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China. The Israeli community started to notice the ambitious expansion by Chinese
giants, even though Chinese companies have been quite active in other countries
too, encouraged by the government's strategy to increase the competitiveness of
Chinese companies globally through outbound foreign direct investment. In 2014, the
acquisition of Tnuva by Bright Food became a hot topic from the start. Tnuva's yellow
cheese, milk and other stable food products had been a national staple for so long
that Israelis struggled with the concept of the company being under foreign control.
Ironically, Tnuva was, interestingly, actually controlled by the British private equity
fund- Apax Partners at that time, itself a foreign owner in essence.
Alongside these two headline acquisitions, many activities are bubbling up. Chinese
funds and corporate venture arms such as PingAn, Baidu, Lenovo invested in Israeli
VC funds and subsequently, some invested directly in companies. This can be seen
as a learning process – investing in funds allowed exposure to more potential targets
and the wider ecosystem and when the investors gained enough confidence, they
invested directly. In 2014, when Shuang Chuang, a catchphrase of the policies to
encourage innovation and entrepreneurship became a household term in China, Israel
became the natural role model for many Chinese organizations and entrepreneurs to
emulate.
Meanwhile, the Promotion of Competition and Reduction of Concentration Law in
Israel spurred some companies to divest their holdings in major financial entities.
Chinese syndicates and conglomerates started to chase Israeli insurance companies
on the shelf. At the time of writing, Yango Holding is waiting for regulatory approval on
acquiring the fourth largest Israeli insurance company, Phoenix, and China Minsheng is
eyeing the third largest insurer – Clal.
Some sectors are more attractive for Chinese investors, for example, healthcare.
Motivated by the "healthcare reform" and "big health" highly promoted by the Chinese
government, the expected trillion dollar market brought Chinese companies to Israel.
Two notable acquisitions herewere Fosun's US$240million acquisition of Alma Lasers,
and the US$70 million acquisition of Natali, the home healthcare service provider, by
Zhejiang Sanpower Group.
For more traditional sectors, the impact of technology and economic slowdown has
led many industry captains to look to upgrade their technological capabilities and
enter overseas markets. Israeli companies seem to be the perfect solution. The classic
model for Israeli companies is to enter the North American and Western European
markets before braving the Chinese market. Once acquired or invested by a Chinese
company in a similar industry, the Israeli company will provide the technological
upgrade and western markets, while the Chinese company provides their domestic
channels and marketing prowess.
For smaller Israeli high-tech companies, finding directly a Chinese joint venture partner
or distributor is no easy feat. Furthermore,when only the sales andmarketing are done
in China, the Chinese partner does not have much input into the R&D process of the
Israeli side. Thus, an increasingly popular method today is that the Chinese partner
Aspiring Chinese are also mesmerized by the story of the Jewish nation's
reconstruction out of devastation and many executives come to first learn
about Israeli wisdom, innovation and entrepreneurship as well as, to look for
business opportunities.