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How to do Business in Israel

The Promised Land

 

Israel rests on the southeastern shore of the Mediterranean Sea, bordering Lebanon, Syria, Jordan, Palestine and Egypt.

 

Despite land disputes that have gone on since Israel’s 1948 inception, 83% of the world’s countries recognizes Israel as a state. And this nation isn’t only about Judaism either.

 

Israel has the third highest entrepreneurship rate in the world, and the most women and over-55 entrepreneurs as well.

 

Major Cities

 
Israel-major-cities
 

Jerusalem

Israelis and Palestinians both claim the holy city as their capital. Israel’s central government sits in Jerusalem, but Palestine sees the city as a seat of power for them as well.

 

There’s no consensus on either land claim. However, President Trump declared in December 2017 that the US will be recognizing Jerusalem as the capital of Israel.

 

He plans on moving the US embassy in Israel from Tel Aviv to Jerusalem —a process that will take close to three years.

 

The Israeli government plays a large role in Jerusalem’s economy. Besides generating a large number of foreign and domestic jobs, the Israeli government offers subsidies and incentives for small businesses.

 

Plus, Jerusalem is the logistics capital of Israel, with highly-developed transportation communication infrastructure.

 

Jerusalem’s Har Hotzvim Industrial Park and the Jerusalem Technology Park are home to many internationally-renowned companies, including Intel, Cisco, IBM and Johnson & Johnson.

 

In April 2015, Time Magazine chose Jerusalem as one of the world’s top five emerging tech hubs, stating Jerusalem “has become a flourishing center for biomed, cleantech, internet/mobile startups, accelerators, investors and supporting service providers.”

 

If your small business is involved in these fields (and even if not), Jerusalem can be your “land of promise.”

 

Tel Aviv

 
israel-tel-aviv
 

Tel Aviv, Israel’s second-largest city, is located along the country’s Mediterranean coastline, and is Israel’s financial and technological hub. After Abu Dhabi and Kuwait City, Tel Aviv has the third largest economy in the Middle East.

 

A high-speed rail system from Tel Aviv to Jerusalem is being constructed, and should be completed by the end of 2018. No matter which of the two cities your business chooses, transportation is taken care of.

 

Tel Aviv is a hotspot for foreign business, with many international venture-capital firms, research institutions and high-tech companies calling the city home.

 

Tel Aviv was voted in 2016 as an “alpha world city” in the global economy by Loughborough University, sharing that honor with San Francisco, Lisbon and Washington. But the praise doesn’t end there.

 

In the last ten years, Tel Aviv has been voted the second most innovative city in the world, ahead of New York City. It was also picked as the second best place to start a high-tech startup, behind only Silicon Valley.

 

Although Tel Aviv specializes in chemical processing, textile plants, food manufacturing and high-tech, there’s plenty more to offer your small business.

 

Haifa

 
israel-haifa
 

There’s a common saying in Israel: “Haifa works, Jerusalem prays and Tel Aviv plays.”

 

Haifa hosts Israel’s biggest seaport on the Mediterranean coast, and will likely be where your products ship from.

 

The city plays a vital role in Israel’s economy. You can find international high-tech companies like Microsoft, Motorola, Google and Intel in Israel’s largest and oldest technology park, Matam.

 

After an enormous public spending spike in 2010, Haifa was named the city with the most promising business potential by UK magazine Monocle. Haifa spent more than $350 million on infrastructure and roads, working to establish itself as a “city of the future.”

 

 

Haifa is a center for heavy industry, petroleum refining, and chemical processing among other fields, and is known as a haven for coexistence between Jews and Arabs.

 

Businesses typically overlook Haifa for Tel Aviv and Jerusalem, and this is a mistake. You can take advantage by finding the perfect supplier for your business in Haifa.

 
 

Currency

 
israel-currency
 

The Israeli new shekel is the country’s official currency. Your business can greatly benefit from the strength of the US dollar in Israel.

 

This is because Israeli supplies will be much cheaper than what you can find domestically. You can purchase your goods in Israel, ship them back home to the US and sell them for domestic market prices.

 
 

Language

 

Naturally, it wouldn’t hurt to check if your potential Israeli supplier would prefer an interpreter

 

The official languages of Israel are Hebrew and Arabic. English is the main foreign language used, and is spoken and understood by most Israelis. Naturally, it wouldn’t hurt to check if your potential Israeli supplier would prefer an interpreter.

 
 

Holidays

 

There are plenty of holidays in Israel, but not all businesses celebrate them.

 

Likewise, some businesses may close early on the Jewish Sabbath (which starts Friday at sunset and lasts until Saturday at sunset).

 

When scheduling appointments with Israeli suppliers, ask them if the suggested date and time works for them. They’ll know better than anyone whether or not they’re available.

 

HolidayDateObservance
PurimMarch 1Bank and public institutions are closed- Not in Jerusalem
Shushan PurimMarch 2Nationwide
Passover (Eve of Pesach)March 30Nationwide - Full or Half Day off
Passover (Pesach)March 31Nationwide
Passover cont.
(Chol Hamoed Pesach)
April 1-4Nationwide - Public institutions are closed. Businesses are usually open
Passover cont.
(Eve of Last Day of Pesach)
April 5Nationwide
Passover
(Last Day of Pesach)
April 6Nationwide
Eve of Israel Independence DayApril 18Nationwide - Full or Half Day Off
Israel Independence DayApril 19Nationwide
Pentecost (Eve of Shavuot)May 19Nationwide
Pentecost (Shavuot)May 20Nationwide
Day of Fast (Tisha B'Av)July 22Nationwide - Public institutions are closed. Businesses are usually open
Jewish New Year (Eve of Rosh Hashana)September 9Nationwide - Full or Half Day Off
Jewish New Year (Rosh Hashana)September 10-11Nationwide
Day of Atonement (Eve of Yom Kippur)September 18Nationwide - Full or Half Day Off
Day of Atonement (Yom Kippur)September 19Nationwide
Tabernacles (Eve of Sukkot)September 23Nationwide - Full or Half Day Off
Tabernacles (Sukkot)September 24Nationwide
Tabernacles cont. (Chol Hamoed Sukkot)September 25-27Nationwide - Public institutions are closed. Businesses are usually open
Eve of Last Day of Sukkot (Hoshana Raba)September 30Nationwide - Full or Half Day Off
Last Day of Sukkot (Simchat Torah)October 1Nationwide
December 2-10HanukkahNationwide - Most Business Work Regular Hours

 

The Israeli holiday Yom Kippur needs more of an explanation. Almost all of Israel shuts down at around 4-5 p.m. on the eve of Yom Kippur, a day for atonement and repentance.

 

All cars and motorbikes in Israel are replaced with families strolling on the roads until sundown the next day.

 

So don’t plan any appointments on Yom Kippur because you’ll be stuck in… traffic.

 
 

Traveling to Israel

 

Applying for an Israeli visitor visa requires:

 

  • Valid passport (original and copy)
  • Completed visa application
  • Bank statements (need proof you possess $100 for each day you’re spending in Israel)
  • Return ticket
  • Two passport photographs (5×5 cm)
  • Paid visa application fee ($23)

 

 

A visitor visa allows you to stay in Israel for up to three months. If you want to extend your stay in Israel, you can submit an application at a regional Ministry of the Interior office.

 

A visitor visa allows you to stay in Israel for up to three months. If you want to extend your stay in Israel, you can submit an application at a regional Ministry of the Interior office

 

Since you’re likely going to Israel on business, you should bring a formal invitation letter from your Israel business partner as well.

 

Telecommunications

Israel has the Middle East’s most developed telecommunications, and it doesn’t stop there.

 

The Israeli telecommunications industry is among the global leaders in communications. Many of the qualities you admire about your smartphone can be traced back to Israeli engineering, including voicemail, texting and microchip technology.

 

4 Steps to Calling Someone in Israel from the US

  1. Dial 011, the US exit code.
  2. Dial 972, the Israeli country code.
  3. Find and dial the 1-digit area code for the city in Israel that you’re calling.
  4. Dial the 7-digit phone number.

 

Where Can I Find a SIM Card?

Israel has five network operators that offer prepaid SIM cards: Cellcom, Partner, Pelephone, Altice (formerly Hot Mobile) and 019.

 

Network coverage shouldn’t be an issue from any of these operators. Cellcom is the most popular, however, with the most customers in the country on their network.

 

Many operators provide competitive cell phone packages that put Western countries to shame. You can get a phone on an unlimited plan in Israel for $30 a month from a variety of different providers.

 

 

These SIM cards can be purchased at most Israel airports, shops and kiosks. Try to avoid buying from airports, however, as they’re much pricier.

 

Another option is to use SIM to Israel. It's a mail order SIM card service that will deliver to your home abroad, or your hotel in Israel

 

Another option is to use SIM to Israel. It’s a mail order SIM card service that will deliver to your home abroad, or your hotel in Israel.

 

SIM to Israel even includes a free virtual US number so that your friends and family can call you without long distance charges.

 
 

Finding a Supplier for Your Business

 
israel-tradeshow
 

There’s no tricks to finding Israeli suppliers.

 

Good old-fashioned trade shows and fairs are your best bet. Considering their popularity, schedule appointments with potential Israeli suppliers in advance so you have quality time to discuss negotiations.

 

Other than these events, there’s some organizations that pride themselves on facilitating trade between foreign businesses and Israeli suppliers.

 

Established in 2008, IsraelExporter.com is a platform that “promotes Israeli goods, technologies, trade relations, cooperation and strategic alliances with overseas companies.”

 

Their supplier database is categorized by industry and even has a search function. Plus, each supplier has contact information, company profile and a link to their official website.

 

Pretty convenient right?

 

Internet

Considering Israel’s telecommunications prowess, it should be no surprise that Israel has widespread wifi access. Major cities like Jerusalem and Tel Aviv offer free wifi through cafes, hospitals, businesses, buses and gas stations.

 

Haifa even has their entire beach covered with free wifi — the first municipality to do that.

 

And on the off chance that you can’t find wifi in Israel?

 

For $30 a month, you can get an unlimited plan with most of the Israeli network providers.

 

Problem solved.

 
 

Major Trade Shows and Events

 

WhatWhere
WhenWhat about
AnalizaTel AvivSpring Every 2 YearsLaboratory equipment and biotechnology
Eilat-Eilot Green EnergyEilatFall Every 2 YearsConference on green energy
JovellaTel AvivSummerJewelry, watches and fashion accessories
Jerusalem International Book FairJerusalemJune Every 2 YearsBook fair
Systems and Storage Conference IsraelHaifaSummerSystems and storage
Nano IsraelTel AvivWinter Every 2 YearsNanotechnology

 

Business Culture

 

Israel’s business culture is very different from what you’ll find elsewhere.

 

While the US and most European countries are rule-oriented, Israel focuses on the relationship that is built between businesses. This makes Israeli business much more laid back and informal than what you’d find in the US.

 

Hierarchy in Israeli business culture is flat, with many decisions being made collectively. Although everyone is free to express their opinion, the senior member always has the final say on decisions.

 
 

Business Communication

 

The key to successful business in Israel, especially if you’re based in the US, is being aware of the cultural difference between the two countries.

 

Israeli Perspective on Americans

Many Israelis see Americans as artificial and cold, by not being personal and only thinking about the business negotiations.

 

But this is just the American way of showing respect for the business opportunity. Most Americans fear that if they’re less formal, it’ll seem as though they aren’t taking their business partners seriously.

 

American Perspective on Israelis

On the other hand, Americans often characterize Israelis as being arrogant and rude, prone to raising their voices and interrupting during business meetings.

 

But what makes Israelis so direct and honest is that they view their entire country as an extension of their family.

 

Since they’re used to doing business with fellow Israelis, they often speak to foreign business partners as they would speak to their friends or siblings. If you have any siblings, you can understand how this could be shocking at first.

 

Trying to understand Israeli business culture through an American lens won’t work. Instead, avoid being offended by the casual Israeli business tone, and trust that your business partner cares about the negotiations too. They just care more about getting to know you first.

 
 

Business Etiquette

 

Don’t Dress like an Israeli

You shouldn’t pretend that you’re from Israel by dressing in their traditional clothes. Your business partners will know you’re not, you know you’re not, it’ll just be confusing.

 

Don’t Beat Around the Bush

Whether you’re in business negotiations or having dinner at your Israeli business partner’s house, you should be as direct and honest as they are. Israelis will trust you more if you’re a straight shooter, so maintain eye contact and tell the truth.

 

Avoid the Left Hand

You should shake hands with the right hand instead of the left, which is deemed dirty. This is especially important if you’re doing business with Arab Israelis. Either way, the right hand is the right choice.

 

Start the Week Right

The working week starts on Sunday, as Saturday is the Jewish Sabbath Day. Israelis work 40-45 hours a week, from Sunday to Thursday, and mostly from 9 a.m. – 5 p.m.

 

Use this when you’re scheduling meetings, dinners or anything else.

 

Accept Business Interruptions

You’re showing your business presentation to your Israeli supplier when the senior manager answers his phone and leaves the room. The Israeli employees start talking to one another and you’re left standing by the door.

 

This thought may terrify you (and you’re not alone!) as it clashes with many Western business etiquettes. However, if your Israeli supplier catches a glimpse of your annoyance, that can single handedly end the negotiations.

 

Remember how Israelis often speak to one another as though they were family? It’s similar in these meetings.

 

If your sister excuses herself from the dinner table, it probably won’t offend anyone in your family. Try to be patient with your Israeli business clients and trust that they’re equally invested in the negotiations.

 

Actions that you see as rude and brash are, in fact, passionate and interested.

 
 

Business Negotiations

 

What to Wear

Most countries appreciate it when you dress like them. It displays your willingness to learn their culture.

 

This isn’t the case with Israel.

 

Much more informal than other countries, they respect your country’s unique clothing trends, and want you to be comfortable more than anything.

 

Your First Meeting

When you meet your Israeli business partner, you should use their title and surname. However, it’s common practice in Israel to address people by their first name.

 

Getting on a first-name basis with your Israeli supplier personalizes the business relationship.

 

Physical contact is common in Israeli business greetings, with hugs often replacing handshakes. Make sure that you don’t hesitate, as your business partner will likely notice and be offended.

 

If you’re used to doing business in the US, you probably have a stack of business cards just begging to be passed out.

 

Although Israeli business culture is starting to lean towards exchanging business cards, this isn’t a fixed practice in Israel. Bring some cards, but keep them in your briefcase if you don’t spot any from your other partners.

 

Take your Time

Meetings in Israel are often spontaneous and loose, and punctuality can be quite unpredictable. You should only consider your Israeli business partners to be late when you’ve been waiting for around 20 minutes.

 

Eating in Israel

 
israel-kosher
 

Israelis don’t do a sit-down lunch. They will have sandwiches or something similar during meetings, however.

 

You should respect dinner in Israel, however. It’s prime time for relationship building, so make sure to avoid any business talk.

 

If you’re inviting your Israeli business partner to a meal, you should check if they’re religious or not. If so, you’ll want to find a kosher restaurant, or another location that will respect their values.

 

Similarly, you should offer them alcohol with their religion in mind as well. Israelis don’t tend to be heavy drinkers, but they’re known to have a beer or two.

 

Giving Gifts

An Israeli doesn’t invite just anyone to their house. It isn’t to be polite, but a genuine display of friendship.

 

With that in mind, you should make sure to repay the favor. When you’re invited to an Israeli home, bring flowers, wine or chocolates.

 

Some more formal options would be a gift that has your business logo on it, like apparel or a mug.

 
 

Regulations, Permits and Tariffs

 

Certain products, such as perishable food, livestock, explosives and spirits, can’t be exported from Israel. And some require export licenses, such as Israeli agriculture and chemicals.

 

The Israeli customs process is relatively straightforward. Israeli exporters need a certificate of origin to take care of preferential rates.

 

Luckily, the US and Israel Free Trade Agreement provides a great foundation for international business. When dealing with Israel, your business can benefit from reduced duty rates.

 

Virtually all Israeli imports are eligible for preferred rates as a result of this bilateral agreement, as long as the products are manufactured in Israel, or meet a 35% direct cost of processing rule.

 

 

And regardless of whether or not the Israeli imports meet these terms, the US waives the merchandise processing fee on the Israeli goods.

 

To receive these reduced rates, you have to fill out the United Nations Conference on Trade and Development (UNCTAD) Certificate of Origin Form A. This is used as evidence to support the discount claims on Israeli imports.

 

Form A may be used as a blanket declaration for a period of 12 months, meaning you don’t have to present the form each time your imports enter the US.

 

Business Advisories

Israel is a safe place to do business. However, continued conflict between Israel and Palestine has made certain areas riskier than others.

 

Avoid the Gaza Strip and the West Bank, as well as the Egyptian, Lebanese and Syrian land borders.

 

Payments

Israeli businesses love to send payments online. Since the country is an industry leader in fintech, this isn’t much of a surprise.

 

Another reason is because of the advancements in cyber security, a field that they’re also global leaders in.

 

Israel’s affinity for online payments makes Veem the obvious choice for sending B2B payments to your Israeli suppliers.

 

You’ve learned that Israelis prefer an informal, friendly business environment, without focusing on the technicalities of business negotiations.

 

Veem makes global payments as simple as sending an email, so that you and your Israeli business partner can focus on what’s important: your relationship.

 

And your Israeli counterpart is sure to appreciate the online security offered by Veem. With end-to-end verification and real-time tracking, there’s no doubt that your money will arrive in Israel safe and sound.

 

Start doing B2B payments the Veem way today.

 
 

The Key to Successful Business in Israel

 

Personal relationships are the best way to seal negotiations in Israel. Small talk shouldn’t be considered as social niceties, but prime business opportunities.

 

Israelis want to trust the person that they’re doing business with above all. Your job is to fulfil that request before, during and after your trip.

 

Israelis want to trust the person that they're doing business with above all. Your job is to fulfil that request before, during and after your trip.

 

Understanding the cultural differences can help you seal the deal in Israel, and in other countries as well.

 

Try and see the business negotiations from an Israeli perspective, by either speaking to an Israeli from your country or by doing your research. Rationalizing their decisions through your American perspective will just lead to confusion and mixed signals.

 

Resources

 

Here is a list of resources that will help you on your business trip to Israel.

 

The World Bank on Doing Business in Israel

Legal and Business Guide to Business in Israel

Guide on Israeli Culture

Everything You Should Know About Israeli Culture

OEC Israel Guide