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China Breakthroughs: Chinese companies seek tech innovations in Israel

Editor: Qian Ding 丨CCTV.com

10-22-2017 10:23 BJT

Full coverage: China Breakthroughs

By Tom McGregor, CCTV.com Panview commentator and editor

Numerous Chinese technology corporations have embarked on 'Go Global' marketing and sales campaigns to introduce their products and services worldwide.

The concept sounds attractive for domestic companies to expand beyond borders, but such endeavors do not always guarantee success.

China has struggled under a negative reputation for having a business environment that appears permissive when it comes to shortcuts on Intellectual Property Rights (IPR), playing copy-cat with new technology trends and lacking a true innovative spirit.

Nevertheless, Chinese companies are taking tremendous strides in recent years to overcome such deficiencies by making large-scale R&D (Research & Development) investments and encouraging greater cooperation on joint ventures with foreign-owned firms.

Israeli technology companies are playing a pivotal role to help 'China Tech' to design ground-breaking devices that transform society.

Shining a light on Israel's R&D centers

The Chinese and Israeli governments, as well as leading universities from both nations have been collaborating to build the most-advanced R&D centers in Israel as the country is gaining prominence for establishing its 'Silicon Valley' of the Middle East.

Israeli tech research labs have received hundreds of millions of US dollars in capital to develop new inventions that can grab the hearts of consumers, investors and manufacturers.

Chinese tech giants – Alibaba, Baidu, Lenovo and Xiaomi – have all agreed to open subsidiary R&D centers in the country.

Chinese companies realize that the old ways of doing business, which includes manufacturing low quality gadgets on the cheap, is no longer a winning formula.

Israeli companies are recognized as leading innovators in the fields of IoT (Internet of Things), Web security, edTech (education technology), finTech (financing Tech startups), mobile and digital health devices.

Meanwhile, Chinese companies hold a deeper understanding on how to bring new products to the mass market and generate profits.

CEO Omer Kreisel of Paolim Capital Markets told Global Times that Chinese consumers are getting more sophisticated and desiring more advanced technology devices when deciding to purchase them.

Israeli tech startups can offer them more-enhanced innovations, which explains why more than 1,000 Israeli companies have set up operations in China that have led to mergers, such as in 2014 when China-based Ctrip acquired Israeli-owned Travelfusion Ltd.

Bridging cultural investment gaps

For Israeli hi-tech firms hoping to set up shops in the Asia-Pacific region, China offers plenty of benefits, but there are a few disadvantages as well.

China has the heads up on factories, logistics and infrastructure here. The set-up process for registering a new company takes a shorter time than in Israel.

Yet, Israeli investors or startup companies should prepare for some headwinds, such as cultural investment gaps that can lead to misunderstandings and potentially broken contracts in China.

A good solution for Israeli firms to enter the Asian powerhouse would be to sign up with a Chinese company from a related industry on joint ventures. Utilizing localized managerial skills remain essential for success and harmony in the country.

Most importantly, they should develop a network of relationships that could form potential Chinese partnerships. Nonetheless, adapting to local customs can be rewarding, since that could lead to better cooperation and opportunities.

China-Israel trade accelerates to full-speed ahead

Total trade between China and Israel stood at over US$15 billion in 2016 (including figures from Chinese mainland and Hong Kong combined).

And in the prior year, 2015, Chinese companies have already invested more than US$2 billion in Israel, compared to just US$300 million for 2014.

Economists are forecasting China to surpass the US as Israel’s largest trading partner in the future, but a careful look at statistics show that China still has a long way to go to catch up.

In March 2015, the Israeli Trade Authority signed an Authorized Economic Operator (AEO) agreement that simplifies customs and approval procedures for Chinese exporters to Israel.

"The mutual recognition program streamlines and simplifies trade between Israel and China." Israel's Trade Authority director Moshe Asher told the Jerusalem Post.

Asher added, "Participation in the program is expressed through saving time and money" for Israeli companies, exporters and importers to "make them more attractive to the global trade market."

Linking China and Israel with shared technologies

As Israel 'Looks East' for trade and investment opportunities in Asia, China's technology companies can benefit from the innovative drive of Israeli hi-tech startup firms.

R&D tech centers are blooming in Israel, which can pave a pathway to new devices that can change the world. Hence, both countries can cooperate to instill a more tech-savvy global population.

Tmcgregorchina@yahoo.com

(The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

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