Are you looking to expand your business? Here’s how to partner with a company in Israel.
The deadline is quickly approaching, faster than I ever dreamed it would. We’re closing in on an agreement, with just minor details left to resolve. The staff is in place, technology complete, and we’re ready to go, right? Not quite, we have to wait until the CEO returns from government mandated reservist duty (miluim), great. And how long will that be? 35 days according to his secretary.
It happens, and more often that you can imagine. Israeli businesses are forced to put everything on hold for days or weeks because a senior staffer is called to army duty. Or because the histadrut (union) has gone on strike, yet again, and closed all of the ports. For that matter, it could just be because the CEO felt like not working today! It’s most definitely infuriating, but doing business with Israeli companies can still be profitable, and make you feel good that you’re helping the Jewish homeland. All it requires is the right mindset, and the right proposition. But how do you get there?
The proposition, today more than ever, is the easy part. Have money, will talk! Israeli companies are actively seeking investors, partners, distributors and just about anything else that will help them stay in business. In tough economic times like these, if you come up with a decent proposal even the toughest Israeli CEO has to concede terms in the name of staying alive. The mindset is a different story.
Israeli companies, and businessmen make you feel that they are doing you a favor by agreeing to do business with you. At least that’s how you feel they think! It’s not usually true, but it is the perception you may get after most meetings; “you need us more than we need you! We’re doing fine without you, even if we’re ready to go out of business if you don’t invest!” The toughest test for the potential suitor is accepting this without fighting. Explaining to the Israeli businessman that you are helping them stay alive is the worst thing you can do.
Before you approach a potential partner or company, make sure you know what you’re talking about and who you are talking to. The first key is doing your research. If you are planning on importing a consumer product, find out what the market price is. Next, speak to the local distributors and ask about the company’s reputation. Do they deliver what is expected and when it’s expected? Are their prices competitive? What type of margins do the retailers make? Who are the competitors?
The next step is to break down the barrier. Let them know from the get-go, about the successes of your business. Indicate that you are ready to do business with them which will be mutually beneficial. Israeli Negotiations are typically aggressive. During negotiations know your limits and market conditions from your initial research. Tell them, in no uncertain terms, that you know the going price, and will not pay one “agura” more. A popular Israeli tactic is when they tell you the price, tell them that you know that one of the local retailers paid half of that for the same item! Negotiate, negotiate, negotiate! Fight for every last cent! Be friendly, but firm. Remember, you’re in the
When you reach an agreement, smile and tell them how happy you are to be doing business together. Leave all the aggressive and bad feelings at the negotiating table. Reinforce that you know they will profit from the transaction too. If nothing else, Israeli’s understand that business is business, and generally harbor no grudges.
Once the initial deal is done be sure to be friendly at every opportunity. Israeli’s think of foreign businessmen as rich entrepreneurs who make millions without any effort. They will try to gauge you at any point, but maintaining friendly relations, especially with the staff, can save you from being “forgotten” or having prices suddenly rise.
At the end of the day, if you feel like you are being ripped off, the best option is to hire a local professional consultant, who knows the rules of the game. As locals, consultants know how and when to continue to fight and when to concede. They may also know of a better potential partner, or an additional company with which to negotiate. At the end of the day, consultants can offer foreigners extra leverage in a country where they may feel lost and alone. While you may pay more in the short term, having a local on your side will usually pay off longer term.
Avi Rosenzweig is a business consultant specializing in strategic management and business development. He received his MBA at