Sam Chester

On November 15th, 2018, Think Tank Co-Directors Daniella Lang and Eitan Rotmensch interviewed Sam Chester, an expert in Sino-Israel relations and analyst at Kuang Chi and Indigo Global. Mr. Chester studied Chinese investments and China’s strategic influence in the Middle East as a graduate student at Johns Hopkins University’s School of Advanced International Studies (SAIS). His previous research focused on China’s Muslim minorities, Sino-Israel relations, and China’s cultural diplomacy in the Middle East. Mr. Chester has fieldwork experience in China and the Middle East, namely the United States Institute of Peace, i24news, and the Middle East Institute. Kuang Chi is a global investment firm with offices in Tel Aviv and China.

 

This interview has been edited and condensed for clarity.

Tell us about yourself. How did you end up in Israel and when did your passion for Sino-Israeli relations begin?

My interest in China began in 2005 as an undergraduate at Johns Hopkins when I applied and was later accepted to the Critical Language Scholarship, sponsored by the U.S. State Department. I learned Chinese and decided then that I wanted to merge my passion for Israel and interest in China as an emerging area via a collaboration role.

 

As an undergraduate one summer I interned for John Calabreeze at University of Southern California (USCS), United States China Institute. Calabreeze is an expert in cross-regional ties between the Middle East and Asia and specifically China. My interest peaked; I went to receive my masters at John Hopkins University, School of Advanced International Relations. There I focused on East Asian Studies. Upon completion I decided to enlist in the Israeli Defense Force (IDF).

 

I spent three years miserable in the finance sector, and on the side I began to research drones as a passion project. I reached a point where I needed to make a lifestyle change professionally so I moved to China and entered the drone technology field. I worked for a year in China with the Chinese and British. After becoming an “expert” in the field and feeling that I had found my “in” I returned to Israel and began my current career path as a finance advisor specializing in drone tech.

What advice would you give your younger self?

Private sector professional internships in China or Israel are essential in order to better define a professional direction. Learn Mandarin early; Chinese is the new English. Explore cross cultural knowledge, especially policy papers and articles. Familiarize yourself with global economic trends. Finance is an excellent entry point; your entry does not need to be immediately related to China or Israel. This leads me to my next piece of advice: leverage a new tech vertical. There is always opportunity to exploit an up and coming technology sector (whether it be cryptocurrency, fintech, or the likes).

Word of advice for political science and Middle Eastern Studies majors?

(1) Publish! This is valuable for anyone pursuing any future career. People value writing samples, credibility and expertise. This is great for business and humanities majors. (2) Get an internship! Always a must. (3) As for China and Israel, most opportunities are in the private sector, specifically in finance.

Tell us what you do at Indigo Global and Kuang-Chi?

I divide my time between two separate companies which deal with private investment in tech companies between China and the Middle East. I work at Indigo Global as an investment advisor. This means I advise investors on opportunistic investments, work with chinese investment companies and contract their retainer out to relevant fields. I also advise for Kuang Chi.

How does it feel to work for a Chinese company in Israel? Are there cultural gaps? What are some of the challenges unique to this non-traditional work environment?   

The important thing to understand is that on a macro level Israelis speak frankly and think short term. This obviously has to do with Israel’s unique political environment and its effect on the nation’s mindset. In contrast, Chinese attitude is patient and looks long term, far into the future. In the Venture Capital tech space, for example, the long-term thinking vs. short-term thinking clashes. I see this a lot.

 

Looking specifically at Chinese firms investing in Israel, Chinese business people may spend years visiting a startup before making any sort of investment decision. Israelis do not have the patience, resources, or time to play host to the Chinese in this scenario. This can cause tension.

 

Another common trend I see is Chinese VC firms investing in a seed round and then, in a way, pulling out. As in, they won’t participate in a follow-up round. This is unusual in the VC world and something Israelis find frustrating.

 

These are issues facing the Chinese VC market in the West. These clashes are where I come in; I call it culture mediation and think of it as a reality check for Israeli companies. I tell Israeli companies to approach Chinese VC firms like any other VC firm. Israeli companies should not depend on the allure of the Chinese market or the JV (joint venture) approach.

 

In many ways the Sino-Israeli tech relationship is symbiotic. Israel has tremendous innovation and China has a vast market resource. However, the Chinese investment ecosystem is intensely bureaucratic and has a strong state influence. Since China is trying to shift from manufacturing to self made resources, I predict that long term Chinese VC firms will professionalize and become accustomed to Western business models. Until then, Israeli startups and companies should be weary of Chinese opportunities and the desire to transcend into the Chinese market. As the entire world devotes more attention to the the East, Israel will too will learn to adapt to Chinese culture.

What do you believe attracts China to the Middle East and specifically Israel?

Areas of interest for China in the Middle East are complicated but can be broken down into three central axis:

  1. China’s Belt and Road Initiative (BRI): BRI is an ambitious effort by the Chinese government to develop a modern day Silk Road via infrastructure and investment crossing through East Africa and the Middle East. It is still hazy with regards to how exactly this will play out, but it is definitely something on China’s mind.

  2. Energy needs: This relationship is best represented by the controversial transactions and trade between China and Iran, and China and Iraq. China’s energy needs are perhaps the greatest in the world and have created a precarious reliance on Middle Eastern oil.

  3. Technology, R&D, Innovation: This need is best embodied through the Israeli Tech Sector. The relationship between China and Israel grew exponentially in 2018, expanding to encompass tech and information exchange (e.g. academia).

Regarding the future trajectory, China’s interest in the Middle East will only grow. I like to explain it the following way: just as oil and war equals U.S. intervention and interest in the Middle East so too do oil and infrastructure potential (BRI projects) ensure China’s presence and interest in the Middle East.

This depends on Israeli leadership as China is ambiguously stable. The Chinese are not motivated by Israeli politics so I do not foresee any Israeli Palestinian interest. In the near future, I believe that while Israel might not have to choose between China and the US, Israel will have to choose between China and Europe.

 

I think a fundamental challenge which hinders Sino-Israel business ties is Israel’s liberal market values versus the Chinese Beijing Consensus - China’s authoritarian mindset and its influence on trade and investment. This is a major clash which at this point does not seem sustainable long term.

Where do see Sino-Israeli relations in 5-10 years. What do you believe are the most imminent future challenges ahead for Sino-Israeli relations?  

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China-Israel Connection is a non-profit organization that aims to strengthen the Sino-Israeli relationship in universities through the creation of an international professional network.