A trend has developed of Israeli companies moving their operations to Asia. In the past year, a growing number of Israeli companies in different industries have been expanding in Asia. Many companies, especially in the high-tech, defense, and commercial industries, are establishing branches and business operations in Asia. The questions are why, what are the advantages, and for which companies is this suitable?
Global Banking Offshore Ltd. (GBO) business development manager Lena Dikman discussed these questions with "Globes".
"Globes": Why are Israeli companies moving their activities abroad and/or opening representative offices in Asia?
Dickman: "A lot has already been said about growth in Asia and in China, so I won't discuss that here. Instead, I will mention the main reason, which is technical or branding. Israeli companies that manufacture in Asia and market to Europe are struggling to work with Israeli banks, mainly because of currency and conversion problems, transfers, and guarantees. There is also a major problem in working with countries that are not friendly with Israel, such as Indonesia or Malaysia, and companies operating in these countries must be foreign companies, with a preference for Asian companies registered in Singapore or Hong Kong.
"The tax issue is also very important (it recently made media headlines). Israeli companies establishing foreign operations are taking legitimate and legal steps to reduce their tax burden. For example, in Singapore companies greatly benefit from tax treaties with Israel and many other countries. Foreign companies based in Hong Kong are exempt from companies tax on profits made outside Hong Kong."
Is it legitimate to establish companies abroad?
"Absolutely. Today, many companies operate overseas and establish business relations with companies in many countries. The move to international operations is simply necessary. In other words, globalization has pushed many companies to international operations and international branding."
From the Israeli perspective, for what activities are Israeli companies establishing companies and branches in Asia?
"There are high-tech multinationals which set up offices in Asia for business development, marketing, and logistics; diamond merchants who are active in India and China; Internet companies, which target Asian markets, and more."
Is the banking system in Hong Kong or Singapore as advanced as in Europe?
"Absolutely, and in many cases, it is better than in Europe. Singapore's banking system is considered secure and one of the global leaders in private banking. It is known as the Switzerland of Asia. Hong Kong has become an important financial center with a developed banking system with one of the highest levels of banking confidentiality in the world."
Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2012
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