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Among the most difficult challenges Israeli companies of all fields face, is successfully cornering the Chinese market. With more nearly 1.5 million residents, China – the world’s global engine for economic growth – has enormous potential. Nevertheless, penetrating the Chinese market entails other practices, preparations and actions than the ones companies apply in cornering Western markets. One prominent business strategy involves securing a foothold in a smaller Asian market and then use it as stepping-stone for launching business operations in China.
Israeli start-up companies who wish to follow the same business strategy now have a new opportunity. These day, a new accelerator is underway – the product of cooperation between Startup East, a bi-directional accelerator between Asia and Israel, and the National University of Singapore (NUS) and its prestigious business incubator.
In the framework of the new program, Israeli Start-Ups will undergo a joint route in both Israel and Singapore. The companies who will exhibit their products could be feasible in the Asian market will benefit from the cooperation between Startup East and Synergy China Fund, a Sino-Israeli investment fund. Both will assist them in entering the Chinese market as well. The business incubator will also feature mentoring for Israeli startups, meet-ups with prospective investors and clients, as well as pilot programs and product localization.
The extent of annual commerce between Israel and Singapore reaches hundreds of millions of dollars. Israeli defense industry sources say that for the past few decades, Israeli companies in the Homeland Security field have garnered a great deal of success. This reputation should assist Israeli startups in gaining prominence in Singapore.
“In the past, entry into China was something we only recommended medium-size companies or larger corporations,” explains Zvi Shalgo, managing partner at Synergy China Fund.
Nevertheless, adds Shalgo, “In the past two years, China has become a much more appropriate venue for Israeli startups, in particular in the mobile and internet sectors.” According to Shalgo, securing a major investment entails meeting one’s Chinese investor from a position of power – especially having proving technological feasibility in Asia.
Amos Avner, one of the founding partners in Startup East, adds that the success of Israeli startups depends on how suited they are to the Chinese market. “For this reason, Singapore is an ideal point of entry. Over the past year, it had more than ten exits. Singapore ranks first in safeguarding intellectual property,” he explains. “English is the official language in Singapore. Besides, the local government supports startups and small businesses. They are very taken with Israel and its innovative streak. For Israelis, Singapore is a real stepping stone for South East Asia as a whole.”
Accelerator officials note that Singapore can serve Israeli startups in expanding to other, more flexible markets, such as the Philippines, South Korea, Thailand, Japan, Malaysia and Indonesia.
As a bi-directional accelerator, Startup Eas also caters to Asian startups as they enter Israel. In this capacity, a follow-up investment for Korean company Way has already been raised. This company developed a ‘smart’ bracelet capable of recommending women what skin care to apply based on their skin’s moisture.
Israel is considered one of the world’s largest arms exporters, ranking third among defense exporters in recent years, after the US and China. Israeli defense contractors have already penetrated the Chinese market successfully, through a series of giant deals. This, despite criticism from the US and a few successful American attempts at foiling certain defense contracts between Israel and China.