For years, most local high-tech players looked westward, with an emphasis on the US. US money flowed to Israel, and is still doing so. Startups are trying to sign contracts in the land of opportunity, and the Holy Grail for companies is a Nasdaq IPO.
This trend will not change overnight, but in recent years, looks are also turning eastward - mainly to the Chinese giant. Chinese concerns are investing in Israeli venture capital funds, and some of them are offering access and connections. The US and Europe are usually the default option, but China is unquestionably a rising force.
PTL Group founder and chairman Zvi Shalgo has already been active in the Chinese market for 20 years. In cooperation with other concerns working in China, Shalgo is offering 10 Israeli startups an opportunity to take part in a China Boot Camp - a week in Shanghai that will give them a brief introduction to the culture of the world's most populous country. Participation in the camp, scheduled to take place next September, including tours and meetings with local concerns, is free of charge. The entrepreneurs taking part in the plan will pay for their flight and their stay in China.
"Our company has been operating in China for 18 years already," Shalgo told "Globes." "We help international companies in China, and in certain cases, help solve crises and help companies in trouble recover. In the past two or three years, we are seeing more and more very young startups daring to go to China. Some of them are doing so after receiving offers to invest in them. We have run into quite a few cases in which companies came to China with no knowledge whatsoever. Startups usually lack resources, and therefore meet with people they know, and are not inclined to take professional advice. Some of them come to us a little too late, after getting into a crisis.
"Many concerns will participate in our Boot Camp. This is a professional program that will provide information about the way people do business in the country. We won't tell people what to do; we'll explain how to behave with the government. Our agenda is to connect with young businesspeople."
Shalgo was the first chairman of the Israel Chamber of Commerce in China. Joining forces with him in the Boot Camp will be Synergy Funds senior advisor Eran Lasser; William Bao Bean, managing director of Chinaccelerator, believed to be the first startup accelerator in the Far East; and representatives of Israel companies active in China, including Mobileye(NYSE: MBLY), Orbotech Ltd. (Nasdaq: ORBK), Verint Systems Inc. (Nasdaq: VRNT), and others. 10 companies participated in a similar boot camp produced by Shalo 18 months ago.
"Globes": What is it important for startups to know about business in China?
Shalgo: "It is necessarily to realize that this is not a country that is easy to understand. It's not like Europe or the US, in which the laws are fairly clear, and the market is sophisticated. In China, the situation is a little more difficult. The first mistake that companies make is to find a partner and appoint him as their local representative. As soon as you appoint someone like this, he can represent you only in a very small part of China - and it doesn't matter where he is located - because of the cultural form. It's not like what happens in India or Vietnam, for example. If someone thinks he can go and make a lot of money immediately - that won't happen. A lot of wise and persistent work is needed, and connections have to be made with many partners."
How do you feel about China not being a democracy?
"On the business level, it has a good effect on companies. I don't know any country that is planned in such a way and guides the business sector accordingly. This can be regarded as a burden, but also as a substantial advantage. Every five years, the government publishes a clear five-year plan, in which it states which technologies it's looking for. Later, it supports such ventures with all of its force. In democracies, you see the government being replaced frequently and changing the goals. You might not like the fact that China isn't democratic, but you can't avoid appreciation of the country's management capability."
Published by Globes [online], Israel Business News - www.globes-online.com - on June 29, 2017
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