China may be the ideal hub for transforming Israeli ideas in the renewable energy and water sectors into globally marketable, environmentally sustainable technologies.
As Israeli entrepreneurs and researchers in these fields continue to develop new types of green products, China is becoming an increasingly fitting partner for mass-producing and internationally promoting these innovations, experts say.
For China, where 70 percent of water is used for agriculture and 90% of waterways have become polluted, “energy, water and waste are cornerstones of a sustainable future in China” and are areas in which Israel can be a great asset, according to Peggy Liu, chairwoman of the Joint US-China Collaboration on Clean Energy (JUCCCE), a nonprofit focused on accelerating China’s greening process.
“The central and local government are actively seeking international technologies and best practice partnerships to boost their capability on the ground,” Liu told The Jerusalem Post. “Israel is known to China and the world as a leader in water technologies so it makes common sense for both to partner in piloting new technologies and scale up for commercialization.”
Liu’s organization recently featured Israel as one of seven countries attending their November China Energy Forum in Chengdu, in which all of the countries involved discussed potential collaboration opportunities in renewable energy.
“Israel has an excellent reputation in China as a ‘startup nation’ for hi-tech technologies,” agreed Dr. Richard Hardiman, a fellow at the Harry S. Truman Research Institute for the Advancement of Peace, visiting scientist at the Weizmann Institute of Science, senior lecturer at the Hebrew University and board member at the Jerusalem-based Israel-Asia Center.
While China is clearly interested in developing Israeli technologies, however, some of the cutting edge products in Israel’s renewable energy sector are still in their early evolutionary stages and could pose challenges to investors, Hardiman cautioned.
“They like to grab new ideas, but whether to take them at that early stage of development is yet to be seen,” he said.
Today, within the renewable energy and water sector, water is probably the optimal route for Israeli innovators to take with China, as the solar industry there is nearly bankrupt – despite the fact that it produces the majority of the world’s solar panels, according to Hardiman. Hydroelectric power also remains a particularly strong industry in China, as does wind power, which has overtaken the United States in terms of installed capacity, he said.
Much of the improved relations between Israel and China are due to the concerted effort of the Foreign Ministry to open its doors to business in China in recent years, as well as the decision by businesses to look eastward following the 2008 economic crisis, according to Carice Witte, founder and executive director of Sino-Israel Global Network & Academic Leadership (SIGNAL).
“The technology development relationship is similar to the trajectory you’ve seen in all areas of China’s relations in the past year,” Witte said. “Relations overall have taken a sharp increase.”
Witte also attributes China’s increased interest in Israel to the Arab Spring, the resultant investment losses – particularly in Libya – by which the Chinese were “taken aback.”
“They’re a non-denominational solution-seeker,” Witte said.
A joint Israeli and Chinese team is currently in the process of erecting a huge Sino-Israeli International Water Industrial Park in southern China’s Guangdong Province. The $200 million facility, which will encompass about 400,000 square meters of research and exhibition space in the manufacturing city of Dangguan, will be managed jointly by Chinese company Dowell Technological & Environment and Ness Ziona-based Shirat Enterprises.
The partners have already signed memorandums of understanding with 10 Israeli companies, and are in discussions with about 30, according to Shirat president Eliezer Manor.
“We are fully aware how hard it can be for Israeli companies to penetrate China market,” said Huangeng Pan, chairman of Dowell Technological & Environment, in a statement released by his office, after a visit to Israel during which he met with Industry, Trade and Labor Minister Shalom Simhon.
This partnership will help “cut Chinese red tape” and also give Israeli companies the means to get the global exposure necessary for marketing their products, Pan added.
“The fact is that Israel hi-tech companies must go outside of Israel. Israel is not an industrial market,” Manor told the Post. “China is exactly the opposite of Israel – China has many more industrial capabilities.”
Victor Zhao, Shirat’s China-based director, agreed that the relationship would certainly be “mutually beneficial.”
“China is facing very problematic issues with water shortages and pollution and Israel, on the other side, has great technologies but not a great market,” Zhao told the Post at November’s WATEC water technologies exhibition in Tel Aviv.
At the WATEC convention, China was the most highly represented country, sending 24 groups with more than 200 people representing over 130 firms, research institutes and government offices, according to the Industry, Trade and Labor Ministry.
The large number of Chinese participants coincides with an increase in trade with the Asian partner, which amounted to $6.8 billion in 2010, a jump of 49% from the previous year, said the ministry, which also signed an agreement of cooperation on water issues with the city of Tianjin during WATEC.
As far as the Water Industrial Park goes, the funds will be coming from Chinese governmental grants of $6m per year, investment funding of $18m per year and about $36m in private sector capital raised each year, according to the companies.
Meanwhile, Shirat has also become involved with another project in the central Chinese city Wuhan, where it has partnered with the local investment fund AgriGroup to bring in new agricultural water technologies from Israel.
“The only way for [China] to keep growing their technology is the introduction of new products into their markets,” Manor said.
Likewise in the water sector, IsCham Beijing (the Israel Chamber of Commerce in China’s Beijing branch) has proposed establishing an Israeli commercial demonstration center either in Beijing or in Tianjin, which would house permanent and revolving exhibitions as well as courses in water technologies, according to IsCham Beijing general manager Fani Gurevich.
Such a demonstration center would target Chinese government officials, field specialists and potential clients, using a model that Israel has already employed in other parts of China and all over the world. The center would “answer challenges” that Israeli water companies face in China, as well as recycle and purify waste and/or seawater from the nearby area, Gurevich said. Among the currently successful Israeli demo centers in China are a dairy farm near Beijing operating since 2001 and agricultural centers in the Xinjiang province and in Beijing, she explained.
“I think we’ll start seeing more and more such collaborative projects with innovative structuring, for example where the Chinese government provides funding and other nations contribute expertise to build centers for technology R&D,” said Manuela Zoninsein, the China Dream Project Director at JUCCCE and a columnist for IsraelStrategist.com covering cleantech exchange between Israel and China.
“Whatever is produced is jointly owned, with both sides equally contributing and equally gaining: China’s government is implicated in protecting the intellectual property it owns and the foreign nation gains funding and, potentially, access to this massive market,” she added.
Regarding the Water Industrial Park, however, Zoninsein said she was concerned as to whether both sides would be contributing equally and feared that Israeli companies might be “providing the piece that is of greater value.”
In doing so, they could risk losing control of their own innovative technologies due to prevalent intellectual property infringement.
“It is hard to say whether Israeli companies will retain their cutting- edge position in clean technologies,” she said.
This is a concern that Hardiman has also voiced, noting that there have been long-time hesitancies, or “cold feet,” about cooperating with China in such ways because it is “renowned for copying.” He suggested that Israeli renewable energy and water companies follow the footsteps of some American firms that have had the Chinese National Development and Reform Commission (NRDC) stand in as an official state guarantor when they sign contracts.
For Manor at Shirat, the international property issue is no longer a serious concern and he argued that the Chinese firms “need” the Israeli companies to develop the products and cannot simply embezzle knowledge.
“All our activities in China are somehow related to the local authorities and they do not allow [companies] to easily to steal know-how because they know that if this happened it would hurt their own activities,” Manor said. “China is undergoing a process of taking care of this issue much more properly.”
While Gurevich from IsCham Beijing stressed that there is, in fact, a substantial risk, she pointed out that many companies are able to operate in China without any issue.
In order to succeed in the Chinese renewable and water sectors, however, Witte from SIGNAL emphasized just how crucial it is for Israelis to better familiarize themselves with Chinese customs.
“If you understand Chinese culture you will know how to address the issues of property rights and will know how to succeed,” said Witte, whose organization recently established the Center for Contemporary Sino-Israel Studies (CCSIS), the first-ever Chinese research center addressing China- Israel comparative politics and strategic analysis, at Shanghai Jiao Tong University.
“The Chinese hold the Jewish people as a whole in high esteem and they perceive us as a unique people who have made an unusually – proportionally – large contribution to society,” she added.
