Israel Market Entry

Israel Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

According to cheeroutdoor.com, Israel is, in most respects, a country with common domestic market problems and risks. Certain specifics result from the religious and social composition of the population, different traditions and norms of behavior not only compared to the Czech Republic, but also very varied and different within Israel. In addition, especially in the case of projects of a larger or regional scale (e.g. in the area of ​​infrastructure construction), the political and security situation associated with the further development of the Israeli-Palestinian conflict must be monitored.

The limitation of the market is its small size due to the number of inhabitants, Israel’s limited involvement in regional trade and economic cooperation and, for Czech exporters, especially the transport distance. From the point of view of the Czech Republic, or of our traditional export commodities, there is a significant shift of the focus of economic growth to the area of ​​advanced technologies, which is associated with the decline of traditional industries such as metal production, textile and clothing industry, footwear, chemical production, etc.

Although the consequence is a limitation of export opportunities for our suppliers of machines and technologies for these fields, on the other hand, new opportunities are opening up for suppliers of final products. However, this possibility is only realistic in those fields in which the price competition of Asian production is not so evident.

A special chapter of trade with the Jewish state is agricultural and food products and raw materials. For their import, it is generally necessary that they meet the requirements of Jewish religious regulations (kashrut), i.e. they are kosher. The responsible authority is the Chief Rabbinate, certificates of other rabbinates may not be accepted by the relevant authorities and customer groups, and therefore it is recommended to check the validity of the certificate issued by the chosen rabbi in advance (obtaining the certificate is the responsibility of the exporter). Czech companies can apply for kashrut to a rabbi in the Czech Republic, and they can also contact rabbinates in neighboring countries. However, goods intended for sale in certain specialized stores (especially for the Russian-speaking or Arabic population) do not need to be provided with a kosher certificate.

VAT at the standard rate of 17% is also imposed on imports upon release into circulation. Individual customs rates, coefficients and turnover tax rates are listed in the customs tariff, which has been based on a harmonized system since 1988. The price list also contains information on any additional requirements and restrictions (import quotas, certificates, etc.), as well as changes in the import regime and conditions within the framework of the association agreement between the European Union, its member states and the State of Israel.

In addition to normal duties, the Israeli authorities may impose anti-dumping duties, countervailing duties and safeguard duties on imported goods. However, according to available information, no anti-dumping or countervailing duties have been applied so far, certainly not on goods manufactured in the Czech Republic.

Exports from Israel are generally not restricted. Exceptions are commodities and products of a strategic and sensitive nature, antiquities, live animals and some licenses (in cases where the know-how was developed with the help of government subsidies), similar to imports and exports, trade with certain territories is prohibited.

Import licenses are issued by the Ministry of Industry and Trade and mainly concern agricultural and food products and supplies for the health sector. The issuance of a license, which can only be applied for by an Israeli citizen or a company registered in Israel, usually takes 7-10 days. For the import of alcoholic beverages, a certificate from a certified specialized laboratory is also required. This approval is valid for one year and is renewed “almost automatically”. In the case of importing whisky, rum and brandy, certification is also required that the drink was distilled directly in the country where the sugar cane used in production was grown. In the case of denatured alcoholic beverages, the manufacturer must also submit a certificate on the production inputs used and their proportions. The Winery Institute analyzes imported alcoholic beverages.

The import of goods from countries with which Israel does not have trade relations (some Arab or Islamic countries) and from countries that are not members of the WTO and do not have a free trade agreement is prohibited.

Israeli requirements for marking, labeling and packaging of products are quite strict and the relevant regulations are only available in full in Hebrew. Marking of the goods must be done by printing, engraving, stamping, sticking labels, etc. on the product or on its packaging. In the case of multi-level packaging, the outer layer must be marked. It is prohibited to import goods bearing the name or brand of an Israeli manufacturer, distributor, etc., unless this name (brand) is supplemented by the country of manufacture. Imported products must contain, in addition to information on the country of origin, the name and address of the manufacturer and importer, information on content, weight and volume (in metric units). Labels and product markings must be in Hebrew, which can be supplemented with, for example, English, but only if the condition is met that the foreign language inscriptions are not larger than the Hebrew. labeling, respectively labeling of products can currently only be carried out in Israel, with the exception of textile products and cigarettes.

Forms and conditions of operation on the market

Although there is no formal requirement to appoint a local customs agent, this practice is generally recommended. In some cases, it also happens that, despite the aforementioned absence of a formal requirement, customs offices are willing to deal only with a customs agent. Customs procedures are uniform and standardized. Part of the customs clearance usually takes place directly with the customs agent, who communicates electronically with the customs authorities. All imports are cleared with the use of computer technology, which means that customs clearance is usually within 20 minutes, or within one day, but a delay of several days is not an exception. A special chapter is the frequent strikes of civil servants incl. customs officials, which sometimes paralyze all the passage of goods across the Israeli border. Inspection of goods is carried out on the basis of a risk assessment rather than a random sampling method. A pre-shipment inspection from the exporter is not mandatory.

Anyone interested in exporting to Israel, be it consumer or investment goods, should first of all try to find a local partner who knows the local market and customs well and, in the case of consumer goods, has their own distribution network or has access to it. For companies with foreign participation, the alternative of using distribution networks and business connections of a foreign partner is offered. Building your own network is not economically justified and realistic for most suppliers due to the usually small volumes of deliveries. Distribution and sales through a local partner is more common than direct sales.

The local partner can either be a sales agent (i.e. a middleman who markets the supplier’s products for a commission usually calculated from the turnover achieved) or a distributor (i.e. a trader who purchases goods for resale on his own behalf and makes a profit from the sales margin). As in other countries, selling through local partners has the advantage of their knowledge of the local environment and language (e.g. tender announcements are often only in Hebrew, as well as the relevant tender materials) and the possibility of their flexible and operative action on the market at relatively lower costs. Considering the limited market, its coverage by one local partner should be sufficient. In addition, it is quite common for local partners to strongly demand exclusivity. The effort of an Israeli entity to obtain exclusive representation must be accompanied by prudence, including ensuring the quality of the formal and legal aspects of the relevant contracts on the part of the Czech exporter. This area is not regulated by a special legal norm and the principle of freedom of contract is fully applied here.

Marketing and communication

Claims for promotion are comparable to EU states – i.e. consumer goods are intensively promoted in all kinds of media and on billboards. Direct mailing is used on a smaller scale. When promoting, it is necessary to take into account the local culture, the religious feelings of the population and the national composition, or the character of the individual target groups – e.g. immigrants from the countries of the former USSR can be approached through media published or broadcast in the Russian language, the same is true of the Arab minority.

Goods that are not for individual consumption are usually promoted primarily through specialized trade fairs and, in particular, targeted marketing activities of individual companies (presentation events, visits to reference companies, etc.).

The prices of television and radio advertising correspond to the costs of these media in the EU, a more accessible and relatively common marketing and communication medium is the Internet, social networks – especially Facebook and Instagram, or e-mail. In addition to your own website, it is possible to place an advertisement with links to any of your own pages in most online versions of local periodicals (in both Hebrew and English versions). Advertising prices in Hebrew dailies range from around NIS (NIS 5,000) to NIS 17,000. USD (60,000NIS) for 1/2 side.

Israeli newspapers:

  • https://www.timesofisrael.com/ The Times of Israel
  • https://www.jpost.com/ Jerusalem Post
  • https://www.haaretz.com/ Haaretz
  • https://www.ynetnews.com/category/3083 Yediot Achronot
  • https://en.globes.co.il/en/ Globes

Issues of intellectual property protection

The issue of protecting trademarks, patents, designs and copyrights is under the responsibility of the Ministry of Justice. Israel is a signatory to all relevant international treaties in the field of intellectual property protection. Patents are registered by the Israel Patent Office, their granting usually takes 2 to 3 years and their protection for another 20 years. Trademarks are initially registered for 7 years, after which the registration can be extended for another 14-year period. Patterns and designs are protected for 5-15 years, provided that they are original, new, and not sold, exhibited, or published in Israel until the application for registration is filed. Copyrights enjoy automatic protection without the need for registration for the lifetime of the author and a further seventy years.

Public procurement market

Purchases by the Israeli government, its agencies, state-owned enterprises and other state-owned entities represent a significant part of the market. In general, all public projects must be announced in the form of public tenders, in accordance with Israel’s obligations under the WTO. Tenders are published in the mass media (usually in two Hebrew dailies, one Arabic daily or weekly and on the websites of relevant government agencies and companies (see below).

International tenders are then compulsorily published in the English newspapers Jerusalem Post or Ha`aretz (English version), or on the websites of the publishers (see below). An alternative to open tenders are invitation-only tenders – potential participants who have successfully passed the so-called pre-qualification for the relevant tender, or who are included in the list of qualified suppliers of the relevant company or institution, are approached.

Tender announcers are obliged to inform all participants about their results. The result can be appealed to an Israeli court, which can then cancel it or suspend its fulfillment pending an investigation of the entire matter. Most tender advertisements contain a clause that the contracting authority reserves the right to make the final decision regardless of the position of the tenders in the tender, or to discuss the details of the tenders with any participants, which can relativize the objectivity of such tenders. Non-binding tenders, so-called “requests for information” (Request for Information, RFI), are often announced, which do not commit the contracting authority to anything a priori. Although the openness of tenders for the participation of foreign entities is declared, some restrictive measures are applied selectively. These include, above all, the obligation of minimal counter-purchase of Israeli goods, the so-called buybacks (see below), the mandatory participation of a domestic entity in the implementation of the project or the obligation of pre-registration of the tender participant in Israel. Pre-qualification (sub) of suppliers may also be a condition for participation in tenders. For tenders financed from funds obtained in the framework of US aid, only deliveries of goods from the US are possible. It can be assumed that, as a result of the current development of the economic situation, domestic suppliers will be favored despite the current improvement, after all, the Israeli government does not even hide this intention. For tenders financed from funds obtained in the framework of US aid, only deliveries of goods from the US are possible. It can be assumed that, as a result of the current development of the economic situation, domestic suppliers will be favored despite the current improvement, after all, the Israeli government does not even hide this intention. For tenders financed from funds obtained in the framework of US aid, only deliveries of goods from the US are possible. It can be assumed that, as a result of the current development of the economic situation, domestic suppliers will be favored despite the current improvement, after all, the Israeli government does not even hide this intention.

Since 1995, state entities have been required by law to apply a policy of supporting domestic producers (offsets or buybacks) when preparing tenders. All international contracts (originating from the state or tenders announced by state companies) with a volume of more than 5 million USD must contain a condition called “industrial Cupertino”. To fulfill this condition, the foreign contractor must purchase goods or services from local companies, invest in Israel or transfer know-how to Israel – all in the total amount of 20% of the value of the contract obtained in the tender. The measure in question is applied in accordance with WTO rules and is applied to all foreign suppliers without exception.

However, it is not required that the subject of the countertrade be related to the subject of the tender itself, or even to the subject of the participants’ activities. Therefore, a contract between third parties can also be recognized as countertrade. The entity responsible for the implementation of countertrade policy is the Industrial Cooperation Authority (the link to the ICA is on the website of the Ministry of Industry and Trade, see below). This office makes final decisions on countertrade items and also issues permits applicable to offsets. On the office’s website, detailed information on this issue is provided in English; it is very important that those interested in participating in Israeli tenders familiarize themselves with the ICA conditions before making a binding business decision regarding public procurement.

Contract fulfillment guarantees (bid bonds or performance bonds) are also commonly required. Their amount and form can be subject to negotiations, with the exception of publicly published tenders, where the conditions are fixed. The value of the bonds usually ranges from 5 to 15% of the contract price. In addition to the publication of a significant part of the tenders only in Hebrew media (including the websites of the contracting authorities), a limiting factor is the sufficiently flexible participation of Czech companies, as well as the frequent publication of their own tender materials only in Hebrew versions or the usual acceptance of only personally delivered offers. For Czech companies, the need to find a serious local business partner is growing again. This should be key for negotiations with all competent authorities and, in important public contracts, with the ICA as well. Since the beginning of 2008, the amendment to the Public Procurement Act has been in effect.

Tender portals or the most frequent announcers of international tenders

https://www.lapam.gov.il/?lang=en tender portal

https://www.iec.co.il/en Israel Electric Corporation

http://www.israports.org.il/en Israel Ports Authority

https://www.rail.co.il/enIsrael Railways

https://mof.gov.il/en Ministry of Finance of the State of Israel

www.bezeq.co.il Bezeq – Israel Telecommunications Corp. Ltd

http://www.economy.gov.il/English Ministry of Industry and Trade

Payment terms, payment ethics and resolution of commercial disputes

Considering the difference between Israeli legislation rooted in English common law and British mandate regulations, careful attention must be paid to the legal side of cooperation with local entities, incl. a clear determination of the procedure for resolving complaints and other disputes. The basis is the careful preparation of the contract and attention to detail, especially regarding contractual conditions, general business conditions and the governing law and the place where any dispute will be resolved. There is no agreement between the Czech Republic (EU) and Israel enabling enforcement of the decisions of the judicial authorities of one party in the territory of the other party, and a detailed contract can save a lot of trouble. Arbitration in a third country appears to be the most appropriate and commonly accepted way of resolving commercial disputes by Israeli entrepreneurs.

In the event of a breach of an obligation by an Israeli entity and the absence of a previous agreement on the method of dispute resolution or non-respect of one’s own obligations by the partner, we recommend contacting the Israeli authorities. Israeli law only allows for representation by a local lawyer. In the event that the discussion of the dispute appears to be too lengthy and financially demanding, an out-of-court settlement can of course be initiated or accepted.

All usual payment terms can be used in trade with Israel. The most common method of payment is a documentary letter of credit. It is necessary to take into account the harshness of the Israeli approach to trade and the ability of Israeli businessmen and their legal representatives to use all the possibilities given by the contractual relationship and the legal system to obtain benefits such as various discounts and penalties for non-compliance with time agreements, expected quality, etc.

Information: www.court.gov.il

Visas, fees, specific conditions for traveling to the territory

A visa is not required if the stay does not exceed three months and is of a non-earning nature. A visa is therefore not required for short-term tourist stays. Visas for other purposes (short-term gainful and long-term) are required and information can be obtained from the Embassy of Israel in Prague.

The obligation to obtain a visa also applies to volunteer work, e.g. in a kibbutz. An invitation letter from the relevant kibbutz (moshav, intermediary agency, etc.) addressed to the applicant and confirmed by the Ministry of the Interior of the State of Israel is submitted. More information can be obtained from the Embassy of Israel in Prague: Badeniho 2, 170 06 Prague 7, Tel.: +420 233 097 500, Fax: +420233 097 519, E-mail: [email protected]

Regarding the specific conditions of travel to the territory, it is necessary to bear in mind that security is a priority for the State of Israel. Airport procedures are subject to this. Every traveler must be prepared for a security interview and screening, which can be more time-consuming. Passengers of the Israeli airline El-Al, in particular, go through a thorough security check at the airport in Ruzyna, the security checks are identical for all passengers upon departure from Israel. As a result, it is recommended to arrive at the airport with a safe time reserve, i.e. approximately three hours before the plane’s departure.

Tourists are not required to register, nor are any mandatory vaccinations or health certificates required. At land crossings into Egypt and Jordan, Israeli authorities require holders of travel and service passports to pay an exit fee equivalent to US$29-51 depending on the point of crossing.

Israel is located in the turbulent environment of the Middle East, so we recommend checking the current travel recommendations on the website of the Embassy of the Czech Republic in Tel Aviv or on the website of the Ministry of Foreign Affairs before each trip.

With rare exceptions, foreigners have not been the target of terrorist attacks in Israel. The security situation in the country has been stable in recent years, but due to the protracted conflict with the Palestinians and the absence of peace treaties with Syria and Lebanon, terrorist attacks on places where a large number of Israeli civilians are concentrated and unrest in the Palestinian territories can never be completely ruled out. Markets, bus stations and bus stops, and entertainment venues have been the subject of terrorist attacks in recent years.

We do not recommend citizens of the Czech Republic to travel to the territory of Gaza, after all, entry into the Gaza Strip is practically impossible at the moment. Before traveling to the autonomous Palestinian territories in the West Bank, it is important to familiarize yourself with the current recommendation issued by the Ministry of Foreign Affairs of the Czech Republic and published on the website of the ministry. The travel document must be carried at all times in case of checks at permanent and temporary Israeli police and armed forces posts.

Employment of citizens of the Czech Republic:

Employer’s authorization: The relevant employer of a citizen of the Czech Republic (or another foreign worker) must hold an authorization issued by the Department for Foreign Workforce at the Ministry of Industry, Trade and Labour. Work visa: Citizens of the Czech Republic must have a valid work visa (B/1) issued by the Ministry of the Interior. The work visa is limited to the length specified in the work permit, it is issued for a maximum of 1 year. Only the Ministry of the Interior can extend it.

Sector of work: Foreign workers obtain work permits as specialists in the relevant sector (usually home care, agriculture, industry, public catering; special conditions are set for construction). They may not change this sector during their stay. Employment contract: The employer is obliged to provide the employee with a copy of the employment contract in a language the employee understands. The contract must contain: identification of employer and employee, job description, details of financial evaluation and deductions from wages, date of commencement of employment, working hours, rest period, number of vacation days and holidays.

Minimum Wage: The minimum wage for a full-time worker is set at NIS 5,300 per month. The weekly minimum wage is set at 28.49 NIS per hour if the employee works 186 hours per month. In the event that an employee works 182 hours per month, the weekly minimum wage is set at NIS 29.12 per hour. Maximum length of working hours: 186 hours per month Minimum rest period: 36 continuous hours per week, which should include Friday, Saturday or Sunday according to the employee’s religion.

Minimum vacation time: During the first 5 years of employment – ​​16 days per year; during the 6th year – 18 days per year; 7th year – 21 days a year. If the employee has been employed by the same employer for 8 years or more – the minimum leave period is extended by one additional day of leave for each year of work, up to a total of 28 days.

Religious holidays: Employees are entitled to paid time off during religious holidays, namely 9 days a year. Health insurance: The employer is obliged to provide the employee with health insurance for the entire duration of the working stay. Part of these costs can be deducted from the employee’s salary depending on the agreed provision in the employment contract.

Social security: The Národní pojišťovna (“Bituach leumi”) pays insurance for foreign employees in case of occupational accidents.

Accommodation: The employer must provide the foreign employee with suitable accommodation. Part of the accommodation costs can be deducted from the employee’s salary. If he does not provide accommodation, he should provide the employee with a housing allowance.

Travel allowances: The employee is entitled to a maximum of NIS 22.60 per day.

Deductions from wages: An employer can deduct the following items from an employee’s wages: income tax, social (national) insurance, part of housing costs and health insurance, etc.

Termination of employment: The employee must give notice in advance determined according to the length of time worked (max. 1 month). In case of dismissal by the employer, the employee is entitled to severance pay in the amount of 1 month’s salary.

Employment of citizens from the Czech Republic

Foreigners can obtain a work visa only on the basis of a work permit and are issued by the embassy of the State of Israel abroad. Work permits are granted by the Israeli Ministry of Labor and Social Affairs only based on the need for a specific job in the country. The Ministry will not issue work permits for occupations that can be filled in Israel by Israeli nationals. If there are no workers in any of the fields, the entrepreneur who is looking for a worker must himself apply for a work permit for a person from abroad who he knows meets the given prerequisites. In the case of a work permit being granted by the Ministry of Labour, this is sent in the case of Czech citizens to the Israeli Embassy in Prague, which will issue a so-called work visa based on it.

The Ministry of Industry and Trade tries to respond flexibly to the situation on the labor market in the country. Under normal circumstances, there is a shortage of manual workers in Israel, and this problem was previously solved by employing workers from the Palestinian territories. However, since the second intifada, the labor market is not dependent on these employees. On the other hand, the State of Israel has previously concluded contracts with some countries (e.g. Thailand, the Philippines) enabling the recruitment of foreign workers to work in agriculture, social care, construction and similar fields. The market for low-skilled people is saturated, which also applies to the labor market for qualified and educated employees.

As a rule, the Ministry of Industry and Trade also does not allow assistance in the field of hospitality and accommodation services. Catering entrepreneurs are thus motivated to increase wage offers in order to preferentially satisfy potential Israeli applicants. In principle, a work permit can be obtained for the field of construction, agriculture and social and health care.

With regard to the employment of local forces, the foreign employer is governed by Israeli labor law in this area, as is the Israeli employer. The employment of local forces is not limited in any way, but specifics such as the release of employees (military forces in reserve) for regular exercises and with a high number of religious holidays must be taken into account.

Fairs and events

10 – 12 May 2022 – BIOMED – international conference, accompanying trade fair and business forum in the field of biomedical sciences. In the past, the main topic was the aging of the population and innovative trends in the treatment of related diseases (chronic diseases, cancer treatment, neurodegenerative diseases, diabetes treatment). The competition of biomedically oriented start-ups is always an important part of the program.

10 – 12 May 2022 – ACLIMA – the trade fair is the largest trade event in the field of air conditioning, cooling, heating and ventilation systems

24/05/2022 – INDUSTRY 4.0 SMART FACTORY – cyber-physical systems, Internet of Things, cloud computing, cognitive computing

24 – 25 February 2022 – NEW-TECH EXHIBITION – Hi-Tech, Electronics

24/05/2022 – THE ANNUAL ROBOTICS & AUTOMATION CONFERENCE – continuously in the background of the NEW-TECH EXHIBITION

25/05/2022 – AI 2022 – the annual artificial intelligence conference will take place against the backdrop of the NEW-TECH EXHIBITION

13 – 14 November 2022 – DIGITAL MARKETING INTERNATIONAL EXPO – the fastest growing digital marketing trade fair

22 – 24 November 2022 – ISRAFOOD – the main trade fair in the food industry

22 – 24 November 2022 – HOTEX-KITEX – the main trade fair for equipment, technology and services in the hospitality industry

22 – 24 November 2022 – BAKE & CAKE – the main trade fair in the field of bakery and confectionery

28.2.-1.3.2023 – ANNUAL EXHIBITION SAFETY & RESCUE – the main trade fair in the field of security (not military)

6 – 8 June 2023 – RAX – the main trade fair in the field of electrical engineering

Israel Market Entry