We are pleased to host Arie Schreier, CEO of PTL Group, which provides management and operations services to Israeli and international companies in China, in the “Five People” section. In an exclusive interview with Chiportal, Arieh says: “The Chinese market was and remains an important business destination on which the world depends. Corona-era polls also show that production remains in China and China’s importance in the global supply chain has not been undermined. The Chinese government has also launched a new and easier policy regarding goods and materials that can be imported and exported today, in order to stimulate the economy and cross-border trade. ”Here is the full interview with Arie Schreier:
1. First, what is the state of the corona plague in China in general and in Shanghai in particular these days?
Until recently the feeling was that China was out of the crisis and life was back on track. The restaurants are full, the streets are bustling, everyone has returned to using the metro and buses without social distance, and there has even been a directive that you do not have to go with masks. Many people were looking forward to the Import and Export Exhibition (CIIE) held in China every November, and the expectation is that by November it will be possible to come and hold the event as usual and receive hundreds of exhibitors from abroad at the exhibition. Even at our annual company event in offices in Shanghai, people shook hands, hugged, sat together without social distance and without masks.
The renewed outbreak in Beijing threw us back at once: our team in Beijing returned to work from home. People immediately went into quarantine voluntarily or as directed by the authorities. Anyone who comes to Shanghai from the Beijing area immediately goes into quarantine.
In Shanghai life is still going on as usual but everyone is back to putting on masks and there is some anxiety in the eyes of the people, who are starting to realize that maybe it is actually not yet behind us, as it seemed.
2. In recent years, there has been a dramatic increase in the interest of Israeli companies in the Chinese market. Do you still recommend Israeli companies to direct marketing resources to this market?
of course. The Chinese market was and remains an important business destination on which the world depends. Corona-era polls also show that production remains in China and China’s importance in the global supply chain has not been undermined. The Chinese government has also launched a new and facilitated policy regarding goods and materials that can be imported and exported today, in order to stimulate the economy and cross-border trade. Beyond that, China’s power cannot be ignored either in terms of purchasing power. However, it should be borne in mind that things are not as they were yesterday. For example, the consumption habits and priorities of Chinese consumers have changed. If in the past the hand on the wallet was much lighter, today the element of saving or necessity have become more central in decision-making processes. It is therefore very important to inspect the area thoroughly and consult with a local expert expert in order to formulate a tailored strategy.
3. In the past, Israeli technology companies have been reluctant to do business with Chinese companies for fear of knowledge theft and unauthorized use of Israeli patents and technologies. Has the situation changed?
Both in the past and today the business in China should be run with the utmost care. Over the years, a lot of knowledge has been accumulated about how to conduct business in China and especially how not to conduct business in China. Unfortunately, Israeli companies are always looking for shortcuts, so they repeat the mistakes made in the past with almost painful accuracy. There are quite a few experts and service companies that can lead Israeli businesses in China while minimizing the risk. China, too, has come a long way over the years in improving the means of protection and punishment against theft of knowledge and technology, but the risk is always there. Those who intend to come to China should prepare for the move before arriving, research and learn what is the best way to start the business in China, what measures should he take to protect the technology, and who will run the activities in China and maintain the technology during the company life in China.
4. How the trade war between China and the United States affects Israeli companies. Do Israeli technology companies have restrictions on the sale of their products in China?
The trade war between China and the United States is a thorn in its side. On the one hand, it is an opportunity for Israeli companies that are able to provide a suitable alternative to American competitors, especially when it comes to technological products. As part of China’s effort to close the technological gap with the United States, China is giving priority to anyone who can help it get there, and it is known that Israel has a great advantage in the field. At the same time, there is a fear that American companies will issue an ultimatum to Israeli companies operating in both markets. There are currently no restrictions on both Israeli and American companies as a result of the trade war, except for the tariffs themselves between the two countries that are changing the market situation.
5. In recent years, industrial parks have sprung up in China that encourage Israeli companies to establish local development centers under tempting conditions. Do you recommend Israeli companies to use the same parks? Are there cities or counties that are superior to the others?
In the last twenty years dozens of such industrial parks have opened that have tried to entice companies to come and establish a company in their park. Very few companies survived in those parks because the enticing conditions (grants and tax benefits) were not enough to make the companies successful. The grants ran out before the company had time to establish itself in China, the tax benefits were irrelevant because the companies did not have time to make money. Beyond that, the parks were also in problematic places where it was difficult to find customers, suppliers and also suitable personnel, and it was difficult to attract to the remote parks quality workers who would be able to lead the company in China. Recently local governments have also learned that the grants given at the time to anyone who set foot in China eventually worked against them, as they remained in their area with quite a number of companies abandoned or shuffled.
The main problem of the parks is that what is most important to them is to show good to their superiors and show as large numbers as possible in the annual report of the number of foreign companies registered in that park. They do not have real tools to help companies develop the business in the area where they are and anyway the official in charge of the issue will move after two years to another position, so his motivation to enlist in the issue in the long run is low.
We have rich experience working in front of such a park where our industrial incubator is located. There they learned that beyond the structure and benefits, there is a need for a management company that understands the needs of the companies that come and knows how to provide them with professional management so that they can concentrate on business success in the first years. Parks that offer such services will attract companies in the future as well, and rightly so.