Japan upgrades ties with Israel, increases investment

By September 07 2016, 17:07 Latest News No Comments

Japan's PM Abe and his Israeli counterpart Netanyahu visit an Israeli innovation exhibition in JerusalemJapanese executives have stated that they are interested in increasing their trade with Israel. This is part of a growing trend whereby Prime Minister Shinzo Abe visited Israel in 2015, which followed Netanyahu’s trip to Tokyo in 2014.

In the past Japan was hesitant to trade heavily with Israel due to its reliance on Arab oil, with Japan unwilling to upset these countries. However, since the price of oil has decreased this is no longer such a concern for the Japanese, with the Chairman of Mitsubishi Chemical Holdings Kobayashi commenting “geopolitics is changing in the Middle East and as oil prices come down, strategically it’s not as important. Japan is changing its mind”.

This change in the trading relationship between the two countries can be shown by the fact that bilateral trade between Japan and Israel was $1.4 billion in the first seven months of 2016. As a consequence, Japan has become Israel’s fourth largest trading partner in Asia. This is part of a growing trend whereby Asia is overtaking America as Israel’s second largest trading partner after Europe.

This increase in the trading relationship can also be shown by the Japanese acquisitions of Israeli companies. Most notably, Rakuten acquired Viber, an Israeli chat app that was popular within Asia, in a deal worth $900 million. In addition, Sony Corp acquired Israel’s Altair Semiconductor for $212 million.

These acquisitions are in conjunction with R&Ds being set up by the Japanese Government in Israel, which includes notable companies such as Panasonic, NEC and Ricoh, leading to the creation of 12 projects with Israeli companies. This is a trend that is reportedly set to increase in the following months and years, with investment by Japan into Israel already reaching $50 million in 2015.

This investment goes both ways, with the Israeli firm Apps Flyer, a mobile analytics company opening an office in Tokyo last year, which reportedly has over 100 Japanese clients.
Additionally, Teva Pharmaceuticals has a joint venture with Takeda Pharmaceutical Company to bring its generic drugs to Japan.

Overall, the Japanese are very attracted to Israel’s biotech, internet and automotive industries, with particular emphasis on cyber and defensive security, as well as health in order to deal with the threat from China and its aging population respectively.

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