For the first time, Israel’s exports to Asia surpassed its exports to the United States. The Israel Export Institute said in a report Monday that 21 percent of Israeli exports between October 2011 and January 2012 went to Asian countries, while exports to the US constituted only 20% of Israeli exports.
The change in export destination was due to a combination of circumstances, institute officials said. Due to the recession in the US and Europe, Israeli companies have been busy developing new markets for their products and services in the Far East — mostly India and China, but also Taiwan, Singapore, South Korea, and Vietnam. About 35% of Israeli exports went to the European Union.
The data is somewhat worrying, Institute chairman Ramzi Gabay said at the report’s release, because the US is still the largest single target market for Israeli exports, and a falloff now could mean that Israeli companies will lose market share to competitors when the US economy recovers.
Nevertheless, the Institute itself is preparing for a future in which Asia dominates the world economy, and is working to build ties with governments, entrepreneurs, and companies in the region to pave the way for future Israeli economic ties. There are already dozens of Israeli companies in China and India, and some of them have already built strong ties with the local market there. The Israel Trade Mission in China lists at least 250 Israeli companies doing business there, and the Export Institute has run numerous seminars designed to help companies get their foot in the Chinese door.
And many Israeli companies are succeeding in the Chinese market. Israel’s Solbar, for example, the world’s largest maker of soy products, has a large manufacturing facility in China, where it makes products mostly for the local market. Solbar’s soy protein and other products are very popular among Chinese makers of processed vegetarian and meat products, which sell to the local market and export to other Far Eastern countries. Solbar, in fact, is one of the few non-Chinese companies to have won a top award from the Chinese government for excellence in management.
India also looms large as a destination for Israeli companies, perhaps even more than China. In a recent report, the Israel Export Institute said that while China’s economy was growing more quickly than India’s, there was even more opportunity for growth in areas such as infrastructure, health, and education in India than there was in China. And in the coming decades, growth in India will significantly outpace growth in China, as India’s young population continues to grow, while China’s relatively older population begins to die off.
China and India also see Israel as a significant factor in their future growth. For the first time, a Chinese trade delegation came to Israel last week in order to search out investments in Israeli startups working in the areas of high-tech, environmental technology, energy development, and other areas. According to Carice Witte, a noted Israeli expert on China, Israel is a lot more on China’s mind than most Israelis believe, despite the fact that China is a lot bigger than Israel, and ostensibly has no trouble finding, developing, or buying whatever technology it needs. “Israel’s reputation as an innovator in clean alternative energy production, solar energy, and innovative engineering are well known to China’s leaders,” said Witte, “and China is very interested in implementing similar programs in order to reduce its dependence on foreign fossil fuels.”
India, too, is seeking closer business ties with Israel. In recent weeks, there has been a major debate in the Indian media on the desirability of setting up a “silicon wadi” like Israel’s, in which a high-tech infrastructure could feed talent and enhance development of home-grown Indian technology start-ups. The key to that, many in India’s tech community believe, is to build a computer chip fabrication plant in India, and India has turned to Israel’s Tower Semiconductor for help on that project. According to press reports in India, Tower signed a binding memorandum of understanding with an unnamed Indian infrastructure company to build a chip fabrication plant in India. The Indian government favored granting the contract to Tower and its Indian partner, in part in order to facilitate the building of an infrastructure that would attract Israeli companies to work with Indian start-ups and develop an indigenous high-tech startup industry. This India has failed to do until now, despite the fact that many Western high-tech companies have outsourced back-office work there.
The Tower deal represents one of the many Indian companies hope to make with Israeli high-tech companies, as the country seeks Israel’s help to raise its profile in the high-tech world. Look for trade between Israel — as well as other Far Eastern countries — to continue to grow, Renu Raman, an investment manager with deep knowledge of the Indian market, told The Times of Israel. Israel, he said, was one of the best of India’s few choices as a secure partner in developing its high-tech industry. “There might be more of an alignment of interests between Israel and India than with other countries,” he said. As a result, Israel’s trade with India, China, and other Far Eastern countries is likely to continue to grow.