capture the opportunity in israel - business …€¦ · a high-performance culture family and...

CAPTURE THE

OPPORTUNITY IN ISRAEL

BUSINESS SWEDEN

Vienna

February 2016

EXECUTIVE SUMMARY

Israel has a proven record of being world leading in

R&D, innovation and technology.

R&D expenses corresponds to near 5% of GDP.

FDI is above 3% of GDP.

In terms of technology and innovation, Israel is world

leading in several industries such as

ICT (The internet of Things, Semiconductors)

Healthcare (Medical devices, regenerative medicine)

Energy (Gas, Solar power, Hydro-technology)

Defence (Cyber Security, Aerospace technology)

There is no language barrier due to wide use of, and

extended knowledge in English language.

The business culture is permeated by a will of doing

business and an entrepreneurial spirit . Personal

contact, network & building trust are of importance.

Israel has been geographically and politically isolated

and there is room to further develop its

internationalization through trade and cooperation.

BUSINESS SWEDEN IN ISRAEL

Israel invests, in global comparison, the largest share of

GDP per capita on R&D, resulting in Israel being a global

leader in ICT and healthcare technology. The market is

characterized by high-tech expertise and a strong

entrepreneurial spirit.

The Israeli market offers business opportunities in several

areas. In particular, Life Science, ICT, chemical industry as

well as space & defence technology provides prospects for

Swedish firms. This, combined with the fact that Israel has

an ability to continually innovate new technologies, makes

the country attractive for investments and partnerships.

Business Sweden’s local office supports Swedish

companies in Israel with for example partner search,

market expansion and market analysis as well as

stakeholder management.

Welcome to Israel!

8 JUNE, 2016 BUSINESS SWEDEN 2

ISRAEL IS A GLOBAL INNOVATION LEADER WORKING TO

FURTHER FACILITATE INTERNATIONAL COOPERATION

Carsten Grönblad

Trade Commissioner &

Country Manager, Israel

ISRAEL’S POPULATION AND ECONOMY ARE GROWING

Inhabitants: 8.2 million

GDP per capita: EUR 30 200 (On pair with Italy)

Capital: Jerusalem

Government: Benjamin Netanyahu (Likud)

Constitution: Parliamentary democracy

Language: Hebrew and Arabic

Currency: Israeli New Shekel

Area: 21 600 km2

Population centres : Tel Aviv-Yafo (3.7 million), Haifa (1.1 million); Jerusalem (0.84 million)

Israel boarders towards Egypt, Jordan, Lebanon, Syria

and Palestine.

ISRAEL IS A STABLE COUNTRY IN A RESTLESS REGION


ISRAEL IS AN IMPORTANT TRADE PARTNER TO EU AND

THE USA IN THE MIDDLE EAST

.

IN TERMS OF POPULATION AND ECONOMIC STANDARD ISRAEL IS COMPARABLE TO SWEDEN

KEY ECONOMIC INDICATORS 2015

* (Indicates the Swedish equivalent as benchmark)

GDP growth: 2,5% *(0,8%)

GDP: 248 000 MEUR *(520 000 MEUR)

GDP per capita in PPP: 30 200 EUR *(46 000 EUR)

25th in the world (Ranking by IMF)

Inflation: -0,9% *(0,1%)

Unemployment: 5,3% *(6,2%)

Average annual wage: 27 000 EUR *(33 600 EUR)

State Debt / GDP: ~ 66% *(44%)

Budget deficit / GDP: -2,7% *(-1,9%)

MACRO ECONOMIC DEVELOPMENT 2006 - 2015


ISRAEL'S ECONOMY IS EXPERIENCING ROBUST

GROWTH AND HIGH EMPLOYMENT RATES

SOURCE: IMF; EUROMONITOR, THE WORLD BANK GROUP

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15

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25

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33

2006 2007 2008 2009 2010 2011 2012 2013 2014

GDP/capita (PPP), 1000 EUR (left axis)

Unemployment, total (% of total labor force) (right axis)

ISRAEL’S ECONOMY HAS BEEN GROWING DUE TO A BOOMING TECHNOLOGY INDUSTRY

ISRAEL’S FOREIGN TRADE IN CURRENT BN EUR MAJOR IMPORT PARTNERS


IN 2014 ISRAELI IMPORT AMOUNTED TO 66 BN EUR

CORRESPONDING TO 27% OF GDP

SOURCE: WORLD BANK GROUP; EUROMONITOR

Major imports include crude oil, grains, materials,

and military equipment. The EU exports chemicals,

machinery and manufactured goods to Israel.

Major exports of cut diamonds, high-technology

equipment and pharmaceuticals.

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10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013 2014

Exports

Imports

Europe

US

China

Other

EU IS ISRAEL’S MOST IMPORTANT TRADING PARTNER AND SUPPLIES NEARLY HALF OF IT’S TOTAL IMPORT

THE ISRAELI – SWEDISH TRADE RELATION

In 2014, Sweden's exports to Israel amounted to 340

MEUR or 0.5% of its overall imports

Machines, paper, electronic equipment and vehicles

represent 70% of this export

Other top ten exports include pharmaceuticals, wood,

plastics, furniture, medical equipment and iron & steel

Israel's exports to Sweden amounted to 166 MEUR or

0.3% of its overall exports

Electronic equipment, machines, medical equipment

and plastics represent almost 75% of this export

Other top ten exports include food, fruit & nuts, rubber,

perfumes & cosmetics, inorganic chemicals

Swedish products have good reputation in the innovation

appreciative and consumer oriented Israeli market

ISRAELI – SWEDISH TRADE FLOW


SWEDEN HAS A LARGE TRADE SURPLUS WITH ISRAEL

AND POTENTIAL TO INCREASE EXPORTS FURTHER

SOURCE: ISRAEL'S CENTRAL BUREAU OF STATISTICS

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100

200

300

400

500

600

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2012 2013 2014

Exports to Sweden Imports from Sweden

FOCUSING ON JOINT VENTURES AND R&D MAY REVIVE THE ISRAELI-SWEDISH TRADE RELATION

ISRAEL'S ECONOMY IN BRIEF

GDP per Capita:

4.9 % of Israel's GDP is re-invested in R&D, which is the highest quota among all OECD countries.

Foreign direct investments (FDI) amounts to about 3% of GDP which is more than twice the regional average.

Israel is world-leading when it comes to investments in innovative, high-tech industries such as defence, security and ICT.

Israel is becoming a hotbed for start-ups – more than

4,000 start-ups are present in the country.

About 600 start-ups annually revive external funding

Several known ICT innovation stem from Israel such

as USB stick, voice mail and Viber.

Processes supported by highly skilled human capital –

first in global ranking of amount of engineers per

10,000 inhabitants.

R&D EXPENDITURE & FDI IN % OF GDP


ISRAEL HAS HIGHEST R&D EXPENDITURE & FDI PER

CAPITA IN THE REGION AND IS GLOBALLY COMPETITIVE

SOURCE: THE WORLD FACTBOOK (CIA); EUROMONITOR

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0,5

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1,5

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2,5

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3,5

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4,5

Israel Sweden World's Average

R&D

FDI

DELOITTE PROCLAIMED ISRAEL THE WORLD’S 2ND BEST MARKET FOR START-UPS AFTER SILICON VALLEY

THE JEWISH SINGULARITY

Not being employed by government

officials, Jews often entered self-

employment, and creative start-up

businesses

Since Christians were not allowed to

charge interest rates, many bankers

were Israelites which empowered

them with capital

Being a minority and being different

has created a mind-set of thinking

different and finding niches

THE FORCE OF NECESSITY

For survival and prosperity in the

barren land of Israel, innovation and

technology within the agricultural

sector is required

Being geographically and politically

isolated, Israel has been forced to

become largely self-sufficient in

terms of food, energy and defence

technology, driving domestic

research and creating know-how

Furthermore, Israel lacks natural

resources and is therefore

depending on brain power

A HIGH-PERFORMANCE CULTURE

Family and traditions are important

in the Israeli culture which has

implication in terms of a long term

horizon favouring:

Education

Investments

Responsibility

Acting in-line with a common

good for the community

BUSINESS SWEDEN 8 JUNE, 2016 8

HISTORICAL AND GEOGRAPHICAL FACTORS PROVIDES A

FOUNDATION FOR AN INNOVATIVE CULTURE IN ISRAEL

SOURCE: WORLD ECONOMIC FORUM

THE ECONOMY OF ISRAEL, SECTOR CONTRIBUTION

OF GDP. 100% EQUALS 248 BILLION EUR

CHARACTERISTICS OF ISRAEL'S ECONOMY


ISRAEL’S ECONOMY IS BASED ON THE SERVICE SECTOR

AND HI-TECH MANUFACTURING

SOURCE: THE WORLD FACTBOOK (CIA); EUROMONITOR

The service industry is the largest and most important

part of Israel’s economy.

Banks and financial institutions represent a major part.

Tourism accounts for more than 7% of GDP and

employs 13% of the work force.

Manufacturing as part of the industrial sector represents a

vital part of the overall economy.

Generats13.5% of GDP employs 12% of work force.

High-tech industries account for more than 30% of the

manufacturing production and the country is world

leading in e.g. aeronautics, generic drugs,

telecommunications and biotech.

Agriculture is small but highly productive.

Employs only 1.5% of the entire work force.

Over 40% of the land is controlled by the kibbutzim.

72%

26%

2%

Services

Industry

Agriculture

ISRAEL’S HIGH TECH INDUSTRY IS TRANSFORMING FROM PRODUCTION OF SEMICONDUCTORS TO ICT R&D

IMPORTANT INDUSTRY SECTORS

Most of Israel’s manufacturing is based on sophisticated

R&D and hi-tech processes, tools, and machinery

Major international companies such as Intel, Google

Microsoft and IBM have R&D centres in Israel

High-tech goods and services account for 12.5% of

GDP and 50% the industrial exports

ICT is an important industry, contributing 20% of the

private sector GDP

Israel is also world leading in the diamond industry

Due to edge-cutting technology & large local inventory

Transportation and telecommunications are other

important industry sectors

4% of exports come from the aerospace sector

~ 99 % of exports are transported through seaports

80 % of the companies in Israel are small or mid sized

(<50 employees)

EXAMPLES OF LARGE ISRAELI COMPANIES


MNE:S & LARGE NATIONAL UTILITIES DOMINATE &

SMALL HIGH-TECH COMPANIES THE ISRAELI MARKET

SOURCE: GLOBES DUN’S 100; ISRAEL MINISTRY OF FOREIGN AFFAIRS; TEVA PHARMACEUTICALS

TEVA PHARMACEUTICALS

Israel's largest company develops, produces and

markets generic drugs and innovative pharmaceuticals

No. 1 in generics worldwide

43 000 employees in 60 countries

Company Turnover (bn€) Industry

Teva Pharmaceuticals 18.5 Pharmaceuticals

Israel Electric Corp. 5.8 Electric utilities

Israel Corporation 5.6 Chemicals, transportation

etc.

Israel Aircraft Industries 3.5 Aerospace technology

Super-Sol ltd 2.7 Retail

Bank Hapoalim 2.5 Bank

Bank Leumi le-Israel 2.3 Bank

El Al Israel Airlines 1.9 Airlines

Tnuva 1.6 Food

SINCE BIG BUSINESSES ARE HIGHLY REGULATED IN ISRAEL OPPORTUNITIES RESIDES IN SMALL TECH FIRMS

ISRAEL’S ECONOMIC AND DEMOGRAPHIC CENTRES

Central Israel

> 30% of the population

Tel Aviv, also known as “Silicon Wadi”

Main economic engine of Israel

Top 10 most technologically influential cities globally

The city of Jerusalem is mainly a tourist destination,

but has a number of advanced technology parks

High-tech companies e.g. Intel and Cisco

Start-ups and incubators


THE ISRAELI ECONOMY IS GEOGRAPHICALLY

CONCENTRATED TO THE CENTRAL COSTAL AREA

SOURCE: EUROMONITOR

Tel Aviv

Jerusalem

Haifa

ECONOMIC CHARACTERISTICS OF ISRAEL'S REGIONS

The Galilee and the Golan (north)

Farming plays a key role in the region

Include hi-tech centres such as Haifa, focusing on life

science and green technologies.

The Negev (south)

Center of Israeli solar industry

Hub for Cyber Security & Programming

Planned centre for military industry

THE GEOGRAPHICAL CONCENTRATION OF INDUSTRY, KNOWLEDGE & PEOPLE FACILITATES BUSINESS

The sector has generated over 5 %

in annual growth since 2000

15 % annual growth is predicted for

3rd Platform Services 2015 - 2020

22 Israeli ICT start-ups are among

the 500 fastest growing companies

in EMEA

Focus areas in Israel are cyber

security & the internet of things

HEALTHCARE

The healthcare system in Israel is

ranked top 10 globally

About 8% of GDP is spend annually

on healthcare out of which ~4.5% is

governmental funds

Israel is not only a consumer of

healthcare services but also a large

producer, especially in medical

devices & generative medicine

ENERGY

Israel has among the largest

offshore natural gas findings in the

world and in 2016 another major

field at Daniel East/West will be

revealed

The massive Leviathan field is

expected to start production in 2017

Israel also has edge cutting solar

power and hydro technology


R&D INTENSIVE AND EDGE CUTTING SECTORS OFFER

PROMISING OPPORTUNITIES IN ISRAEL

SOURCE: WORLD ECONOMIC FORUM

SWEDISH COMPANIES COULD BENEFIT FROM TECH-TRANSFER THROUGH STRATEGIC PARTNERSHIPS

ICT


INFRASTRUCTURAL PROJECTS WITH MIXED PRIVATE

AND GOVERNMENTAL FUNDING SPEARHEADS GROWTH

Tel Aviv Jerusalem

Haifa

VENTURE CAPITAL TO FUND PROJECTS IS 2.5 TIMES HIGHER PER CAPITA IN ISRAEL THAN IN THE US

Leviathan Gas Field (2010-2018)

Investments > 1 bn USD

The gas field Leviathan outside

Israel's coast is one of the largest

gas fields in the world. The

prospection began in 2010 and

production is expected to start in

2017, making Israel an important

energy supplier. The reservoir

contains an estimated 19 TCF of

natural gas, corresponding to a worth

about 50 bn USD.

Shalim Thermal Solar Power

(2015-2018) Investment > 1 bn USD

The construction of the world largest solar

power plant in the Negev desert in southern

Israel has started. Only the 121 MW solar

power tower in Shalim equals the power

supply of 60 large wind turbines or the

supply 1% of Israel's electricity. By 2020

Israel aim for renewable energy resources

to supply 10% of its energy.

Be‘er Sheva‘s Cyber Security

Ecosystem (Evolving)

Government investments and programs

such as cyberspark align with the military

research centre, the focus of Ben Guiron’s

University and the specialisation of local

private businesses employing 2500

specialist. Prime minister Netanyauh has

launched a program to make Be’er Sheva

world leading in Cyber Security by 2020

Ayalon Roofing Project (2016 – N/A)

Investment > 500 m USD

The project to cover a 240 hectare of a

high-way section north of Tel-Aviv was

approved in late 2015. The underlying idea

is to reduce pollution and noise in an

urban area while gaining public land to be

used for green areas and leisure.

Be’er Sheva

YOU ARE WELCOME TO

CONTACT US

BUSINESS SWEDEN TEAM AUSTRIA

Wipplingerstraße 24-46

1010 Vienna, Austria

+43 1 402 35 150

[email protected]

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