Worth a few minutes/ some insightsInto the Chinese market, and working within the very different way they have to do business.
US Edition
alvr looking to china....
note: anyone look at the job data today? is this going to be a jobless recovery? i still think there could be some huge correction in the near term based on overvaluations and overly optimistic recovery data... we could test all the lows from a few years ago... :O ......
https://biz.yahoo.com/rc/030905/tech_israel_china_1.html
Reuters
Israeli high tech eyes lucrative future in China
Friday September 5, 1:08 am ET
By Gwen Ackerman
JERUSALEM, Sept 5 (Reuters) - Israel's vaunted high tech industry, dependent on exports for survival, is tapping into China's enormous trade potential as traditional U.S. and European markets struggle out of a slowdown.
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If Israeli companies have their way, millions of Chinese will be connecting to broadband Internet over their wireless infrastructure, or playing games on their cellphones using their streaming technology.
"The United States and Europe are still in the midst of the crisis and Israeli companies are going to markets where there is growth," said Yair Ofek, senior director general at the Israel Export and International Cooperation Institute.
The small size and flexibility of Israeli companies gives them an advantage in China, whose economy is expected to grow eight percent this year, say investors.
"Chinese firms are not looking for cutting edge but for solutions that can be adapted and are suitable for the markets here," said Yishai Klein, Giza Venture Capital's man in Singapore.
"Israeli companies are more flexible and in a positive way more aggressive and understanding in terms of meeting customer and market needs as opposed to other companies in the world," said Klein, whose company has investments worth more than $300 million.
Asia began opening to Israel three years ago.
Erel Margalit, founder and managing partner of Jerusalem Venture Partners (JVP), said that, once focused on China, his portfolio companies that had never sold in the country now make a third of their sales there.
Spurred by the absence of a domestic market, Israeli companies are more open towards investing time on business development in new regions.
"To convince a U.S. company to go to China, you need to do a lot of convincing because they have all their customers in the United States," said Margalit, whose company manages $670 million of investments in technology companies. "Israeli companies go international anyway so China becomes part of the mix."
Overall, Israeli high tech exports to China grew 15 percent between 2001 and 2002, from $186 million to $214 million, and Ofek said he expects the upward swing to continue.
PATH TO CHINA REQUIRES ADAPTATION
But the business path to China is not necessarily easy for the Israeli entrepreneur better acquainted with the United States.
"We are accustomed to the Western world and one kind of negotiations, and in China there are meetings after meetings. It is slow and it is a process," said Ofek.
To encourage Israeli firms to branch out into the Chinese market, the government-owned Israel Foreign Trade Risks Insurance Corporation Ltd has set up a special $150 million fund for projects in China. But Ofek says it is not enough.
"We need to create the infrastructure for Israeli companies to lean on. It is a large market with huge potential and it is a shame not to be there," he said.
Zvi Slominsky, chief executive of Tel Aviv-based Alvarion Ltd (NasdaqNM:ALVR - News), said China's language and size presented problems for the wireless broadband equipment maker, which was selected by mobile operator China Unicom (HKSE:0762.HK - News) in July to build networks in seven Chinese cities.
The difficulties were countered by establishing relationships with local firms who have the ability to install and maintain networks throughout China's many provinces.
"You need not just a headquarters but many feet on the ground and for an Israeli company to have a lot of feet on the ground is complicated," said Slominsky.
Recognising the need for local partners, Margalit's JVP recently invested $4 million in UP Tech, a Chinese company that aims to become a leading communications provider in the country.
Margalit hopes to introduce products developed by his portfolio companies into China through UP Tech, which will in turn give those firms a foothold in the market.
"We understood that if we don't put Asia in general, and China specifically, into the mix of business development for our Israeli, American and European companies, it is going to be very difficult to make it," said Margalit.
Giza Venture Capital also sees the Asian market as the most important market for Israeli companies after the United States. According to Klein: "To some degree and in some sectors, Asia will even surpass the United States in the future."