Last month, Israel’s commissioner for capital markets, insurances and savings indicated that it would not, “at this time,” allow a group of Chinese investors to buy control of one of the country’s largest insurance corporations, Klal Insurance Ltd. According to a report in the financial newspaper Calcalist, the commissioner could not obtain sufficient information to satisfy her concerns on whether the investors were indeed suitable to control Israel’s second largest insurance empire, despite an approach to Interpol for information about the anonymous investors.
The announcement, which effectively terminated the deal, joined other prospects relating to the sale of major Israeli companies to foreign investors, specifically Chinese ones.
Chinese groups have expressed an increased interest in investing in the Israeli economy. In 2011, Chemchina bought 60 percent of the shares in Machteshim-Agan, Israel’s foremost producer of chemicals and pesticides and a global leader in this field. In 2013, Fuson, a Chinese pharmaceutical giant bought Alma lasers for $240 million. Most recently, two weeks ago, it was announced that the Chinese Brightfood Corporation had bought 56 percent of the shares of Tnuva from the British investment fund Apax. Tnuva, which was founded 85 years ago as an agricultural cooperative and is Israel’s biggest dairy producer, is a leading and beloved household brand.
A review of the responses to the Tnuva (and other) sales reveal a curious trend. Israel is an integral part of the global economy. Many of its companies operate in foreign countries and are often partially or fully owned by foreign investors, something Israelis are very proud of — especially when it comes to foreign companies buying small Israeli startups.
Yet when it comes to Chinese investors, Israelis are more suspicious. While some commentators welcomed the Tnuva deal, others lamented it, both on economic and social grounds. The most interesting response came from Efraim Halevy, the former head of the Israeli intelligence service Mossad. In a parliamentary hearing convened after the sale, he warned of an increased Chinese control of Israel’s economy, mentioning that after the sale of Machteshim-Agan to a Chinese investor, the company changed its name and was struck from the Israeli stock exchange, effectively terminating it as an Israeli company.
What explains this objection — and perhaps hostility — toward Chinese involvement in what is a legitimate economic activity? Is it a case of prejudice or are there legitimate security concerns involved? Read more “Chinese Shopping Spree Raises Concerns in Israel”