Businesses with China ambitions should ‘not take side’ in trade war

Israeli-Chinese bilateral trade has soared to more than $11 billion in recent years, seemingly undisturbed by the trade war between their Chinese trade counterparts and Israel’s closest ally.

By
March 1, 2019 11:48
2 minute read.
(From left) PTL Group Chairman Zvi Shalgo, General Manager Arie Schrier, Kramer COO Gil Feingold

(From left) PTL Group Chairman Zvi Shalgo, General Manager Arie Schrier, Kramer COO Gil Feingold, PTL Group HR & Administration Manager Jasper Zhang and Financial Controller Wendy Wan. (photo credit: YARIN TARANOS)

 
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Israelis seeking to take advantage of business opportunities in the lucrative Chinese market should “not take a side” amid trade tensions between Beijing and Washington, according to Zvi Shalgo, a veteran Israeli businessman and chairman of the Shanghai-based PTL Group.

“Israeli entrepreneurs should definitely not choose a side,” Shalgo told The Jerusalem Post ahead of Thursday’s annual meeting of the China Business Club, a forum of Israeli executives whose companies have operations in China.

“What we have now is a few decades where they should sit on the fence, or as they call it in Chinese philosophy, take the middle road,” he said.

Israeli-Chinese bilateral trade has soared to more than $11 billion in recent years, seemingly undisturbed by the trade war between their Chinese trade counterparts and Israel’s closest ally, the United States.

The visit of Chinese Vice President Wang Qishan to Israel in October symbolized the importance Beijing places on increasing innovation cooperation with the Jewish state.

“Israelis have a great opportunity to enter the Chinese market, but there is a certain way to behave if you want to maintain a strategy of a middle road,” said Shalgo.

“They should not begin their operations in China with big strategic partnerships that they can never withdraw from. The way to go is to enter quietly and independently, and to do business through many channels and [with] potential small partnerships.”

By entering into small partnerships, such as marketing and production cooperation partnerships rather than joint ventures with Chinese investors, Shalgo believes that Israeli companies will always be in control of their businesses, regardless of future developments of the trade war.


“Prospective European or American investors would want to know that the Chinese market is not blocked for the Israeli company, and at the same time, that the company is not restricted by American pressure and can maneuver between the two,” Shalgo said.

“Israel must not let go of our relationship with China. In 20-40 years when a new equilibrium of power comes into effect, China will be so strong and so dominant that we must maintain strong economic ties.”

Founded in 2000, Shalgo’s PTL Group serves as an operational outsourcing platform that provides day-to-day operations and management support for multinational companies who wish to operate in China.

To date, the company has completed over 200 market entry projects with the support of 250 employees in seven locations across China, and names major Israeli firms such as Mobileye, OrCam, TowerJazz and ECI among its many clients.

“What people don’t know when they open a business in China is that it’s like another home market due to its sheer size. It’s like building a new company with all the business disciplines and key managers,” Shalgo said.

“It’s a tremendous task without outsourcing. If you use outsourcing platforms, however, you can do from day one what the whole company would otherwise be doing after two or three years.”

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