Investments by Japanese companies in Israel in 2023 amounted to $662 million, compared to $1.55 billion the previous year and close to $3 billion in the record year 2021. According to a report by Harel-Hertz Investment House, which specializes in the Japanese market, investments by Japanese companies returned to 2018 levels.
The number of Japanese investments remained stable, with 62 investments, similar to the previous year’s 66. This indicates that as the risk increased in Israel, the investments decreased in size.
The decline in investments was especially acute in the second half of 2023. Fear of governmental stability and the outbreak of the war against Hamas in the last quarter brought an almost complete halt to Japanese investments.
However, Japanese investments in Israel have become a stable and influential factor in the Israeli high-tech industry, making up once again 10% of all investments.
This year, only one acquisition of an Israeli company by a Japanese company was completed, with Oxide purchasing Israel’s Raicol.
Another characteristic of Japanese investments is the prominent element of strategic investments. About half of the investments were made by industrial companies seeking to develop joint technologies and achieve future advantages over their competitors with the help of Israeli entrepreneurship.
In terms of areas of investment in the high-tech industry, 16% were directed to medicine, 13% to urban and maritime transport, and 11% to security and cyber sectors. 19% of Japanese investments were directed to fintech industries and various funds.
Another reason that deterred Japanese investors was the steep fall of the Japanese yen against the U.S. dollar from 115 in January 2023 to 147-150 in early 2024.
Harel-Hertz does not foresee a dramatic change in the scope of Japanese investments in Israel as long as there are restrictions on visits and travel, the resumption of the activities of local offices, and the end of the war with the restoration of stability in the region.
