World City Guide

Business

Business Profile
Although not the capital of the country, Tel Aviv is Israel’s economic and financial centre. Israel’s stock exchange is located here, along with the head offices of major banks Bank Hapaolim and Bank Leumi and almost all the country’s insurance and finance institutions.

Its high-tech venture capital industry is strong in the areas of telecommunications equipment, software, Internet and semi-conductors. High-tech medical instruments, innovative pharmaceuticals and the diamond trade (including cutting and polishing) also contribute substantially to the economy. Israel is noted especially for top-level scientific and medical research companies, many of which have their offices here. The government maintains and encourages its highly educated workforce in the high-tech sector, through tax incentives, education and financial backing.

However, Israel's high-tech sector, after a record year in 2000, suffered a downturn in 2001, when the meltdown of global tech markets brought an abrupt end to several years of rapid growth. The industry has largely subsided since.

In addition to the high-tech specialists, more than 50% of Israel’s other factories and industrial plants are located outside the city centre but within the Tel Aviv metropolitan area. Important industries include clothing (much of it for outlets in Europe and America), food processing, metal and engineering, printing and publishing. Israeli manufacturing has a reputation for high quality and innovation.

A procedure known as ‘Dual-listing’, launched in July 2000, permits larger Israeli companies to be listed both in New York – on the New York Stock Exchange, NASDAQ or American Stock Exchange – and on the Tel Aviv Stock Exchange. Around 50 international Israeli companies have taken advantage of this possibility. Among them are big computer and software names Elron, Formula and Magic Software and others, such as chemicals and pharmaceuticals manufacturer Teva and the investment and industrial development corporation Koor Industries – all of which are based in or around Tel Aviv.

In the long term, tourism is another important contributor at 10% of GDP (in 2000), comprising a significant source of foreign exchange earnings. The general trend in visitor numbers appears to be steadily upwards, if one assumes that the almost complete cessation of tourism during the current Palestinian campaign of suicide bombings is temporary. However, the tourism industry has also been affected by the recent economic slowdowns worldwide, although this is also expected to be temporary.

Important strides have been made in Israel in laying out a foundation of macroeconomic stability. A wide range of reforms have been put in place in recent years aimed at reducing the scale of the large public sector and supporting the modernisation of the economy. Inflation is tightly controlled (Israel learned from the experience of runaway inflation in the 1980s), although it is currently under pressure from the exceptionally high expenditure involved in combating Arab terrorism. Defence spending has climbed to 15% of GDP, although, given the present situation, this is seen as a necessary evil.

Currently Israel’s economy is in difficulty owing to the downturn that the wave of terrorist attacks has produced. Israel’s attempts to halt terrorism have elicited hostile responses from the EU, which Israel views as pro-Palestinian, including sanctions and boycotts by some EU states. At the same time, the EU as a whole remains an important market for Israel’s agricultural produce.

Israel takes the long view that since all their diplomatic initiatives and peace offers have been rejected, a military response to terrorism is unavoidable, but that eventually the country will be at peace with its neighbours, to the mutual economic advantage of all. Israeli strategists envisage the country eventually playing a leading role in building a regional economic union, after Islamic hostility to the idea of a Jewish state has abated. To this end, Israel has strongly cultivated alliances with neighbouring Islamic states where possible, including Egypt, Jordan and Turkey.

For the last few years, unemployment in Tel Aviv has fluctuated between 7 and 9% against the 8.7% national average (July 2001), which has recently been climbing. There is also a sharp split between high-tech (high earners) and non-tech (low earners).

The commercial focal points of the city centre are around the huge Azrieli Center (with 350,000 sq metres/3,767,368 sq ft of business premises and dominated by a 50-storey skyscraper) and Dizengoff Center and along Dizengoff Street. However, many industrial and business premises are located in industrial zones and privately-owned ‘business parks’ well away from the city centre, for example, Atidim Science-Based Industrial Park, in the northeast of the city.

The Federation of Israeli Chambers of Commerce, PO Box 20027, 84 Hahashmonaim Street, Tel Aviv (tel: (03) 563 1010; fax: (03) 561 9027; website: www.chamber.org.il), can provide advice and information on doing business in Israel.

Business Etiquette
The business community in Tel Aviv is highly sophisticated, with an international outlook. There is a strong preference for informality and plain-speaking. Business attire, even for important meetings, is generally ‘smart-casual’ jacket and open-necked shirt, although suits and ties may be worn by some. Women dress stylishly but also relatively informally and usually wear trousers or skirt with a blouse or shirt. After introduction, it is customary to use first names. Despite this easy-going informality, punctuality is considered important. Business cards are expected.

English is generally spoken well by businesspeople and is used out of politeness if non-Israelis are present. Social interaction is important and relaxed lunch meetings or even outings together may be used to develop trust. Business meetings may be held over dinner and can take place in a private home or restaurant. If in a private home, a small gift – of flowers or chocolates, for example – is usually appropriate.

People work hard and with dedication and start the day early. Business opening hours in Tel Aviv are generally 0800-1730/1800 Sunday to Thursday. On Fridays, shops, restaurants, cafes and entertainment establishments are open until 1230 for Shabbat (the Sabbath), which starts Friday at sundown and continues to Saturday evening. Increasingly, Shabbat is being extended so that the whole of Friday is added to Saturday as a day off work.