Chinese investments in Israel on the rise despite challenges

Israel is a global player in many fields that particularly interest Chinese investors. As a result, in recent years, this tiny yet powerful country has seen a tide of growing Chinese investment. Highlights include combating desertification, refining water desalination, improving agricultural capabilities, and advancing the integration of high-tech into the economy. In 1992, the volume of bilateral trade between Israel and China was just US$50 million, and according to a recent China Daily report, the number now stands at about US$10 billion.

One main driver behind China’s fast-growing economic ties with Israel is Israel’s robust and innovative economy. It invests 4.5% of its GDP in research and development and has the highest number of start-up companies per capita globally. Since China continuously aims to transform its labour-intensive industries to be more IT and hi-tech oriented, Israeli innovations are highly sought by Chinese investors, especially in the scientific and technological fields.

Chem China spearheaded a new era of Chinese investment in Israel in 2012 when it paid US$1.44 billion for 60% of Machteshim-Agan (now ADAMA), a global leader in off-patent crop protection solutions. Since then, Chinese firms have invested billions of dollars in Israel, mainly in hi-tech, advanced medical equipment, energy and agricultural technology. In particular, in the past couple of years, the success and failure in several high-stake acquisitions of prominent Israeli corporations have revealed both the appeals of Israeli businesses to the Chinese investors and certain obstacles that the Chinese investors are facing.

Zhou Min is a partner at PacGate Law Group. Gidon Weinstock, a partner at Weinstock Zecler & Co., also contributed to this article