Asia Overtakes U.S. as Target Market for Israeli Exports

European Union remains primary market for Israeli goods; main markets in Asia are India and China.

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Israeli exports are moving east: For the first time, Israel exported more to the Far East than to the United States in the period from October 2011 through January 2012. It isn't that Israeli companies are shunning the U.S., it's that orders from there have been diminishing because of America's economic troubles.

That said, the European Union, so much closer to Israel than North America, remains the No. 1 market for Israeli goods. The main markets for Israeli goods in Asia are India and China.

Samuel Wasserman

Over the four-month period in question, 21% of Israeli exports went to Asia, reported the Israel Export and International Cooperation Institute yesterday.

Exports to the U.S. made up only 20% of the total.

The drop in exports to the U.S. is worrying, said Institute chairman Ramzi Gabai. If this trend continues, then overall Israeli exports may fall - and such damage may already have ocurred, he said. This is backed up by data released by the Finance Ministry yesterday, which showed a 6.3% fall in total exports of goods in January, compared to a 12.2% increase in goods imports for the same month. This has increased the trade deficit to a record NIS 9.1 billion.

"We are not surprised by the drop in the share of the U.S. in exports, but by the speed," said Gabai. "We hoped we would see a rise in exports to the U.S. this year," he added.

Some 35% of Israeli exports go to European Union nations. However, as a stand-alone nation, the U.S. was by far, and remains, the single largest export market for Israel.

The changes in the export map are the result of parallel processes: rapid economic growth among the developing nations in Asia, combined with a steep drop in U.S. imports due to the economic problems there.

Exports to the United State contracted by 23% in the four months from October to January compared to the same period a year earlier, reported the Export Institute.

The U.S. had a 27% share of Israeli exports for the same period a year earlier. Exports to Asia grew only 1%, so the drop in exports to the U.S. was the major factor behind the change in export markets.

But exports to Asia have been growing at a steady pace, with a 9% increase compared to the same period the year before.

Israeli exports to the U.S. totaled $2.9 billion for the October 2011 to January 2012 period, while exports to Asia rose to $3.1 billion in the the same period.

Israeli exports to the EU for the four-month period rose to $5 billion, and the European share of Israeli exports rose to 35% from 30%.

In January, the treasury's figures also show a drop in incoming tourism and a drop in exports of services, as well as a sharp drop in exports of chemicals and pharmaceuticals. The growth in imports was mostly in raw materials and investment goods.

Among the leading exporters to China are Intel Israel (chips), the Dead Sea Works (chemicals) and other Israel Corporation subsidiaries, Orbotech (quality control for screen-makers), Iscar (blades technology), TowerJazz (chips) and Nilit (industry).

The major Israeli exporters to India include the Dead Sea Works, Rotem Amfert, ECI Telecom, Comverse, Elta, Elbit Systems, Netafim and Ceragon Networks.

Hanita Coatings sells various coated and laminated films for energy saving and safety in Asia. The company views India and China as its main sources of growth and plans to increase sales there by 15% within the coming year, said Leon Davids, the company's sales manager in Asia. Hanita Coatings, a privately owned firm, exports a few tens of millions of dollars and exports divide up 50% to Europe, 20% to Asia and the rest to the U.S. Sales to Asia have doubled in recent years. "We see a steady riise in exports, particularly to China, but also to other areas such as India, Korea and Singapore," said Davids.

As for cellular video transmission pioneer LiveU, the company forecasts that most of its growth this year will come from the Far East, said CEO Samuel Wasserman.