There is a very narrow window of opportunity for business between Israel and China in the biotechnological, pharmaceutical and medical equipment aspects

Says Sigal Weisswasser, an Israeli businesswoman who specializes in promoting international business, especially with China, and the initiator of the annual LIFE SCIENCES Israel international business development conference, which will be held on 16/17-10/2013 at the Dan Panorama Hotel in Tel Aviv

"After quite a few years of activity, closely accompanying business companies and connections with governmental and other organizations, it is certainly possible to see that many countries and companies fail in business with China," says Sigal Weisswasser, an Israeli businesswoman who specializes in promoting international business, especially with China, and the initiator of the annual international business development conference LIFE SCIENCES Israel which will be held on 16-17/10/2013 at the Dan Panorama Hotel Tel Aviv.

"There are two main reasons for these failures: one is the fact that in recent years China has been changing at an extremely fast pace and therefore there are no fixed and clear rules of the game, which makes it very difficult for business conduct not to mention a long-term business plan, and the second is because many do not really understand (even though everyone says they do.. ) What does it mean to do business with the Chinese - this is a different business world, a different culture, different codes and completely different needs. "

"The Chinese do admire the Israelis and Israel, and recently many of them even come to see "what's going on here" and to witness the wonder of Israeli genius. It is important to note that the Israeli government invests a lot of effort and brings to Israel many Chinese who are engaged in diverse fields with the aim of joining collaborations - but unfortunately here too it is a continuous lack of success in relation to the huge investment that is invested and the efforts."

"As you can see in the case of the Chinese deal with the Technion, the Chinese millionaire did not come to invest here in Israel, but to open operations in China. That is, to import the Technion's technologies to China.'

As for the biotechnology industry, Weisser says "there is a very narrow window of opportunity for business between Israel and China in the biotechnology, pharmaceutical and medical equipment aspects." According to her, today the competition is increasing from local Chinese companies that develop themselves and even sell them internationally, since they pass their products through the entire regulatory process accepted in the Western world, and therefore start selling internationally - something that was never the case in the medical field.

Today there is the development of Chinese molecules, and Chinese medical equipment is already sold in Europe and other markets, so the government has a clear interest in continuing to promote the local industry.

The local investors in China promote investments in foreign companies, but the preference is for those who will come to China to establish an activity on Chinese soil and it is better together with money! Therefore, those investors have an interest in promoting specific and targeted projects. So if you don't have an investor with deep pockets who wants to take part in the Chinese venture - it may be quite problematic.

And although "tech transfer" has become a keyword they like to use quite a bit - still, at the level of actual practice as a policy, they have no real interest in risking and investing in foreign start-up companies at the beginning.

"The Chinese investors are very carefully looking for companies to invest in with a preference for mature and profitable ones and not start-ups at the beginning of the journey. They recently acquired a part of the Swedish company Volvo, the Finnish Ericsson, a part of Agen Makhteshim and the Israeli Alma Laser). In the field of pharma and medtech, their trend is to invest in companies that are already in advanced stages of development. The Chinese have a lot of money to invest, but the field of venture capital is not developed among them and they do not like to take risks and prefer to go for the sure thing, especially if there is investment from the foreign side as well...! Their preference is literally to do together, that is, to develop together."

"The Chinese minds of the younger generation are returning home to China under preferential conditions offered by the government, after being educated in the US and Europe, in order to transfer the development to China instead of relying on technologies from abroad. This is especially true in the fields of high-tech, communications and the medical field."

"The cost of living - the issue of price and pricing is changing in China, therefore today many companies encounter a situation that greatly affects product pricing, which affects the entire issue of marketing and business strategy. Beyond the business aspect, this issue also affects the Chinese culture which is becoming a consumer that demands to earn more than before. "

"Negotiations of years and business from the heart - on one of my recent trips I heard a conversation of a film man who told his interlocutor that Walt Disney took about 12 years to close a deal with China... If you are negotiating with the Chinese, take this point into account. Moreover, even if there is a contract on the table ready to be signed for millions of dollars that took two years to develop, know that if you accidentally hurt the honor of your potential Chinese partner, then he will have no problem giving up the deal, and nothing will help! Honor is above all!"

In Siegel's experience, beyond the tightening of regulatory and governmental conditions, one of the main reasons for the difficulties that have recently piled up at the doorstep of many companies is the dizzying fact of Chinese success, and the fact that they are replicated by the whole world, causes
for them to be very selective, and more difficult to negotiate. That's why we hear more and more about western companies that are simply tired and prefer to return to the old model and sell in the smaller markets.

The Chinese reform and the pharmaceutical and biotech market

As part of the new health reform in China and for the first time every Chinese will have basic health insurance, which requires a lot of medical equipment and drugs. This is a major reform of $200B over several years.

The reform can help and be an opportunity for the Israeli pharma and biotech market, but you need to enter there wisely with an organized strategy and a real understanding of what it means to do business in China and be prepared for all kinds of unexpected surprises, but above all be mentally prepared. For example, a foreign retail chain that wants to enter China will most likely experience quite a few difficulties and problems, sometimes up to failure during the process - therefore, while in other parts of the world such ventures are welcomed, in China the attitude may be completely different.

So how to act against the Chinese and succeed?

Chinese businessmen do come to conferences and meetings in Israel, but quite a few of them mainly come to travel and get to know the "wonderful" country up close and not necessarily to do business and sign contracts. For many of them, visiting Israel is nothing less than a "dream" and in most cases they come at the expense of the host companies or the government, but in practice they do not see huge contracts, investments or significant collaborations.

It should be remembered that the Chinese for the most part do not usually travel to conferences and meetings in the world. If you want to invite a Chinese businessman for a visit, then you will have to finance the visit or part of it and still, there is no guarantee that the next morning or in two months he will sign the contract as a token of thanks. For them, the process is complex and a relationship is really required to promote a joint business course.

Amazingly, the Chinese actually remind us Israelis:

"They believe that there is nothing that stands in the way of desire, they have a desire to integrate and get closer, they attach utmost importance to the concept of family and work on very close and warm family relationships that are very reminiscent of ours, diligence, "everything is applicable and possible and there is no problem", a desire to learn and progress, and today They give utmost importance to the imparting of education and knowledge and more."

"After they found you reliable, they received from you an attitude of respect and a feeling that you believe in them. Chinese businessmen are after all nice and courteous people and may even surprise with their openness (especially after an evening at the local pub), who really want to generate business on the basis of "friendship" and are trying to change the rigid image which was created for them. And there, too, young people are unable to purchase apartments...which leads to great frustration!"