Australia/Israel Review


Editorial: ‘Start-up Nation’ comes to Asia

May 28, 2013 | Colin Rubenstein

Colin Rubenstein

Israeli Prime Minister Benjamin Netanyahu travelled to China for an official visit on May 8 and 9. Despite recent Chinese criticism of alleged Israeli air strikes on arms shipments in Syria, Beijing arranged an itinerary that strongly hinted that they regard Netanyahu as an important visitor. In addition to the standard protocol for visits from overseas heads of government – meetings with President Xi Jinping and Premier Li Keqiang at the Great Hall of the People with full military guard – Netanyahu was also invited to hold a live chat with Chinese citizens on Xinhua’s website, and gave a speech at the Central Party School, the main academic institution training the Communist Party’s future leaders. These are much less common gestures highlighting a desire to reach out to a foreign leader.

The welcome mat put out for Netanyahu in Beijing is part of a growing trend across East, South and Southeast Asia. Israel’s reputation as the “start-up nation” – a dynamic economy centred on hi-tech, innovation and entrepreneurship – is causing regional leaders to sit up and take notice. And for their part, Israeli leaders – long heavily focused on the US and Europe – are starting to make the Asian region a new priority.  

In all of this, the Arab-Israel conflict – what most people think about when they think about Israel – plays only a minor part. It is true that China is interested in playing more of an active role as a broker in relation to the Israel-Palestinian conflict – and hosted a lower-key visit by Palestinian Authority President Abbas just before Netanyahu. However, regardless of whether or not that is achievable, Chinese leaders know that Israeli-Chinese trade and economic cooperation are highly valuable and only likely to become more so.

Netanyahu concluded his visit to China by signing a US$400 million trade agreement. China followed up the Netanyahu visit by announcing that Beijing’s University of International Business and Economics is creating a new department of “Israeli economics and Judaism” – dedicated to the study of Israel’s economy, hi-tech, business culture, as well as key figures in Israel’s economic history. This follows the classes established in recent years on Hebrew and Israeli culture at the University for Foreign Affairs in Beijing.

Since Israel and China established diplomatic relations in 1992, trade between the two countries has expanded almost 200 times, from only a little more than US$50 million to US$9.91 billion. Reflecting Israel’s new relationship with China, Netanyahu said at a welcoming ceremony in Shanghai, “If we offer a marriage between Israeli technology and Chinese manufacturing and global marketing capabilities, we can have a winning combination.” The Chinese apparently agree, with Chinese Ambassador to Israel H.E. Gao Yanping echoing these sentiments in a recent Jerusalem Post article.

But Israel’s regional economic ties extend way beyond China. In recent years Israel has steadily been increasing its economic ties also with South Korea, Japan, Singapore, Thailand, Vietnam, Indonesia, Mongolia, Cambodia, Laos, Nepal, India, Sri Lanka and others. While some of these ties date back over 50 years, these relationships are today growing at an unprecedented rate. Even in countries with no diplomatic relations with Israel, such as Indonesia, there are growing ties – albeit indirect ones. Tourism is also growing with both Koreans and Indians visiting Israel in substantial and increasing numbers. Israel’s two-way trade with the Association of Southeast Asian Nations (ASEAN) has reached US$28 billion, and exports to Asia continue to grow and are currently at around 22% of the Israeli total.

Israel is also focused on dynamic India, and it is currently negotiating a Free Trade Agreement that could lift annual trade volume between the two countries from its current level of US $5 billion to US$15 billion or more. Israel’s defence trade with India is currently around US$9 billion.

So why is Israel’s relationship with Asia flourishing? Of course, there are a number of factors at work. Geographically, Israel is in West Asia. Historically, there has been little regional record of the antisemitism that is prominent in Europe and the Middle East. In fact from the 1880s onward, thousands of Jews went to northeast China to flee rising antisemitism in Russia and Europe, and Shanghai was a haven to Jews escaping the Holocaust. Meanwhile, militarily, Israel is a leading exporter of anti-missile technology and other systems adapted to medium-sized nations, and also has an excellent reputation for intelligence.

But perhaps a core attraction is that Asian nations recognise that ‘start up’ Israel excels in innovation in a variety of areas of particular interest including water conservation, irrigation methods, agriculture, medicine, communications and hi-tech. Israel has also gained a reputation for groundbreaking entrepreneurship, pioneering technologies, profitable business opportunities and high investment returns. The Wall Street Journal magazine recently ranked Tel Aviv as the world’s second “most innovative city” – which is attractive to Asian hi-tech powers with their own “Silicon Valleys” in Bangalore, Xinchu Park and Beijing.

Israel’s economic attributes really do seem to be unique – as noted recently by near-legendary business mogul and philanthropist Warren Buffett. Following his company Berkshire Hathaway’s acquisition of the Israeli company Iscar, he said: “Israel is a good place for investment because of its people. There is no other place like it on earth where you can find people with such qualities, with motivation and with the ability to focus.”

Netanyahu’s recent visit to China symbolised Israel’s growing friendly relations with Asian nations. Israel may be a tiny nation but in the arena of innovation it looms large, and in Asia that secret is out.  

Smart Australian companies, CEOs and policymakers are and should be, looking for ways to leverage this new economic presence in our region – through joint ventures and other partnerships, including regional headquartering, providing services, and other complementary initiatives.

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