countries.”
The delegation was hosted by the Knesset High-Tech Caucus, chaired by Esti Peshin, director of cyber programs at Israel Aerospace Industries, and organized by the ICIA, a new organization that works to initiate and foster business between China and Israel by connecting Israeli companies and entrepreneurs with Chinese investors.
With offices located in Israel and China, ICIA “is uniquely positioned to help Israeli companies develop their networks, build key relationships and successfully achieve market entry in China,” said Remy Reinstein, CEO of the group, which helped engineer the deal to bring Israeli tech to the Xianghe area. “Israel is the expert in agro-tech and in water management, in irrigation, in bioengineered seeds, pesticides, fish farms and much more. China has the capital to fund our start-ups, develop our products and market them to the world. The ICIA has hundreds of customers, partners, investors and venture capitalists in China waiting to do business with Israel,” said Reinstein.
Because of the challenges of setting up shop in China, said Reinstein, the services offered by ICIA are essential. Language, cultural and legal issues, many of which are difficult for Westerners to understand, much less overcome, often act to discourage Israeli companies from doing business in China. Having an “agent” on the ground working on a company’s behalf, negotiating with the relevant authorities and helping to overcome obstacles is critical.
Although there are a number of companies that offer such services, ICIA has an ace “up its sleeve” — a representative on the ground in China, who can help smooth the path for Israeli companies looking to do business there. The ICIA has its roots not in Israel, but in China itself. It was started by David Liu in 2011 with the express intent of expanding tech development between the two countries. “I first came to Israel in 1999 as a student and I loved it,” said Liu. “I was very impressed by the tech scene and decided to try and import Israel’s ‘start-up spirit’ to China.” Several months ago, Liu decided that the process would go more smoothly if Israelis were involved as well, and got together with Reinstein to open up ICIA’s Israel office.
One of the biggest concerns for Israeli and other Western countries entering the Chinese market has been protection of intellectual property. Chen admitted that this has indeed been a problem for China — but promised that things were changing. “Here, too, we see policies being implemented that will lead to greater enforcement of the law,” he said. “While we have had laws on the books protecting IP for years, the laws have not always been enforced uniformly, with the result that many Western companies feared that their intellectual property would not be protected. The government has put a great deal of resources into this, and we mean to ensure that the law is followed. Believe me, we mean business.”
Chen has some advice for Israeli start-ups seeking to get into the Chinese market. “There are three main humps to overcome: learning our regulations and laws, understanding our culture and mentality, and integrating with our style of management.” In the past, those would have been formidable challenges, maybe too formidable for most people, but, thanks to organizations like ICIA, the process is much easier.
“Building that understanding between both nations is the key to expanding our business ties,” said Chen. “I believe that the ‘mystery’ of China as an unknown quantity has been a major reason why until now business relations have not blossomed. When you look at it, a China-Israel partnership makes so much sense for both sides. You have the technology and we have the markets and business opportunity. What could be bad?”