China Minor Player in Israeli High-Tech

China has become a more significant player in Israel’s technology sector, however IVC Research Center data shows that its role is still relatively minor

The media headlines suggest that Chinese companies want to invest in Israel high-tech. However, the data gathered by IVC suggests that China is a relatively minor player in Israeli high-tech. Also, China mostly invests in Israel for strategic purpose: Chinese companies only invest in innovative Israeli technology that they can utilize for their own specific needs.

For instance, Alibaba founder and chairman Jack Ma will visit Israel in May. Alibaba announced plans to set up an office in Tel Aviv as part of a $15 billion global R&D initiative after acquiring Visualead, an Israeli QR codes startup. Alibaba has also invested in several other Israeli startups in the past two years that focus on strategic technologies for Alibaba.

IVC explains: “Alibaba is typical of Chinese investors who are primarily interested in Israeli innovation, while the local high-tech sector views China as a huge potential and largely untapped market. An apparent win-win situation for both sides, the data paints a very different picture.”

Chinese direct investments and M&A and buyout activity accounts for at most 5% of the total.

IVC’s data found that the actual number of Chinese companies that invested in Israeli high-tech companies has gone from 18 in 2013 to 30 in 2015 and to 34 last year. The dollar amount invested in those startups ranged around $500 to $600 million in 2015–2017. This represented on average around 12% of the total capital raised by all Israeli startups in those years.