Start-Up Nation meets Asia’s World City

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Israeli Consul General Sagi Karni speaks about Hong Kong connections to the desert “Start-Up Nation.” If necessity is the mother of invention, invention is the mother of investment.

Mr Sagi Karni Consul General Israel Interview


 

“Perhaps it’s your shoes.”

It was the shoes. Through again in socks, finally a green light in the metal detector. Then it was a cheap calculator built into my leather folder Diplomat keep notes in; an unregistered electronic device. That didn’t make it in. The higher tech recording device was pre-registered and not a problem. For a memory deficient editor, this was welcome.

Once the thorough, and congenial, security protocol was completed, Diplomat sat down with the not-so new Consul General of Israel, Sagi Karni, now almost one year on the job.

Let’s get the news of the day out of the way: Diplomat asked about the recent protests in Hong Kong and you can see the Consul General’s response, verbatim, in the sidebar. As chance would have it, there seems to have been a mini-protest actually in the building, on the same floor as the Consulate, while the interview was going on. It must have been a sorry affair, as protests go, as there was no English or Chinese media coverage of it the next day. Any protesters worth their salt would have informed the media ahead of time. When Diplomat left, there were just some police chatting with building security and all was quiet on the Admiralty front.

Mr. Karni has his hands full with more urgent business – working with a vibrant community and driving technology partnership and investment with Hong Kong. Beyond the headlines, there is a lot going on.

An energetic Consul General

Sagi came to Hong Kong after a secondment to the Ministry of Energy & Water Resources where he was the Head of International Affairs Department and Diplomatic Adviser to the Minister. Israel has recently joined the ranks of the energy rich with two major finds of offshore gas and oil. The Consul General may be just off Tamar in Hong Kong, but the Tamar gas field is about 80km west of Haifa into the Mediterranean. That initial find, as large as it is (producing ~10BCM annually), was eclipsed by the find of the appropriately named Leviathan. Southwest of Tamar, it is one of the biggest hydrocarbon finds of the decade, with both natural gas and oil.

Leviathan: Southwest of Tamar, it is one of the biggest hydrocarbon finds of the decade

The Ministry was developing its energy management system in the wake of these finds. Sagi had previous postings in Oslo (Deputy Head of Mission 2000-2001) and Angola (Ambassador 2008-2010) – both energy rich countries with different approaches to managing their oil resources. What he didn’t know about energy development, he could earn. It was his diplomatic experience that made him useful to the Ministry. With his experience in the aforementioned as well as six years working on the Europe file, including 3 years in Brussels, he was able to help manage the international relations side of the ministry.

Milk, honey, desert

The Ministry is also responsible for Water. The Consul General was justifiably proud of Israel’s leadership in water technology. The land of milk and honey is also a land of precious little water. Since the nation’s founding, necessity has been the mother of their invention and Israel has led the world in developing water conservation management and technologies.

“We managed to change the overall water economy in Israel.”

From drip irrigation to wastewater processing, Israel has been a global leader. 92% of sewage is treated. 70% gets back into the ground via agriculture and is returned to local aquifers, making Israel the global leader – by far. Spain is #2 on the list, treating 19% of wastewater.

Reverse osmosis desalination is a specialty that has not gone unnoticed by Hong Kong investors. Hutchison Whampoa is a partner in the Sorek Desalination Plant, a high tech operation that provides up to 20% of Israel’s water. It even provides water for its neighbours. While no one technology stands out, it is the combination of many techniques that make Sorek the lowest cost provider of water via desalination worldwide.

Start-Up Nation: R&D Leaders

Kinrot Ventures is a venture capital arm of Hutchison Water. Kinrot supports the development of innovative solutions for the water industry. Mini in-pipe turbines powering measurement devices could make toxic and costly batteries unnecessary. Rapid water quality testing can reduce the need for time consuming lab work and give water quality stewards instant information. Sonar and algorithm technology can detect even micro-leaks in pipes to allow
operators to dramatically reduce leakage.

More investment will likely follow as Hong Kong and Israel have committed to put funds behind supporting joint research and development of industrial technologies. An MOU, signed in February this year, will lead to a process to supply R&D funding to cooperating Hong Kong and Israeli firms jointly developing industrial technology.

In technology, Israel is a leader because it makes the investment – as do believers from outside the country. “There is more foreign money in Israel in R&D than Israeli government money. Overall about 4.4% of GDP is in R&D in Israel, but a big chunk of it is investment from abroad.” By comparison, those numbers are for the following countries: Canada 1.7%, China 1.8%, Japan 3.2%, Korea 3.7%, USA 2.7% (World Bank, 2010-11).

It occurs to Diplomat that Hong Kong’s technology leadership is more aspirational than actual, especially compared to Israel’s legendary technological prowess chronicled in Dan Senor’s Start-Up Nation. The Story of Israel’s Economic Miracle. But Hong Kong firms do have industry, and established firms could provide a plethora of testing grounds for Israeli industrial technology in a huge market – China.

Smart money

The Consul General values Hong Kong because Hong Kong has what he calls smart money. “Smart money can have two characteristics. Smart money is money that comes with new technology that you don’t have access to. The second option is money that comes with an access to a new market. Money from Hong Kong comes with that access and it is the mainland market. [It comes] with tremendous knowledge and guanxi, that Hong Kong businessmen have in the mainland.”

With up to 40% of Israel’s exports in tech, it is a hugely important sector that includes much more than water tech. Other technologies in play include energy, with solar energy, energy storage and smart grid technologies. Future fuel mix considerations suggest that Israeli technology, to connect alternate sources into the grid and smart grid tech, could be vital contributors to Hong Kong’s energy solutions. Also, the first Israel Investment Forum in Hong Kong was held this month and featured medical and environmental tech firms.

Given Hong Kong’s water demands and precarious supply, cost-effective desalination will be back in vogue, with plans for a first plant already in the pipe (pun intended). Israel’s aquatic businesspeople are coming in September to investigate possibilities for deploying their solutions in Hong Kong and China.

Community

One advantage the Consul General has in Hong Kong is a large and supportive Israeli and Jewish community. Jewish schools, Kosher restaurants, community centres and organisations support the Jewish community, but also support the broader Hong Kong community. The Jewish Women’s Association (JWA) raises money for organisations in Israel and Hong Kong including the Hong Kong Breast Cancer Foundation. The Consulate helped to connect the JWA, the eventual funders, to IsraAID that brings experts to Hong Kong to share best practice on post-trauma treatment.

Every quarter, IsraAID comes to Hong Kong to conduct seminars with NGOs, government social services staff and academics. The Consulate, Jewish Community Center and the JWA support their work here. One large seminar is supplemented with tailored programmes for niche subsets within that larger pool. They ran their first program last December on gender based violence and children abuse. They are also recruiting Hong Kong based professionals to provide expertise and assistance across the region for incidents like, for example, the Korean ferry disaster and the aftermath of the Haiyan Typhoon.

What Sagi says applies to the Consulate and, it seems, the community: “[We are] committed to be involved in Hong Kong life and the Hong Kong community.”

China full circle

Representing Israel to Hong Kong and Macao, a sought after post in Israeli diplomatic circles, he has completed his Greater China set. He first spent a year in Taipei doing language training circa 1997-1998. His first real posting was to Beijing in 1998. Israel was a leader in the Middle East to recognise the Communist government of China, tipping their hat in January of 1950. Actual diplomatic relations were established only in 1992, over forty years later. So when young Sagi arrived, the Embassy was still establishing the first of everything. The first Israeli film festival. The first sports exchanges. He got to work closely with the Chinese Academy of Social Sciences.

Now in Hong Kong, he is looking to extend his countries’ reach into China through the deployment of their technology and through business partnership. With technology the world wants, a supportive community here in Hong Kong and stellar examples of Hong Kong-Israel partnership, his job should not be an onerous one.