TEL AVIV, Feb. 2 -- Business relations between Israeli and Chinese companies took another step forwards on Monday, as a Chinese company and an Israeli venture capital firm announced an innovation competition which would award the winning innovative startup with 1 million U.S. dollars.

The Israeli track of the first "Global Innovation Award" was announced on Monday in Tel Aviv. The Chinese Shengjing360 group is conducting the competition with the help of Israeli venture capital firm Jerusalem Venture Partners (JVP).

The three finalist companies will head to Beijing in August, where the top one will be awarded 1 million dollars.

"China is becoming a substantial partner," Kobi Rozengarten, a managing partner in JVP told Xinhua Monday.

"There's a vast amount of activity, more and more investment bringing more people, looking for innovation in Israel," he said, explaining how the original connection with the Chinese company came to be.

"The purpose of this project is mainly to encourage investments and expose Israeli startups and give them a global spotlight. China is becoming a vital partner for those companies and the companies want to enter the Chinese market," he said.

Explaining Chinese drive to discover and invest in Israeli startup companies, Xueling Cao, Director at Shengjing Technology Co. said "Israel has quickly become a global hub and model for an innovation driven culture. The goal of the competition is to identify the most promising startups and open doors for them."

China and Israel signed a three-year action plan on innovation cooperation on Jan. 29 when Israeli Foreign Minister Avigdor Lieberman visited Beijing and held the 1st Meeting of China-Israel Joint Committee on Innovation Cooperation with Chinese partner.

As China is one of the world's fastest expanding economy, Israel has little manufacturing capabilities and a small market but has established a reputation as an innovation hub worldwide.

The countries' business relations have seen a burst in recent years, with bilateral trade between the countries going from around 50 million dollars in 1992 to nearly 11 billion dollars in 2013, according to estimates.