A striking trend over the last few years has been the interest of Chinese and other Asian investors in Israel. It may be 23 years since the establishment of diplomatic ties between China and Israel but the relationship is now well and truly in full swing. The two countries have managed to overcome obstacles over distance, size and cultural divergence to develop close ties in trade, culture, academia and tourism. According to the Jerusalem Post, two-way trade was estimated at exceeding US$10 billion and the two countries have recently agreed to begin a joint feasibility study for a free-trade agreement. With Israel renowned worldwide for technology, science and innovation, China’s interest shows no signs of stopping.

Since the 2011 acquisition by China National Chemical Corporation of Makhteshim Agan Industries, the world’s largest generic agrochemical producer (now rebranded as Adama), there has been a stunning increase in Chinese investment in Israeli technology and Israeli know-how.

The strong and world class reputation of the Israeli hi-tech industry is drawing in a large range of venture investors. In 2014, for example, foreign investment, overall, amounted to US$1.9 billion, accounting for 56% of the funds raised by Israeli hi-tech companies. Particularly conspicuous in recent years among foreign investors has been the entry of Chinese investors into Israel. Nine Chinese-based investors invested in Israeli hi-tech in 2012. That number rose in 2013 and yet again in 2014, when a total of 22 Chinese-based financiers invested almost three times the amounts invested by Chinese investors in 2012. The Chinese appetite for Israeli hi-tech has not stopped at direct investment in startups, as investors from China account for approximately 30% of the capital raised by Israeli venture capital funds.

In the science field, there is a strong match between what Israel produces and what China needs. Hot off the press this week, for example, is the US$38 million licensing agreement between China’s Hefei Life Science & Technology Park Investments and Development Company and Israeli pharmaceutical company Oramed to market its oral insulin capsule in China, Hong Kong and Macau.

There are flagship, mammoth transactions such as China’s Bright Food Group’s acquisition of a controlling stake in Israeli conglomerate Tnuva in a deal valuing Tnuva at US$2.5 billion. This deal and others are indicative of the growing wave of interest from China and the value and opportunities in the Israeli marketplace. Fosun International acquired control of Israeli insurance provider Phoenix Holdings while an auction is currently under way for insurance provider Clal Insurance, attracting interest from many Chinese players. Furthermore, however, with China continuing to ramp up its presence in Israeli companies, there is also a reciprocal need for and greater use of Israeli technology and innovation in China. In late 2014, the Water City project was launched in Shouang, a pilot program incorporating Israeli technology in the country’s massive water system. With this mirroring of economic interests and passion for innovation, these ties look destined to become even tighter in the years to come.