Too Much Made in China

Toledo has a “Glass Museum” which showcases the finest craftsmanship and skill in the glass industry in the world. The Toledo Museum of Art's $30 million Glass Pavilion is a symbol of America's "Glass City.” The problem with this image: The pavilion glass was imported from China, which has become the new global powerhouse of the glass industry.

No one in this country had the capability to meet the cutting-edge architectural specifications for the curving pavilion, even though the 2006 job involved techniques advanced decades ago by Toledo inventors: bending and laminating glass. The pavilion features 360 thick glass panels, each up to 13.5 feet tall, eight feet wide and weighing over 1,300 pounds.

Glass represents how a potent challenge has arrived in the United States: sophisticated, capital-intensive businesses that boast high-tech expertise. For years, we have focused on the threat from China's low-tech exporters like clothing and furniture makers and now we have threats from both ends of the expertise scale.

The pattern is repeated in industries where global demand has shifted to China, from steel to locomotives and turbines to specialized glassworks. Chinese companies that have gorged on growth in the domestic market have managed in just a few years to close the gap on decades of technological innovation in the industrialized West.

Shenzhen, China-based Avic Sanxin Co. got the Toledo Glass Pavilion job because of its willingness to invest in technology necessary for complex glass, including a $500,000 piece of equipment, says deputy general manager Bruce Tsin. U.S. companies, he says, are too cautious, preferring standardized processes and "easy money."

China also has secured important technology from foreign glassmakers eager for a foothold in the world's biggest market. Foreign companies often play a balancing act in China, trying to protect selected manufacturing secrets and products. Owens-Illinois Inc., an Ohio bottle-maker, intends to pump possibly hundreds of millions of dollars into Chinese acquisitions and joint ventures in the coming years. "It's the biggest glass market in the world and we feel underrepresented," says L. Richard Crawford, president of global glass operations. "What we bring the market is know-how."

Yet each deal will require approvals from Chinese authorities who have a reputation for pressuring foreign investors to introduce their latest proprietary technology, but a weak track record for protecting it. Owens-Illinois says it will hold back key trade secrets locked in its suburban Toledo labs, like how to make jet black glass and 30% lighter wine bottles. Mr. Crawford says his company can succeed in China by introducing "the basic stuff."