The trend is fueled by the national governments' efforts to deepen bilateral ties. A 10-year multiple entry visa policy will take effect next month. The two sides will also start talks for a free trade agreement. That will be preceded by a three-year deal to promote bilateral cooperation.
Such enthusiasm was very much in evidence at the second China-Israel Innovation and Investment Summit, which was held in Tel Aviv in late September. About 100 Chinese firms and 300 Israeli companies showed up and negotiated investment proposals totaling $1.5 billion, according to the conference organizer.
Among them is Chinese social networking heavyweight Tencent Holdings Ltd, which is looking for startups in artificial intelligence, augmented reality and cloud computing.
A group of CEOs from 40 smaller Chinese manufacturing firms was also present, looking for technologies that can upgrade their factories or help build new growth engines, as they wrestle with mounting pressure of an economy whose growth rate is slowing.
Chinese IT firm Neusoft announced at the start of the conference with Israeli-Chinese private equity fund Infinity Group that it would jointly set up a $250-million fund to invest in Israeli medical technologies over the next three years.
Shen Meng, director of Chanson & Co, a boutique investment bank in China, said a few Chinese startups do have "core technologies", but have been over-valued, pushing up the investment cost, which is prompting investors to look for the real gold in Israel.
"But China's budding businesses that are competitive won't suffer from this trend. After all, China has a lot of investable funds now. What we really lack are good ventures," Shen said.
Eran Wagner, general partner of Israeli VC fund Gemini, said Chinese firms often adopt two approaches to investing in Israel: they either pour money into local VC funds whose network can help them effectively reach early-stage startups or directly pump capital into late-stage firms that have mature technologies and products. "Chinese investors prefer later-stage firms."
But as China is moving rapidly from being a manufacturer to a global R&D center, the appetite for risk and willingness to fund technologies that are not fully developed, are growing, he said.
Compared with their Western counterparts, however, deep-pocketed Chinese firms are still newcomers to the Middle Eastern country. The language barrier－English and Hebrew are predominant in Israel－cultural differences and a different startup ecosystem all add up to the challenges that Chinese investors face.
"It is quite important to develop trustworthy local advisors to navigate the differences between the two countries," said Chen Hongwei, executive director for Tencent's mergers and acquisitions.
Things are already moving in that direction rapidly. Legal firms, HR firms that supply workers, translators and guides, and platforms connecting Israel and China, are mushrooming.
Geekpark and 36Kr.com, two popular Chinese technology websites, rolled out Israeli business trip projects last month for small Chinese firms keen to visit Tel Aviv for investments.
Wang Xin, a Chinese student at Hebrew University, is itching to jump on the bilateral tech bandwagon. "I wanna stay in Israel to help deepen China-Israel business connections upon graduation. This is an opportunity too precious to miss."
