Concept Paper: China Business Series
Executive Summary
This paper provides a summary of the launch of the AICC(WA)’s China Business Series held on 2
April 2014 and explores the strategic context surrounding the stimulation of the Israel-ChinaWestern Australia triangle through the AICC(WA)’s business network.
The new prototype is of global markets led by strategically defined trade relationships. Israel’s
relationship with China not only delivers a contemporary and evolving case study of note, but it also
opens up new opportunities for the Australian market. In particular Western Australia as the
gateway to Asia represents a mutually beneficial conduit for both brokering and adding value to
both Israel and China, offering stability, security, service and objectivity to China’s economy of scale
production and Israel’s product of innovation and invention.
Israel and China are two ancient nations dating back to antiquity, with strong and highly resilient
economies. Australia is a modern nation with drive, motivation, resource and prosperity. An
economic axis of three modern and growing nations, Israel, China and Australia provides formidable
potential for true global competitiveness in emerging industries, by leveraging the traditional
strengths of each respective country.
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Introduction
The Australia-Israel Chamber of Commerce “AICC(WA)” has successfully been facilitating bilateral
trade for more than forty years. Across this time many new markets have emerged whilst individual
product life cycles have come and gone. The explosion of Israeli innovation, the exponential
development of technology, the deregulation of markets, and globalisation has greatly altered the
identification and commercialisation of new business development over an extended period.
The new prototype is of global markets led by strategically defined trade relationships. Israel’s
relationship with China not only delivers a contemporary and evolving case study of note, but it also
opens up new opportunities for the Australian market. In particular Western Australia as the
Australian gateway to Asia represents a mutually beneficial conduit for both brokering and adding
value to both Israel and China, offering stability, security, service and objectivity to China’s economy
of scale production and Israel’s product of innovation and invention.
Mr Adam Handley, WA President, Australia China Business Council
Since China established diplomatic relations with Israel in 1992, it has been following Israel’s
example of rapid new industry development. Many Israeli inventions are not only manufactured in
China, and backed by Chinese financing, but also find eager buyers in the vast Chinese commercial
and consumer markets. China’s strength is manufacturing while it faces challenges with innovation.
Israel’s situation is the opposite. By pursuing longer-term business development in China, Israel is
discovering diversified and high volume market opportunities. Israel’s technology is currently
desired across a range of industries. Beijing is determined to build a new Chinese economy that
relies on innovation rather than imitation, hence its favourable embrace of Israel’s “Start-up Nation”
business culture.
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AICC(WA) Launch the China Business Series
The inaugural presentation of the AICC(WA) China Business Series, hosted in partnership with the
Australia China Business Council (WA) revealed how the scale and speed of global trade
development represents new opportunity for Australian business.
Cross country sourcing has matured significantly in recent years however the structure within which
a bilateral relationship is transformed into a trilateral relationship still evolves. The very concept of
deploying a triangular strategy, exploiting and combining the strengths of three modern and growing
economies is one that could not have occurred with such pragmatism and aspiration, even just a few
years ago. What started by default is now being accelerated by design, and the reality of the IsraelAustralia-China trade axis is now a text-book case study of a global economic paradigm. As the
distinguished audience at the launch of the AICC(WA) China Business Series discovered, it is also just
the start of a relationship that could rapidly transform into a global trade revolution.
L to R - Professor Ken Greenwood, Executive Dean - Faculty of Health, Engineering and Science and Pro-Vice-Chancellor:
Engagement (Science, Technology and Engineering),Edith Cowan University, Mr Duncan Calder, National President,
Australia China Business Council, Ms Cynthia A. Griffin, U.S. Consul General, US Consulate General Perth, Mr John
Poynton AM CitWA, Chairman, Azure Capital Limited, Mr Adam Handley, WA President, Australia China Business
Council, Mr John Cluer, Chief Executive, Australia-Israel Chamber of Commerce (WA)
China is now Israel’s third-largest trading partner globally, and its biggest trading partner in Asia.
The two-way trade volume increased by almost 200 times, from only a little more than $US50
million in 1992 to more than $US10 billion in 2013. In a relationship that commenced with the trade
of military and defensive supplies, the diversified range of Israeli exports to China now also focus on
agricultural, medical, water, energy and hi-tech products.
Similarly, Australia’s reliance on China as a buyer of exports continues to intensify. Last year a third
of Australian exports were receipts to China, more than double the ratio from five years ago. Having
suffered from a slow-down of mining revenue and a currency that is relatively stronger than
necessary, new agricultural, livestock, cotton and oil seed markets have rapidly emerged.
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Cross Cultural Challenges in Deal Execution
The AICC(WA) China Business Series launch was hosted by Minter Ellison Lawyers.
Keynote presenter, John Poynton AM citWA, Chairman of Azure Capital, reinforced that China’s
trade with Australia is no longer just a resources story. He drew a number of lessons learned from
the Israeli experience, including the extent to which venture capital funds from China were being
invested into Israeli research and development. China is gaining unprecedented access to Israeli
technology and know-how.
It was however the stellar pace of growth that Mr Poynton used to underpin his support for the cooperation of the AICC(WA) with the Australia China Business Council (WA). Citing the consistent
economic growth of China in excess of 7.5%, he confirmed the world’s largest economy was also the
world’s fastest growing economy.
Mr John Poynton AM CitWA, Chairman, Azure Capital Limited
Mr Poynton challenged that the visibility of Chinese investment in Australia is not sufficiently
recognised, again citing the investment relationship of China into Israel for the purposes of securing
commercialisation. Quoting Foreign Minister Julie Bishop, 123 countries count China as their major
business partner. To compete as intermediaries Australian businesses need to be more creative and
package project value.
This view was confirmed by Adam Handly, Partner of Minter Eillison and co-chair of the China
Interest Group. Noting the track record and recent flow of inbound mergers and acquisitions he
highlighted the importance of both established industry and challenger brands in the pursuit of
business growth.
The presentation concluded by exploring the future of food production, tourism, and other growth
industry development targeted at the Chinese market. Mr Poynton particularly noted the role of
business in supporting the visibility of Chinese companies within the Australian market, and
relationally within the Australian culture. He cited sponsorship examples and encouraged
philanthropic support through academic institutions as examples.
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Diplomatic Support
So important is the Chinese interest in Israel, an ongoing stream of senior political visits, including a
tour of China by Israel’s President Shimon Peres, continues with increasing intensity. The diplomatic
connections are supported at a grass roots level, for example an Israeli college has established a
dedicated media centre to support the exposure and understanding of the Israeli economy by
Chinese journalists.
The People’s Republic of China’s ambassador to the State of Israel, His Excellency Geo Yanping writes
in the Jerusalem Post newspaper his projection that in the coming five years, China’s imports will
reach some $US10 trillion, its outbound investment $US500 billion, and the number of its outbound
tourists may well exceed 400 million annually, 50 times Israel’s total population.
The AICC(WA) China Business Series launch incorporated discussion regarding the modernisation of
Chinese industry, and quality improvements to manufacturing and construction. The same
discussion evolved to address the historical political climate of uncertainty and suspicion
surrounding trade with China, and its governance ramifications. It is evident that the change in
business culture has been led from the highest diplomatic ranks. Reflecting on this Mr Poynton
encouraged greater investment through intergovernmental relationships and remarked that “Politics
is not just local, it’s personal. Business is the same.”
Mr Adam Handley, WA President, Australia China Business Council
Relations between China and Israel have been boosted over the past year. High-level diplomatic
leadership in 2013 was enhanced by a visit to China by Israel’s Prime Minister, Benjamin Netanyahu.
Chinese-Israeli relations and economic cooperation has since rapidly developed, with specific
advancements in the areas of water management, health, agriculture, sustainable energy
infrastructure, and even academia and the arts.
In welcoming Chinese Foreign Minister Wang Yi to Israel in December 2013 Netanyahu remarked
“Our strengths, I believe, complement one another. China has massive industrial and global reach,
Israel has expertise in every area of high technology and I think the combination could be very, very
beneficial to China and of course to Israel."
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Delivering the Australia- Israel Strategic Alliance to China
The value of Australia-Israel bilateral trade in 1970 was $10 million. This relationship has since grown
exponentially, and according to the Israel Ministry of Industry and Trade, stood at over $800 million
last year. It is however the imbalance of trade that is notable, with approximately $600 million
worth of Israeli exports to Australia and approximately $200 million of exports from Australia to
Israel. Given that the overall value of imported goods to Israel is $US80 billion there is an evident
opportunity for Australian industry to increase sales receipts to the Israeli market.
Further analysis highlights the profile of Israel as a knowledge and service economy. Israel has
traditionally exported technology, professional expertise and proprietary innovation. Australia has
returned primary and manufactured goods.
Major new opportunities in Israel’s emerging energy market will now see substantial growth in
bilateral trade with Australia. It is not lost on economic observers that Asia has emerged as a
preferred export destination for the recently created Israel energy industry.
Since China established diplomatic relations with Israel in 1992, it has been following Israel’s
example of rapid new industry development. As reported by Israel21c, the China business
community has embraced Israel’s innovation culture. “They believe the Israeli people are very wise
and successful since we have done amazing things in just 66 years,” says Dr. Amnon Amit, an Israeli
gynecological oncology surgeon who led medical training sessions in a rural Chinese hospital. “They
went for many years without any connection to the Western world, and now they want to follow our
example of quick success.”
The AICC(WA) has engaged in strategic discussions within the Western Australian business
community. The Chamber has also facilitated dialogue with Israeli agencies and companies to
further explore the desire of both Australia and Israel to enhance exports into China. Western
Australia is more than a fortuitous geographic gateway to China. The collaboration of Australian and
Israeli companies can enhance business and proposal development, particularly when the
technology and expertise from both countries can combine to create new productivity efficiency.
L to R - Mr John Poynton AM CitWA, Chairman, Azure Capital Limited, Mr John Cluer, Chief Executive, Australia-Israel
Chamber of Commerce (WA), Mr Adam Handley, WA President, Australia China Business Council
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Collaboration between the AICC(WA), and the Australian China Business Council will yield a new and
unique style of business opportunity. Both entities have a strong track record in supporting WA
business to build its knowledge economy on top of its successful resources base. In addition to
promoting the role of innovation within Western Australian business, the ability to shape the WA
economy through creating productive and smart futures is a strong motivating force towards
exploring a new style of business alliance. Entire new industries can emerge.
Globalisation requires economy of scale production. More than ever successful businesses are
dependent on internationally leveraged supply chains. Herein lies the strategic opportunity for
Australia, and even more-so for Western Australia, to facilitate and escalate Israel’s commercial ties
with China. The stability and security associated with the governance of Australian business coupled
with the Australian reputation for robust project management, quality service and security of supply
allows Australian companies to sit at the front end of Israeli innovation. Whether under the
structure of license, joint venture, franchise or outright purchase, Australian businesses can partner
with Israeli counterparts, adding Israeli innovation and technology to the products and services they
represent to the Chinese market. By also commissioning the manufacturing and production of
commodities through Chinese industry, new global opportunities await.
The concept extends beyond the production of consumables. Australian industry boasts maturity
with project and infrastructure based exports, entailing architectural design, engineering, and civil
construction. Israel brings systems and technology to add process control for offshore development.
The Israel contribution can serve as an antidote to the fallibility of Australian business competing in
a global market by creating a strategic niche for Australian companies, adding science and
technology to the quality of Australian product and service deliverables.
L to R - Mr John Poynton AM CitWA, Chairman, Azure Capital Limited, Mr Adam Handley, WA President, Australia China
Business Council
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Following the successful launch of the AICC(WA) China Business Series (CBS), further developments
are eagerly anticipated. The program will continue to enhance the traditional role of the Chamber;
to connect people to ideas and ideas to people. It will also touch new horizons, setting the scene for
business in Western Australia to consult, enter agency arrangements, and to develop a strategic
niche so that local industry can facilitate the delivery of innovation of Israel into China. In particular,
the online market in China is both the biggest and fastest growing market in the world. Our
presence in this market is further enhanced by the recent negotiations by the Australian
Government towards closer economic ties and a Free Trade Agreement. Greater Government and
industry association support is forthcoming for Australian business seeking Chinese trade
opportunities.
Israel and China are two ancient nations dating back to antiquity, with strong and highly resilient
economies. Australia is a modern nation with drive, motivation, resource and prosperity. An
economic axis of three modern and growing nations, Israel, China and Australia provides formidable
potential for true global competitiveness in emerging industries, by leveraging the traditional
strengths of each respective country.
Andrew Blitz
Special Projects
Australia-Israel Chamber of Commerce (WA) Inc
PO Box 44 Claremont West Australia 6910
andrew@aicc.org.au
www.aicc.org.au
Mob 0417 187 695
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