Beijing’s quiet ban on Israel investments revealed in Hanita Lenses lawsuit

Beijing’s unannounced policy to block Chinese firms from pursuing new investments in Israel has been brought to light by a lawsuit filed by Kibbutz Hanita against the Chinese-based investment fund Ballet Vision.

In its response to the legal action initiated by the kibbutz management, Ballet Vision stated that it was unable to facilitate new capital transfers to the factory because the “Chinese government has declared Israel a high-risk zone,” effectively halting further investment.

Ballet Vision, a fund specializing in health technology, medical devices, and advanced manufacturing, acquired a 74% stake in Hanita Lenses in 2021 for approximately $35 million. Under the terms of that investment, $25 million was paid directly to the residents of the kibbutz, while the remaining $10 million was earmarked for the operations of the intraocular lens manufacturer.

The Chinese fund subsequently increased its stake to 80% through additional investments. According to the contract between the two parties, the kibbutz management retains the right to demand that the fund purchase its remaining minority shares by December 2025.

Residents of Kibbutz Hanita have now filed a lawsuit against the Chinese fund in the Tel Aviv District Court, invoking the specific contractual clause regarding the share buyout.

The legal filing alleges that the factory has incurred losses of approximately $15 million over the past three years and currently sits on the verge of bankruptcy due to mounting bank debt. The plaintiffs contend that the facility is managed entirely by its Chinese owners and that the minority shareholders have been rendered functionally obsolete. The kibbutz is seeking $11 million in compensation, asserting that Ballet Vision has refused to exercise the mandatory option to purchase the remaining shares.

Beijing classifies Israel as a ‘red category’ risk

Ballet Vision’s defense has clarified what appears to be a “silent sanction” imposed by Beijing against Israel. In its court filing, the fund stated: “Since the commencement of hostilities in Israel, the Chinese government has classified Israel as a high-risk region (red category) and has prohibited new Chinese investments in the country.”

The fund argued that as long as this restriction remains in place, the share purchase stipulated in the contract is operationally impossible. Furthermore, it noted a significant deterioration in the company’s financial health.

Liu Yuxiao, director of Ballet Vision and CEO of the facility, disclosed that Hanita Lenses lost $15 million over the three-year period and has accumulated $4 million in debt. Yuxiao maintained that he assumed leadership specifically to prevent the company’s total collapse, adding that the business is not expected to reach a break-even point until 2026. He emphasized that forcing share-purchase negotiations at this critical juncture could jeopardize the ongoing recovery process.