Total GDP: $98 billion (1998)
Real GDP Growth: 3.0% (1998)
Per Capita GDP: $17,000 (1998)
Inflation: 9% (1998)
Unemployment Rate: 8.0% (1998)
Industrial Production: 5.4% (1996) combined in the following industries: food processing, diamond cutting and polishing, textiles and clothing, chemicals, metal products, transport equipment, electrical equipment, and high technology electronics.
Current Account Balance: $1.3 billion (1998)
Trade Balance: -$6.9 billion (1998)
Merchandise Exports: $20.9 billion (1998), in machinery and equipment, cut diamonds, chemicals, textiles and apparel, and agricultural products.
Merchandise Imports: $27 billion (1998) in production inputs (70%), investment goods (16.8%), and consumer goods (13.5%).
Export, Goods and Services: $32.5 billion (1998)
Import, Goods and Services: $44 billion (1998)
Key trading partners: Europe, United States, India, Hong Kong, Japan, and South Korea.
*All dollar figures in U.S. dollars.
Arnold Lumber in West Kingston and Wakefield has come a long way since Carold “Kit” Arnold began his logging operation in South County three generations ago. Not only has it become among the largest lumber yards in the state, but it has expanded its business overseas.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
“We weren’t openly soliciting an international relationship,” said Joseph Parent, the company’s chief financial officer. “We had this particular customer who had a relationship with one or two international agents. They indicated they wanted a relationship with one or two suppliers in the Northeast because of their proximity to shipping ports.”
The agents were representing Ishai Shadi Development Co. of Israel, which Parent said is in the business of building custom homes. Ishai Shadi was looking for good materials, such as Anderson windows and the kind of lumber found in the Northeast, at competitive prices.
Within short order, Arnold Lumber, which had at best dabbled in international business before, was an exporter of the raw materials that went into the construction of 1,200 square foot to 2,200 square foot ranch houses that in Rhode Island, Parent estimated, would cost between $125,000 and $175,000.
Since the summer of 1997 when the relationship began, Parent said they have shipped materials to build six to eight houses, with expectations of some substantial growth. Ishai Shadi, he said, just signed a contract to market its product in seven of the 34 stores that make up a leading home center chain in Israel. Ishai Shadi and Arnold Lumber will co-market the materials, with Arnold shipping hundreds of pounds of marketing material to Israel, Parent said.
The growth in business is a reflection of a growth in understanding relationships and customs. Parent is the contact for Arnold lumber and Adi Yaniv, a vice president, for Ishai Shadi. And while the two have never met face to face, Parent said, he has been able to establish a relationship that has allowed Arnold to penetrate what he says are the Israeli’s “very regimented” way of doing business to Arnold’s approach of having some flexibility, offering suggestions, that allow the company to serve the customer better.
“They are very professional,” Parent said. “Everything is Mr. Parent. I guess the point I’m trying to make is it’s important to be aware of the customs and the way they conduct business. In this case it was also important to add our approach to business as well. Somewhere in between there was the formula for a successful relationship.”
State of Israel
Geographic Area: 290 miles and 85 miles wide.
Climate: Very sunny, with a rainy season from November to April. Regional climate varies.
Main cities and towns: Jerusalem, Tel Aviv, Haifa, Beer Sheva. Ninety percent of the population lives in urban areas.
Population: 5.9 million
Languages: Hebrew (official), Arabic (official for the Arabic minority). Russian and English are widely spoken.
Workweek: Sunday through Thursday
Labor Market: Israel’s civilian labor force of more than 2 million is highly skilled and well-educated. Approximately 30% have 13 or more years of education, and over 17% have 16 or more years of education. More than 27% of the work force is employed in technical professions (versus 8% in the U.S. and 12% in Japan). One-third of university students specialize in engineering, mathematics, physical sciences and medicine.
Type of Government: Parliamentary Democracy
Head of State: President Ezer Weizman (ceremonial and formal duties) and Prime Minister Ehud Barak (One Israel Party)
National Legislature: The Knesset, with 120 members, is elected every four years.
Currency: Shekel
Exchange Rate: June ’99-4.089; June ’98-3.651
Tariff, trade regulations, and free trade zones
In 1985, the United States and Israel formed a Free Trade Area (FTA) to expand the economic ties between the two countries. The FTA eliminated customs duties and most non-tariff barriers by 1995. Duties on import-sensitive products are being phased out over several years to allow time for domestic industries in both countries to adjust to increased competition. To qualify for FTA treatment, products must meet with the following requirements:
1. The goods must be produced, grown, or manufactured in the United States or Israel.
2. The goods must be imported directly from the United States or Israel into customs territory of the other country.
3. Value of the materials produced in the exporting country must not be less than 35% of the products value. Up to 15 percent may be the product of the importing country.
Taxation: Israel has a value-added tax (VAT) of 17 percent, which is levied on most transactions of goods and services. The VAT applies to all imports, based on their landed-cost-plus customs duties. There is also a capital gains tax levied at a rate of 10 percent on the sale of tangible and intangible property excluding inventory and securities.
Foreign Ownership and Licensing: There are few restrictions on establishing licensing agreements in Israel. Israeli companies do not need government approval to enter into such agreements with foreign firms, and once a company has produced certified statements, royalties may be transferred freely through authorized banks. The normal duration for licensing agreements is five years, with automatic renewal for an additional five years. The normal royalty payment is 4-5 percent of turnover, although higher rates for luxury products are common. Royalties are deductible from income taxes. Israel requires an import license for certain products. If a license is required, it is automatically approved for United States products, unless it is necessary to administer certain quotas. Lists of imports requiring licenses are available through the Israel Information Center of the U.S. Department of Commerce.
Import and Export Control and Documentation: Israel maintains few export controls. United States export licenses are required for exports to Israel of certain high-technology, defense equipment/technologies and weapons for chemical/biological warfare. U.S. exporters should ensure they are in compliance with export control regulations administered through the U.S. Department of Commerce, Bureau of Export Administration, and U.S. Department of State, Office of Defense Trade Controls. U.S. exporters to Israel must follow U.S. Government requirements regarding export control documentation.
Trade Financing: Capital trade financing is readily available for Israel. There are no unusual rules or regulations concerning export financing, apart from foreign currency regulations. Loans at market interest rates are available from commercial banks to finance the manufacture of exports, including imports of raw materials and components for export products. Loan terms vary depending upon the raw material requirements, cost of conversion, and collection time frame. City/state-sponsored export financing and loan guarantees are available. The Small Business Administration (SBA), in cooperation with the ExIm Bank provide export credit insurance, pre-export financing, and working capital guarantees.
Marketing and Selling Factors/Techniques: Most United States exporters choose to market their products in Israel through agents/distributors who generally act as exclusive representatives of their foreign suppliers and maintain their own distribution networks.
Product Pricing: Price is a key factor affecting purchasing decisions by Israeli companies and consumers.
Patents: Patents are granted for periods of up to 20 years from the date of filing. To be eligible for a patent, the inventions must be unique, and not published or used previously anywhere in the world. It usually takes 2 or 3 years to obtain a patent.
Trademarks: Trademarks are protected under the Trademark Ordinances of 1938, as amended in 1972. Trademark registrations are valid for 7 years after the initial filing date and may be renewed for 14-year periods.
Copyrights: Israel belongs to both the Universal Copyright Convention and the Berne Convention for the Protection of Literary and Artistic works. This assures that work by U.S. authors first copyrighted in the U.S. are automatically protected in Israel.
Key Contacts
R.I. Export Assistance Center (RIEAC) and World Trade Center R.I., which operates under the auspices of the Center for International Business at Bryant College Raymond W. Fogarty, Dir. Robert Hamlin, Country & Industry Program Manager Edward Barr, World Trade Center Manager
Telephone: (401) 232-6407 or (401) 232-6408
Fax: (401) 232-6416 E-Mail: postoffice@itdn.net
Website: http://www.rieac.org
Embassy of Israel, Washington DC
3514 International Drive, NW, Washington DC 20008
Telephone: (202) 364-5500 Fax: (202) 364-5434
E-Mail: ask@israelemb.org Website: http://www.israelemb.org/
Consultate General of Israel to New England
20 Park Plaza, Suite 1020, Boston, Mass. 02116
Telephone: (617) 542-0041 Fax: (617) 338-4995
E-Mail: israelcg@world.std.com
Website: http://www.israelemb.org/boston/index.htm
Ministry of Foreign Affairs
Website: http://www.israel-mfa.gov.il/mfa/home.asp
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
