Chinese tech money headed to Israel’s shores

Chinese companies are seeing the Great Wall of the United States in the form of CFIUS.

With tightening regulatory scrutiny in the United States, Chinese companies are flocking to Israel to invest in its tech sector.

In 2016, Chinese investment into Israel touched a $16.5 billion with Chinese companies parking their funds into Israel’s buzzing cyber-security and medical device start-ups.

“I’m flying to Israel in May where we’ve selected more than 10 potential targets,” said Li Dongsheng, TCL Corp’s chairman.

As per the chief executive of China Everbright Limited, the investment arm of Hong-Kong based Chinese state-owned China Everbright Group, the company’s focus has turned to Israel.

“Our Israel-focused fund has already invested in four local firms there, and we plan to invest in another three to four within this year.”

As for the United States, the Committee on Foreign Investment in the United States (CFIUS), has become a hurdle for many Chinese companies. After Donald Trump came into office, Chinese companies have struggled with acquisitions.

China-backed Canyon Bridge Capital Partners struggled with its $1.3 billion takeover of Lattice Semiconductor when the U.S. Congress raised security-related concerns.

“The review has always been rigorous, but now it will be even more so (due to) a combination of increasingly strategic transactions from China and a new administration worried about certain Chinese actions,” said Miriam Sapiro, a former deputy U.S. Trade Representative who served as a CFIUS member during the administration of former President Barack Obama.

However, as per multiple sources familiar with the matter at hand, with Israel being a close U.S. ally, Chinese investments in sensitive sectors are likely to raise eyebrows.

“China’s international surge of state-driven investments in emerging technologies should put the United States and our allies on notice,” said Representative Robert Pittenger, a Republican from North Carolina.

Pittenger stated he was campaigning to improve information sharing on the issue with U.S. allies.

Although Israeli Prime Minister Benjamin Netanyahu has portrayed Israel as being a “perfect partner” for China in its quest to develop a range of life-changing technologies, it has not been all plain sailing for Chinese companies.

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