British trade boost: How UK firms profit from Middle East commerce
Lord Sieff, then head of food at Marks and Spencer, returned from 1950s Israel having inked an agreement with horticulturalist Gordon Bickel to buy his gypsophila spray carnation.
More than half a century later Bickel’s firm, Carmel Agrexco, has expanded from what he calls the ‘white gold’ that was behind the success of his business, to sell fruit and vegetables, and it is still a key M&S supplier.
In fact, his firm now counts Tesco and Sainsbury’s as customers and UK grocers account for 30 per cent of his strawberry sales.
But Carmel Agrexco is not alone. UK-Israeli trade is at an all-time high, despite recent rumblings by the EU over the labelling of products from the West Bank and calls in some quarters for a boycott of Israeli goods.
HSBC, Barclays, Rolls-Royce, GlaxoSmithKline and Unilever have a major presence in the market. One out of every seven prescriptions filled by the NHS is from an Israeli pharmaceutical firm.
There are a raft of government initiatives to propagate growth spearheaded by a recent trip by Prime Minister David Cameron, as well as favourable tax treaties.
Britain’s trade with Israel reached a record high of £5.1billion last year after doubling during the last decade. The UK is Israel’s second largest trading partner after the US.
David Ross, an economist with Israel’s Department of Economy, explains that his country is focused on the export market ahead of its domestic one: ‘We are a small, saturated market, and in many ways a geographical island not friendly or trading with our neighbours.
‘The strength of the economy is the fundamental desire to go abroad. The first intention is not the domestic market.’
Israel is the UK’s 33rd largest market worldwide. Bilateral trade has exceeded at least £3billion in each of the past four years. Top 10 UK exports include vehicles, pharmaceuticals, chemicals and plastics.
Bickel says trade is at an all time high because ‘a lot of Israeli people came from Europe and also speak the languages’.
He added: ‘Quality is also key. With property it is “location, location, location”, and with fruit and vegetable it is “quality, quality, quality”. If Tesco could get the same quality in the UK and Spain it wouldn’t buy from Israel, plus thanks to the weather we are able to supply all year around.’
But it is not only products that have made the trip over. More firms listed in London last year from Israel than from anywhere in the world, other than the UK itself. Nine Israeli companies floated on the London Stock Exchange, two of them, Matomy Media Group and Barak Capital, listed on the main market, and the others on AIM.
British Ambassador to Israel Matthew Gould said: ‘London offers many advantages for Israeli companies – appropriate regulation, the English language, more banks than anywhere else in the world, real excitement about what Israel has to offer, and all less than five hours flight away.’
He started a UK-Israel Tech Hub at the British Embassy in Israel, which fosters economic growth in both countries by partnering British firms with Israeli innovation.
The result is partnerships in which British companies help Israeli innovations go global, and Israeli innovation gives British companies a global competitive edge. There is also technology from Israel that is used by a host of British firms, from cyber security used to protect High Street cash machines to chips that go in TV set-top boxes.
David Cameron said: ‘Israel’s technology is protecting British and Nato troops in Afghanistan.’
Two and a half weeks ago a delegation of managers from UK retailers including Sainsbury and Tesco visited Israel to find technological solutions to their business.
Anita Leviant, who runs the Israeli-Britain Chamber of Commerce, says the relationship between Israel and the UK is good because it has common ground.
‘It has a very similar legal system, the language is familiar, there are six flights a day, the culture is great and there are several trade and tax treaties,’ she said.
Israel’s commercial law is based on English law and it has signed a double taxation treaty with the UK. Its free trade agreement with the EU has also resulted in a gradual reduction in import duties for UK products.
Bickel has come a long way since exporting gypsophila. Carmel Agrexco is one of the world’s largest producers of fruit and controls the patents for more than 10 different varieties of strawberries some of which have been developed to taste sweeter, look redder, or last longer before decaying.
He is looking to float his strawberry business in a £32million public offer. Carmel Strawberry will come to market in 6-12 months.
And it’s the London Stock Exchange that is in the running with Tel Aviv.