Israel-Asia Center

Israel-Asia Center: How did Infinity come into being?

Infinity was established in 1993 as part of a program between the United States and Israel, which was aiming to establish a venture-capital industry. The Israeli government subsidized American professionals and entities who had venture-capital experience and were willing to set up funds in Israel. One of them was Infinity, and between 1993 and 2003 we focused on the Israel-U.S., in the sense of early-stage to mid-stage investments in Israeli companies, looking at the U.S. market.

In 2003 we made the shift to China and, in a way, China took the Israel role in the sense that now China wanted to establish more and more venture capital incubators with private equity activity supporting that process like the Israeli government did in the ‘90s. And in a way, we took the role of the Americans in terms of using our experience to build the joint funds in China with the Chinese government. We have done that through multiple relationships starting from the prime minister, Ehud Olmert at the time, and China’s vice premier and through personal contacts, and the fact that we are part of the IDB Group, which is the largest conglomerate in Israel. All this supported the activity in 2003-4 when we started making this shift.

IAC: Infinity's website speaks of synergies between Israel and China. Do they outweigh the differences?

Well, there are significant differences between the countries. Some of them are technical - different languages, time difference, different mentality. The Chinese in many ways are more disciplined, and Israelis tend to be more flexible and changing, so some things are very difficult to bridge - communication and distance....

Differences also on the fact that also there's a lack of a Jewish community. Whenever we’re back in Israel, the U.S., Europe, Russia, Australia – almost anywhere you have a Jewish community – and you don’t have one in China. And it's a barrier in the fact that you don't have any anchors on the ground. But the flipside of it is in Israel. There's not much of a Chinese community. There's no Chinatown in Israel. That actually puts up barriers in that many Israelis do not know Chinese. They might know their construction workers, but not China, so there's a barrier and a difference that is created by the lack of acquaintance.

The synergies are very well known. First of all, the basic values. Education is very high on the priority list of every family and organization. The issue of family values is similar. On the Jewish side, there are many aspects. The more religious you are, the more respected you are. China has elements which are thousands of years old and some of the habits and lines of thinking are similar between Jewish people and Chinese because of this legacy. There is something in the mentality related to the fact that both nations and people were persecuted over the years. Between China and Israel, there is some historical point of mutual support - mostly China to the Jewish people - in Shanghai in World War II and in Harbin in WWI.
 
In their view of money, Jewish people and Chinese are very similar. They see money as a source of security and they think that one should save before parting with money and this is part of your survival, and your ability to protect yourself.

IAC: What kind of investments does Israel attract from China?

Only technology. There is some element maybe of natural resources but Israel doesn't have that much to offer. Israel chemicals. Here and there some property, but in general, technology.

IAC: Can you talk about Infinity's ongoing projects with China and the hubs of business you have built throughout China?
 
What Infinity is doing is establishing local teams in China which we train to work together in the form of joint ventures or fully-owned. And through these relationships, we introduce Israeli companies to Chinese, Chinese to Israelis, and we pick our investments together with our Chinese team where we think there is mutual value - or mostly, where we can add value to Chinese companies through Israeli technology.
 
IAC: In a recent interview with Reuters, Infinity's Avishai Silvershatz said that Infinity has been in China long enough to be considered a 'local' rather than a 'foreigner'. What does it take for a foreign company to achieve that kind of status in China?

Well, to be local means a few things. First, that you let a local team be active on decision making. It means that you are working in RMB currency and that your entities are registered in China as Chinese entities. Another aspect of being local is adopting the local thinking because they are looking at domestic markets - they are not looking to move out of China, they're looking to act in the market itself.

IAC: Does Israel's small size work against it when dealing with China?

I would say that mostly it works to Israel's advantage because it is really too small to be any real player in China's interests, so it's not considered to be an obstacle from a political point of view. At the same time, if you want to relate to small, we are small in natural resources, and it hurts the interests of China and Israel because we don't have natural resources which are in high demand at the moment.

IAC: Has the relationship been hit at all by the world financial crisis?

Actually, the financial crisis helped us, because we stayed very, very active in China - including business developments - through the financial crisis. This differentiates us from many others who tried to access China but when the crisis hit, they went back home or reduced their activity. We did exactly the opposite. We increased it. So, what's perceived by the Chinese, and rightly so, is that strategy in China is long-lasting, very deep rooted and 100% focused, and it's respected because it's not a secondary strategy. It's a whole. It is their strategy.

IAC: What kind of products do you see as being most likely to succeed in China in the coming years?

Well, the areas that we believe are the top priority are medical devices, medical services, some aspects of water technology, agricultural technology, new energy and IT.

IAC: Are Israeli and Chinese investors looking to jointly invest in third countries?

I would say it's still early. It's a good concept. I think that it will happen. We just need to evolve in order to get there.

IAC: Would that be in the same areas of hi-tech, medical clean tech, etc., or could that be in completely different areas?

I think it could be completely different. I think the Jewish network around the world would be the one to support that activity, it could be in different areas

IAC: How do you see the business relationship between Israel and China developing over the next 10 years?

Improving significantly. It really depends on Israel more than on China. I encourage the Israeli government and leaders to lift up their mindset, to look more to China. They are a little bit busy with the current relationship in the West, given the shift of power and focus. However, I tend to believe that Israelis are smart and they'll put more and more effort into that, so I'm very optimistic on the future of Israel and China.