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Japan Turning Increasingly To Israel For Hi-Tech Solutions
Israeli Prime Minister Benjamin Netanyahu (R) and his Japanese counterpart Shinzo Abe pose for a photo op in Jerusalem last May. (Abir Sultan/AFP/Getty Images)

Japan Turning Increasingly To Israel For Hi-Tech Solutions

Officials hail ‘milestone’ in ties as Japanese economy minister visits Israel with Tokyo’s largest business delegation to date

Japan is turning increasingly to Israel for technological solutions in a bid to collaborate on innovative new business projects, industry experts and officials revealed. Hoping to remain at the forefront of the competition, Japanese investors, government agencies and senior members of the private sector are shifting resources more and more outward towards international business opportunities.

This week Japanese Minister of Economy, Trade and Industry Hiroshige Seko is touring Israel with Tokyo’s largest business delegation to the Jewish state to date. Some 150 representatives from 90 companies are taking part, including executives from Mitsubishi, Hitachi and Toshiba.

Seko, who is visiting Israel for the second time in his capacity as Economy Minister, is slated to meet with Prime Minister Binyamin Netanyahu as well as his Israeli counterpart, Minister Eli Cohen. The tour also includes visits to top Israeli businesses in the fields of cybersecurity, digital health, and artificial intelligence and is being led by the Japanese Economy Ministry and the Japan Israel Innovation Network (JIIN), an international platform established in May 2017 aimed at facilitating economic relations between the two countries.

Tomohiro Yoden, Managing Director at the Japanese External Trade Organization (JETRO) in Israel, a Japanese governmental agency that also helped organize the event, said there was a lot of enthusiasm on the part of Japanese businesses to cement ties with their Israeli colleagues.

“There is absolutely a trend in Japan to try to discover technological solutions [outside] and Israel is one of the countries we are looking to,” Yoden conveyed to The Media Line. “We hope to find more and more good business partners in the future who have capabilities we don’t so that we can have a mutually beneficial relationship.”

Israel’s Economy Ministry meanwhile pointed to the imminent signing of an agreement in the field of digital health that will help spearhead new research and business prospects.

“Until a few years ago Japanese companies developed technologies internally,” Sabin Sterenberg, a spokesperson for Israel’s Economy Ministry told The Media Line. “However, today the discourse has moved towards open innovation: locating technological innovations in places that are external to the company.

“The Japanese government, led by Prime Minister Shinzo Abe, has encouraged innovation as an important part of his economic policy, which is aimed at reviving the Japanese economy,” Sterenberg explained, noting the country was hoping to become a world leader in technological innovation by 2020.

“Since Israel is already well on its way in this endeavor, the Japanese government and businesses view the country as an important source of pioneering technologies.”

The Israel Innovation Authority, a government body responsible for allocating resources to tech companies and fostering industrial research and development, was also involved in setting up meeting for the Japanese delegation.

“This is another milestone in relations between Israel and Japan,” Avi Luvton, Senior Director of Asia Pacific Operations at the Innovation Authority, asserted to The Media Line. “There is no doubt that since 2014 we are seeing a permanent growth of ties, following agreements between the economy ministries in both countries.”

Aside from the intergovernmental agreements likely to arise from the visit, Luvton noted that he expects many deals will be inked separately in the private sector as well.

“We’re seeing more and more Japanese companies screening and exploring Israel for opportunities,” he affirmed. “At least 10 of them opened a branch or R&D center in Israel […] and we are expecting 2019 will have even better results.”

One expert on Japan-Israel relations pointed to other factors behind Tokyo’s most recent economic push, most notably its fear of losing out to other Asian nations on lucrative Israeli tech deals.

“One of the biggest drives for Japan is competition with Korean and Chinese companies, which have been investing heavily in Israel over the past half-decade or so,” Prof. Nissim Otmazgin, Director of Hebrew University’s Institute of Asian and African Studies, told The Media Line. He emphasized that the first research agreement Jerusalem and Tokyo signed in 2014, as well as Abe’s highly publicized visit to Israel in 2015, marked important turning points in ties.

“China however is more interested in infrastructure projects and strategic investments, while Japan is more intent on software development and new ideas that can match their huge production capabilities,” Prof. Otmazgin explained. “South Korea is also looking for new companies [to work with].”

Japanese companies have shown a growing interest in the Israeli market in recent years. According to the Tel Aviv-based IVC Research Center, Japanese investors were behind 3 percent of all capital raised by Israeli companies between 2013 and 2018, amounting to some $3.5 billion. Some of these major deals include the Mitsubishi Tanabe Pharma’s acquisition of Israeli company NeuroDerm for $1.1 billion in 2017, as well as the sale of Israeli messaging mobile application Viber Inc. to Japanese e-commerce mogul Rakuten Inc. in 2014.

Israeli exports to the East Asian island nation have also seen a 46% increase in 2018 over the year before, while imports from Japan reached $1.51 billion during the same period.

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