September Edition 2019

18 19 Five Key Points to Take Away Ilan Maor, Vice Chairman, Israel – China and Hong Kong Chamber of Commerce Key Bodies to Be Aware Of Close Scrutiny 01 02 03 04 05 Increased scrutiny is not new, and widely practiced elsewhere. Chinese companieshavebeen turnedbackbeforewhen trying tobuy the Israeli insurance companies Phoenix and Clal, but that was the initiative of the capital markets regulators, who expressed concern over Chinese control of hundreds of billions of shekels in Israeli pension savings. The plan with some of these other sectors is for a panel to be chaired by the FinanceMinister (and including other ministers from defense, public security and justice, as well as the head of Israel’s National Cyber Authority) to examine deals by businesses involved in critical technology, national infrastructure, telecommunications, financial services and defense. Regulating foreign involvement in major infrastructure projects and adopting concrete plans to properly screen foreign investmentswill go someway towards resolving the issue, and expert counsel from experienced lawyers can also do their part to ensure that the Israel/China relationship remains strong. Give priority to segments that are strongly encouraged by the Chinese government, which includes advanced manufacturing & industry 4.0, semiconductors & microelectronics, advanced medical devices, new energy vehicles, and so on. Remember that alongside with considering the first lines cities, such as Shanghai and Beijing, there are many other cities that are eager to attract Israeli companies and worth considering, if to mention a few: Nanjing, Wuxi & Changzhou (Jiangsu Province), Hefei (Anhui Province), Hangzhou & Ningbo (Zhejiang Province), Chengdu (Sichuan Province), and others. Carefully study the relevant business and competitive environment and consider the technology and commercial advantage which will enable the company to strive in a challenging market. Make sure that the company has the needed management attention and resources for the long road ahead. Doing business in China is a marathon. Plan how to establish presence on the ground, whether independently or with / via other entity (representative, partner, etc). The Israeli Embassy in Beijing and the Consulates General of Israel in Shanghai, Guangzhou, Chengdu, and Hong Kong , are very active in supporting in assisting both Israeli and Chinese companies in guidance and active support, and should be on the "homework" list of every company as part of its preparatory work. The same goes for the Chinese Embassy in Tel Aviv who is active and eagerly aiming to support the enhancement of economic and business cooperation. The Israeli Export and International Cooperatio n is actively promoting activities aiming at supporting exchange between Israeli and Chinese companies, from training program to delegation and expos, as well as company guidance. The Israeli Innovation Authority and its counterparts, the Ministry of Science and Technology of China and its Provincial and Municipal levels are playing an important role in supporting technological R&D cooperation, in a very wide scope and paths, between the countries. Companies interested in such activities may approach them directly for guidance and support. The Foreign Investments and Industrial Cooperation Authority of Israel is an integrative body in the Israeli Government dealing with the promotion of foreign investment and management of offset in Israel, and can consult Chinese companies coming to Israel, as well as their Israeli counterpart. The Israel –China&HongKongChamber ofCommerce is a non-profit organization, whose sole purpose is to support Israeli & Chinese companies in engaging, providing guidance and support based on the vast experience of its management and members, as well as its network in China. Ministry of Commerce of the People’s Republic of China (“MOFCOM”) is responsible for China's foreign economic cooperation efforts by creating policies with regard to foreign trade, investments, consumer protection, and market competition. MOFCOM is also in charge of negotiating bilateral and multilateral trade agreements. China’s new Foreign Investment Law requires foreign investors to periodically disclose certain information to MOFCOM and the Ministry of Commerce and State Administration of Market Regulation. National Development and ReformCommission (“NDRC”) functions to “formulate and implement strategies of national economic and social development” by developing plans for economic growth and monitoring business developments. The NDRC approves, authorizes, and reviews foreign funded projects, investment projects for overseas development, and projects utilizing significant foreign exchanges. The NDRC further provides guidance by proposing plans for foreign capital utilization and overseas investment. China Securities Regulatory Commission (“CSRC”) is the regulatory body that oversees the country’s securities and futures exchanges (equivalent to the U.S. SEC). The CSRC is comprised of 36 regulatory bureaus, and is tasked with creating and enforcing laws and regulations for China’s securities market and providing oversight, including the supervision of foreign securities trading firms in China.