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?

[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

[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.