Blocked From US Tech Investing, China Goes To Israel Instead (cnet.com)

Struggling to seal deals in the United States as regulatory scrutiny tightens, Chinese companies looking to invest in promising technology are finding a warmer welcome for their cash in Israel. From a report: Unfazed by this change, which was brought on in part by a new administration focused on US protectionism, Chinese investors are putting their money in Israeli companies instead. Last year, Chinese investment in Israel surged tenfold to $16.5 billion, a record, with money going to Israeli internet, cybersecurity and medical device companies. In contrast, Chinese investors scrapped a record $26.3 billion in previously announced US deals.

Comments

Ok, who has the time machine?

[will_die]

First you had claims about use of a time machine to get access to servers now there are claims that trump went back into the past and implemented restrictions that are not even in place now.
How is this happening and how do I get a ride?

Re:Ok, who has the time machine?

[ShanghaiBill]

When deciding whether or not to invest in a country, any reasonable company would consider not just current law, but likely future restrictions and attitudes as well.

According to Trump:
1. If American companies create jobs elsewhere, that is bad for America and good for foreigners.
2. If foreign companies create jobs in America, that is also bad for America and good for foreigners.

Re:Ok, who has the time machine?

[Farmer Tim]

I hope our next viable candidate is a Macron...

That's a little round meringue, isn't it?

Re:Ok, who has the time machine?

[jandersen]

First you had claims about use of a time machine to get access to servers now there are claims that trump went back into the past and implemented restrictions that are not even in place now.

Investors are very sensitive to what they think is likely to happen in the near future - with Trump going on about 'taking on' China imposing enormous tariffs etc, what did anyone expect Chinese investors to do? Ladle the cash into the US until suddenly a tariff hits them? Just imagine how fast foreign companies would pull all their investments out of China, if their government started talking about stuff like that. It's probably called due diligence or something like that. Or common sense.

Re: Ok, who has the time machine?

[ArmoredDragon]

Both the previous one and the current one are bad in this area (and for what it's worth, Bernie would be even worse than these two.)

The thing is, mercantilism is a concept that has no merit whatsoever. Having a trade deficit can be perfectly healthy for an economy, and historically when countries attempt to correct a trade deficit, they just make things much worse for themselves. Things like tariffs end up costing you much more in the long term than they supposedly save in the short term. The steel tariffs for example cost our economy about $300,000 a year per job it supposedly saves.

What this comes down to is two things:
- Domestic production rises and falls almost in lock-step with imports
- We're on a global economy. If we restrict our steel imports, then any domestic goods we produce that use steel will cost us more money to produce. Meanwhile, other countries that buy cheaper foreign (to them) steel can now undercut our goods that are produced using steel, which means that we then sell fewer of steel based goods.

For what it's worth, practically all economists agree that tariffs and other trade barriers are bad for all parties involved.

Contracts

[psergiu]

I have dealt with Israeli companies before. Everything is fine as long as you pay very carefully attention to the wordings in the contracts. You need both legal and technical teams to go over each revision.
Both their legal and technical teams are usually very good, and once the contract is signed, they keep their part of the agreement. To the letter.
I wish the Chinese good luck.

Re:Contracts

[Farmer Tim]

From my experience in the Read instruction manual, China is an expert on the exact wording of the. I cannot see what the problem.

Re:Contracts

[ShanghaiBill]

Dealing with China is worse. First you sign the contract, then they start the negotiations.

You are doing it wrong. Chinese courts are so biased and dysfunctional that written contracts are basically unenforceable. They are a waste of time. Instead have a written agreement in English, and put the money in an escrow account under American jurisdiction. When they deliver the product, and it meets the spec, you release the escrow funds. If they don't deliver as agreed, then their only option is to sue you in America to get their money. If they won't agree to these terms, then go back to Alibaba and spend 5 minutes finding an alternative supplier.

Chinese don't even trust each other, so escrow payments are common, and every significant supplier is familiar with how they work.

Re:Contracts

[ShanghaiBill]

As opposed to where exactly? Every place on earth is like this.

No they aren't. The level of shady business behavior in China is way beyond what you experience in America.

That's why lawyers have jobs.

Per capita, America has 20 times as many lawyers of China. In China, the courts are not effective at enforcing contracts, so lawyers aren't much help.

There are plenty of stories about naive foreign companies trying to do business in China, but my favorite is when BAT (British American Tobacco) first entered the Chinese market. At first, they were surprised to see sales higher than expected. Sales continued to grow for several months, and they ramped up production. Then, after six months, sales plummeted to zero, and never recovered. They took huge losses on infrastructure and unsold merchandise. It took them a long time to figure out what happened. Their sales were high because their products were being purchased by their competitors, and stored in damp warehouses, where they grew stale and moldy. Then after six months, all the accumulated rotten cigarettes were dumped onto the wholesale market, crashing the price, and destroying BAT's reputation for quality.

Re:Contracts

[ShanghaiBill]

So, what you're saying is they are too reliant on escrows as trust.

No. I said they rely on escrow. I did not say they are "too reliant". Escrow payments work well, and I think they are superior in many ways to the trust based system of "Net-30" payments, credit bureaus, and D&B ratings, that exist in America. Ask an American business owner how much it costs to manage accounts payable, accounts receivable, and how much money is spent on collections, and lost on delinquent accounts.

I think many American businesses would prefer that we adopted a Chinese style payment system based on 3rd-party guarantees rather than "just trust us".

What I should start a legitimate escrow company in China (run it at a loss or whatever), build up a decent amount of business, then exit scam ala silk road.

Escrow companies are regulated and have connections to state owned financial institutions. Your chance of going to China and starting one is roughly zero.

New Trade Agreement

[Thelasko]

There's a new trade agreement that allows China to open banks in the US. That completely changes the landscape for Chinese investment in the US.

About time...

[dskoll]

,,, we've been eating at their restaurants every Christmas for years. Mazel Tov!

Re:About time...

[registrations_suck]

I agree. Maybe the Chinese can start being the leading provider for foreign aid to Israel too, so the U.S. can stop such funding and use that money to build a wall instead.

Re:Makes sense

[AlanObject]

Every investment culture has its own quirks. I haven't been in an investment scenario with Israeli tech companies but I do know they tend to be quite arrogant. And yes they consider contracts as a sort of weapon.

With Chinese you have to have the business model down pat. The contract almost doesn't matter. They pay attention to cash flow and as long as that is going along agreeably then you will be fine. They are often also quite a bit more sophisticated than they might appear.

Maybe they like to use Laptops on their flights...

[ffkom]

and so rather like to go to Israel than to the US ;-)

Actually Trump is to blame

[rsilvergun]

him and Sanders. TPP probably would have allowed the money to flow in, and it was Trump & Sanders demonizing the TPP that stopped it (If you honestly think a little thing like overwhelming public opposition was gonna stop the TPP you need to read up on how NAFTA as passed).

Not that I'm a Trump fan, but TPP is no friend of me. As an IT worker it would accelerate outsourcing and H1-Bs taking what little jobs are left. Said it before, will say it again, you can't compete with India. Hell, I can't compete with China. I can't compete with anyone that lacks clean air and water unless I give up clean air and water...