TEL AVIV -- The number of Japanese companies doing business in Israel has grown rapidly, more than tripling since 2013 to 80, the biggest such rise among Middle Eastern nations. Behind the growth are high expectations for technological innovations spun off from Israel's advanced military technologies.
At an information security company in Tel Aviv on Jan. 14, Japanese executives were enthralled by a world map on a computer screen. The map displayed the state of cyber-attacks in each country on a real-time basis.
They listened attentively as a company employee said, "We have a new technology to eliminate computer viruses."
In connection with a visit to Israel by Economy, Trade and Industry Minister Hiroshige Seko, about 200 people from about 100 companies, including executives, took part in an inspection tour.
"My image of Israel used to be one of a disputed area, but it has changed to one of a technological superpower," said a 50-year-old executive at an Internet-related company.
According to the Japan External Trade Organization's Tel Aviv office, many Japanese companies operating in Israel used to be semiconductor or trading companies. In recent years, makers such as Sony Corp. have expanded into the country one after another. Last year, Tokyo-based leading insurance firm Sompo Holdings Inc. started business in the country.
Japanese companies' investments in Israel have also increased dramatically, from 1.1 billion yen (10 million dollars) in 2013 to 129.9 billion yen (1.2 billion dollars) in 2017. The 2017 figure was boosted by Mitsubishi Tanabe Pharma Corp.'s acquisition of a local pharmaceutical company, but there were also large-scale investments in 2018, including investments in local companies. A senior official of the economy ministry said: "The trend will go on. Japanese firms will expand into the country and their investments will be enlarged."
These Japanese companies aim to utilize Israel's advanced technologies, such as information technology and artificial intelligence. Israel has honed its military technology in repeated wars with neighboring Arab countries, and it has also been converting such technologies for civilian use.
About 1,000 new start-ups are launched annually, many with founders who are former members of the military's cyber security and other units.
Ami Appelbaum, chief scientist at the Israeli Economy and Industry Ministry, said that harsh geography -- most of Israel's land is desert -- is another driving force behind the country's technological innovation.
Israel is now referred to as the "Silicon Valley of the Middle East," and the volume of global investment in the country has been far above that in other Middle Eastern countries, exceeding even the figures for Turkey and the United Arab Emirates.
Japanese companies used to be reluctant to advance into Israel for fear of the "Arab boycott of Israel," under which Arab nations halted business transactions with countries that have connections with Israel. However, with better relations between Israel and Arab nations now, Seko said at a press conference on Jan. 15: "The Arab boycott has lost substance. There are companies in Israel that have great innovative ideas, and Japan has technology to turn those ideas into reality. We have a mutually complementary relationship."
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