Despite the global challenges of the last year or so, Israeli tech and life sciences firms have proven themselves to be highly resilient and undaunted in carving a path to international growth. But, in doing so, many are automatically setting their sights on Europe and North America and overlooking the considerable prospects that lie to the east in Asia - though those targeting the region are growing in number.
Let’s look at why this could be a big missed opportunity.
Lucrative market potential
Of course, the US and Europe are important expansion markets and, for some Israeli companies that want to grow beyond their domestic market, they might well be the best targets.
But I see too many startups looking to the west simply because these markets feel more familiar. They’ve seen other companies take that route, their VC investors are more used to expansion there and they perceive the cultural and language differences to be smaller.
Sure, there’s something to be said for familiarity. And the practicalities of doing business overseas naturally need to be considered. But this approach overlooks the lucrative market potential many Israeli tech and life science firms face in Asia – especially in China, Japan, South Korea and Taiwan.
In fact, for many tech companies, the opportunities to the east could be far greater than those to the west, which some have been surprised to discover through initial market research exercises.
Let me explain three important reasons why.
1. Thriving economies
Firstly, many of East Asia’s economies are amongst the largest globally and growing fast. China is the world’s second biggest economy with GDP of more than USD$ 14 trillion and year-on-year growth around 8%.
Japan is the world’s third biggest economy with GDP around $5 trillion. South Korea is tenth with $1.8 trillion GDP. And while Taiwan is smaller, it has a per capita GDP to rival many European markets and growth above 7%.
Of course, these figures are for the territories’ economies as a whole. When you focus in on their tech and life science sectors, they perform even more strongly relative to other global markets. And they’re home to many of the world’s major corporations in fields from medical products and pharmaceuticals to semiconductors, automotive, energy, telecoms and more.
And you can add to this the fact that East Asia’s economies have proved extremely resilient to the impact of COVID-19. While the virus hit the region first and has certainly affected its populations and healthcare systems, these countries got back to business far faster and more decisively than the west. And our teams based in the region are finding no impediments to running sales programmes and getting deals done on behalf of their international clients.
2. Appetite for Israeli innovation
Secondly, in addition to East Asia’s sheer market size and growth rate, its corporations hold Israeli innovation in high regard.
They realise they can’t keep pace with global competition simply by innovating in-house, so they’re eagerly on the look-out for cutting-edge overseas technologies to enhance their product and service development. And many are showing a keen appetite for developments from Israel.
Israeli firms, in this sense, have a brand advantage from the word go. And they’re recognised as having particular strengths in core technologies of great interest to Asian corporations – including novel medical and diagnostic developments, sensor devices, robotics, computer vision, AI and cybersecurity systems.
These technologies are especially pertinent to Asian corporations pioneering fields such as digital healthcare, imaging, autonomous vehicles and next gen computing. They realise they need to buy in specialist products, ideas and knowhow, and are highly receptive to those emerging from Israel.
3. Less competition
Thirdly, just as many Israeli firms currently gravitate towards targeting North America and Europe, so do companies from many other parts of the world. The result is that, while Asia’s corporations are keen to embrace international innovation, its markets may well be less crowded with your rivals.
That’s not to say targeting them, and striking major deals, will be a walk in the park. There are cultural and language barriers that you do need to address – and this was the subject of a recent webinar we ran entitled ‘Decoding Asian business cultures’ (see the recording here).
But you may well at least find the competition less intense. And, with the right approach, the cultural obstacles can definitely be overcome.
So, by targeting Europe and North America, many Israeli tech and life science companies may be overlooking the considerable business opportunities in China, Japan, South Korea and Taiwan. And our clients who’ve taken the plunge and launched Asia sales programmes provide a good indication of what can be achieved.
Israeli 4D sensing tech firm Vayyar, for example, is making great progress in China and has just moved on from the sales programme we were running for it to establish its own Chinese operation.
Ra'anana-based autonomous vehcicle tech firm DriveU.auto appointed us this spring to help it expand in Asia’s automotive sector and is already making good headway.
And our team in Seoul is busy brokering significant deals for precision medicine tech firm Molecular Health, securing recent contracts with a major South Korean hospital and a clinical lab.
So, the opportunities for Israeli companies in Asia are most definitely there. Exactly how to go about breaking into these markets is, on the other hand, a subject for another time ….
To discuss the prospects for your business in East Asia, please contact Eran Eizik at firstname.lastname@example.org or on +972-528-528-582.