Doing Business in Israel

KEY FEATURES OF DOING BUSINESS IN ISRAEL

Israel is an exciting place to do business. The country is a hotbed for innovation, with start-ups numbering in the thousands and with government creating many opportunities for companies – both new and old – to grow and succeed. This has had results, with the economy is growing and has been for a long time, with growth rates between nearly 2.5% and 5% for the last five years. In fact, it has outperformed both the EU and the US every year since 2006.

The country particularly shines in tech, where it, by its own admission, stands on the world’s medals platform. Israel is working hard to stay there, with huge investments and a lot of attention dedicated to keeping the technological edge the country uses to stay ahead economically and strategically.

With the economic, cultural and business landscape so inviting there is a lot of interest in setting up a business over there. For that reason, here we’ll provide some key elements for you to be aware of if you’re thinking about moving to Israel. With them in hand, you’ll be in a better position to decide if and how you’d get involved.

https://www.crowehorwath.net/uploadedfiles/il/additional-content/home/doing%20business%20in%20israel%202014%20.pdf

Ease of registering a company

Registering a company in Israel is quite easy, with Israel ranking at 56thon the easy of starting a business according to the World Bank Group Ease of Doing Business scale (the country ranks 53rd overall on the scale ). You can set up a company in Israel in less than a month.

To do so you need to:
** Obtain company registration documents certified by an attorney (3 days)

** File with the registrar of companies, Ministry of Justice (2 days)

** Register for taxes at Ministry of Finance, Income Tax Department (7 days)

** Register for VAT at Ministry of Finance, Customs and VAT Department (1 day)

** Register with the National Insurance Institute (5 days)

A lot of help for start-ups

Once you’re registered there are a lot of tools available to you to help your business get started, especially if you’re trying to get a start-up going, as the country does particularly well in that regard, with some experts comparing Israel to Silicon valley.

According to a Financial Times article, the sector raised an astounding $4.4 billion in venture capital in 2015, which doesn’t include foreign subsidiaries like Google, Oracle and Facebook who also have factories in the country and employ almost 230,000 people.
Investment has been rising 30% rise year on year. The country outspends all but South Korea on R&D.

One of the ways for the individual start-up business to access that kind of money is through one of the country’s over 200 start-up accelerators. These offer you the opportunity to find funding, advice, ideas and locations to work from. And if your business isn’t a success, then you won’t have to pay a dime.

This list of 10 top start-up accelerators (http://www.timesofisrael.com/meet-israels-top-10-startup-accelerators/) in Israel will help.

The government puts a great deal of effort into helping start-ups, with the Office of the Chief Scientist working hard to boost the start-up scene. According to some reports they provide it provides 85% of the seed funding to help start-ups get started.

A second institution that helps a lot is the army, where huge numbers of young people are trained up to become highly skilled hackers who go on to become excellent  programmers.

A shortage of personnel

That said, there is a shortage of trained personnel in the tech sector. In fact, there are reports that large numbers of engineering positions are not getting filled due to the high demands of the tech sector, the levelling of interest among students to study such subjects, and the difficulty for foreign workers to get visas to work in Israel.

This has caused salaries to rise over the last years and though they do not yet match Silicon Valley, they are certainly getting close. In response, the government is making overtures to sections of the population that are underrepresented in tech, as well as considering making it easier to bring in foreign workers to do the work.

The first step has already been taken in this regard, with the country now offering special visas to allow tech workers to live in the country for up to five years, whether as employees or as founders of new tech companies. In this situation, people will even be eligible for support from the Office of the Chief Scientist.

BUSINESS CULTURE IN ISRAEL

 

Business culture in Israel, like its overall culture, is diverse with an occasionally surprising contrast between warm hospitality, direct no-nonsense business attitude, aggressive negotiations and a gregarious nature. Expats doing business in Israel should feel at ease in the casual culture, but should nevertheless prepare to be flexible and patient.

Israel ranked 35 (of 189 economies) in the World Bank’s 2014 “Ease of Doing Business” survey, performing especially well in the categories “Getting Credit”, “Protecting Investors” and “Trading across Borders”. However, the country ranked poorly in the “Dealing with Construction Permits” and “Registering Property” categories. These issues reveal the underlying religious nature of the country; land is regulated according to Biblical law. This insight exposes the contrast and contradictions that exist in Israeli culture, a modern democratic country with dynamic and diverse religious interests.

Business culture in Israel is casual and informal. Israelis are direct, assertive and persistent. Business is fast-paced and often conducted with an inherent urgency. At the same time, personal connections are of the utmost importance. Colleagues and business partners take the time to get to know each other, socialise and drink coffee together.

Israeli culture is very direct and honest. It’s common for Israelis to ask questions that you wouldn’t hear in other cultures, such as questions about how much you earn. Israelis typically express themselves very directly, with very passionate expression being a normal part of collegial communication. Because of this, other than very high-level executives or Israelis who have spent a long time abroad, a calm Israeli is one who might be keeping his true thoughts guarded. Even with the directness that is common in Israeli society, avoiding discussion of religion or Middle Eastern politics is probably best.
Israel is a young country with few natural resources that frequently faces adverse conditions. These factors play into all aspects of Israeli culture, including is business environment. Known as the “Start-Up Nation,” Israeli business is pervaded by technology and innovation. Israelis prize intelligence and creativity, showing respect for experts and prominent specialists in their field.

The management style in Israel is often collaborative, and the concept of hierarchy is practically non-existent. Israelis are interested in solutions and results, and everyone is given the opportunity to voice their opinion. The culture places an enormous emphasis on hospitality and Israelis will make an effort to be accommodating to other cultures.

Business etiquette in Israel is relaxed. Many Israelis shake hands when greeting, although religious Jews do not shake hands with members of the opposite sex. When working with religious colleagues, it is important to be aware that they will not be available on the Sabbath (sundown on Friday until Saturday evening). It is customary to ask if there are special requirements when serving food or drink, as some Israelis observe the dietary laws of Kashrut.

Israelis typically dress in business casual, but occasionally dress very casual. If working with predominantly religious Jews, it may be appropriate to dress more conservatively; women may want to avoid low cut tops and wear longer skirts.

Business cards may be exchanged for convenience, often at the end of an introductory meeting. It is appropriate to have them printed in English.  Provide engraved business cards. Thoroughly read any business cards that you receive before putting them away. Go that extra mile and impress your Israeli colleagues by providing them with a Hebrew translation of all your pertinent documents.

The official work week is Sunday to Thursday. The Jewish Sabbath starts at sunset on Friday and lasts until sunset on Saturday. Muslims do not work on Friday. Some Christians do not work on Sunday.

Do not schedule meetings in September or October. Many Jewish holidays occur in these months. Be aware that business hours are shortened for Muslims in the month of Ramadan. During Ramadan, Muslims fast during daylight hours.

BUSINESS ETIQUETTE IN ISRAEL: FAST FACTS

Business language: International business is conducted in English. Internal business is conducted in Hebrew.

Hours of business: Typical office hours are 9 am to 6pm from Sunday to Thursday, however business may be conducted around the clock.

Dress
: Business casual; women may want to avoid revealing clothing for first encounters and with predominantly religious colleagues.

Greeting: Business associates usually greet with a handshake. Particularly religious associates do not shake hands with members of the opposite sex.

Gifts: Companies typically send out gifts to their customers at holiday times: Passover in the early spring and Rosh Hashanah in early autumn; champagne or flowers may be appropriate after closing a large deal.

Gender equality: Israeli society is generally very egalitarian; women are treated as equals.

Provide an agenda:  Israelis have hectic schedules and tend to multitask.

Research your Israeli colleagues:  Be aware of your colleagues’ English language skills and tailor your remarks accordingly. If you don’t speak Hebrew, consider hiring a Hebrew translator or interpreter to demonstrate your professionalism and facilitate communication

Religion:  The Israeli culture plays host to a number of different religions, including Judaism, Islam and Christianity. Business people should always be cognizant of a colleague’s religious beliefs and tailor the behaviour accordingly. By demonstrating proficiency in Israeli business etiquette, you will impress your colleagues and demonstrate your aptitude in Israel’s business world.

DOS AND DON’TS OF DOING BUSINESS IN ISRAEL
  • Do be prepared to offer drinks when hosting a meeting and prepare snacks when hosting long meetings.
  • Do respect diversity and individual opinions. Avoid politics in general conversation, as well as vocalising generalisations about the culture and people.
  • Do be prepared for everything to be negotiable and be assertive.
  • Don’t offer to shake hands with a religious person of the opposite sex.
  • Don’t be surprised by sudden changes in plans.
  • Do make polite conversation and be friendly, flexible and accommodating.
USEFUL ISRAELI WEBSITES

Ministry of Industry, Trade and Labour
http://www.gov.il/FirstGov/TopNavEng/Engoffices/EngMinistries/EngIndustry/
Ministry of Finance
www.financeisrael.mof.gov.il/
Ministry of Foreign Affairs
www.mfa.gov.il

Tel Aviv Stock Exchange
http://www.tase.co.il/eng/pages/homepage.aspx
Central Bureau of Statistics
http://www1.cbs.gov.il/reader/?MIval=cw_usr_view_SHTML&ID=461
Invest in Israel
http://www.investinisrael.gov.il/NR/exeres/19AF2037-38E6-4B78-B901-8208048953CD.htm

Tel Aviv and Central Israel Chamber of Commerce
www.chamber.org.il
Israel South Africa Chamber of Commerce (ISACC)
www.chamber.org.il
Manufacturers Association of Israel
www.industry.org.il
The Israel Export and International Co-operation Institute
http://www.export.gov.il/eng/Homepage/
The Israel Diamond Chamber of Commerce
www.israelidiamond.co.il/.
Israel Tourism
http://goisrael.com/Tourism_Eng/Pages/home.aspx

Last thoughts

Israel offers both many opportunities as well as some unique problems not found anywhere else. These need to be considered carefully and fully if you’re going to try to do or start a business in the country. If you’re a small tech company with your own staff, then Israel would indeed seem to be a great opportunity. If you’re trying to scale up, however, then it might be better to try elsewhere, as you might not be able to find the staff.