China and Japan are forging deeper ties with Israel’s burgeoning tech industry.
While China has been active in the Israeli market for some time, Japan, too, has launched a series of efforts to court the Israeli tech scene.
The signs of warming ties between Israel and Japan can perhaps be traced to 2014 when Rakuten, the largest e-commerce platform in Japan acquired Israel-based messaging app provider Viber Media for $900 million.
However, this week has been particularly significant for Japanese-Israeli relations.
On January 26, Sony announced its intention to acquire Israel-based Altair Semiconductor for $212 million and during the same week, Honda — eyeing Israel’s vehicle intelligence technologies, apps and software — flew in a group of executives and engineers from Japan and North America to attend the equity crowdfunding platform OurCrowd’s annual summit in Jerusalem.
“We believe that partnering together with entrepreneurs, startups, developers and academic institutions will help us develop truly transformational new products,” said Nick Sugimoto, Sr. Program Director at Honda Silicon Valley Lab.
Japan’s presence was also notable at Cybertech 2016 in Tel Aviv where the country was looking to forge closer ties with Israeli cybersecurity companies and technology ahead of the 2020 Tokyo Olympics.
“Over the past year, there has been a noted increase in the interest of Japanese companies in Israel in a variety of fields, evidenced by the arrival of Japanese companies to Israel and their willingness to host Israeli companies in Japan”, Amit Lang, Director General of the Israeli Ministry of Economy, said in a press release when Israel opened a trade office in the country.
In Singapore and China, Israeli tech know-how is a known quantity, but Japan and countries like Indonesia are only just waking up to the potential partnership opportunities with Israeli tech companies.
“In the past couple of years we have noticed an ever-growing presence of Asian and Far-East countries in Israeli events and conventions. Singapore has always had a presence here and recently we have seen Japanese investors and corporations setting up shop here and well as of course Chinese,” says Yaron Carni from Maverick VC. “We had a delegation from Indonesia, one of the world’s fastest growing populations, last year as well. I think that a lot of that is attributed to Israeli ministry of Trade and its economic attachés.”
Although China and Israel established diplomatic relations only in 1992, the two countries have in excess of $10 billion in trade since the beginning of last year.
“The floodgates have opened in a significant way. Chinese investors will increase their allocation to Israeli VC funds and into a growing a number of tech companies,” says Jeremy Lustman, partner at DLA Piper and head of the firm’s Israel Country Group. “Japan has also opened up, as has Korea and Singapore – each with company reps on the ground in Israel. Australia is also making a major play this year into Israeli tech and I think that will add to the broader pan-Asian appeal.”
China is already investing in Israeli venture capital funds, including Pitango, JVP, Vertex and others.
“China has a keen appreciation for the world class technology being developed in Israel across a wide spectrum, including cyber, iOT, fintech, agtech, and medtech, to name just a few. The Chinese are experts at taking these technologies to the mass market in China and elsewhere around the globe. It’s a huge win/win,” says Lou Kerner form Excellerate and managing partner of The Israel Syndicate on AngelList.
Technology investment from China into Israel is growing by 50 per cent annually and is expected to grow.
“The Chinese are looking for unique technology that goes beyond their traditional copycat style to stay competitive,” says Sephi Shapira, chief executive officer of MassiveImpact International Ltd., a mobile advertising company with offices in Tel Aviv and Taiwan. “I believe that they are looking for technology to help with user experience, big data, anything to take the product they built for the Chinese market and make it work externally.”