I guess silence must be contagious: Not a single English-speaking reader has yet shared his/her view of Chinese plastic companies. As an ancient Chinese ode goes, "I was given a papaya, and I give back a beautiful gem." In other words, I was really expecting some feedback that I can share with and inspire Chinese readers.

Let me share my two cents, though.

Companies that manufacture plastic products in China include three types: foreign-invested, state-owned, and privately owned. But it's really not that clear-cut or rigid. A big chunk of the foreign investment comes from Hong Kong and Taiwanese business people. Many state-owned enterprises are being privatized. Smart private business owners make their companies "foreign" by, for instance, listing a relative or friend who has foreign citizenship as the foreign investor. The "foreign" title used to bring tax and other benefits, and it still helps with brand building. Meantime, foreign joint ventures are increasingly bought out by one of the parties involved, and becoming either wholly foreign-owned or locally owned.

Foreign-invested companies still dominate China's export-led manufacturing. But the real determinant force of China's future plastics industry, I believe, is the privately owned domestic Chinese companies (I'm going to shorthand it as PODC) and the entrepreneurs behind them. It's a big, diverse group we are talking about, ranging from the very state-of-art facilities to the down-to-the-earth workshops.

Compared to their American counterparts, on the macro level, PODC firms' competitive advantages include: 1) relatively easy credit from official and underground sources, 2) a driven, affordable, and highly trainable workforce, and 3) relatively cheap infrastructure and lax regulations.

All three points are double-edged swords, though. With easy credit and an inefficient financial system, risky investments are made. Factories come on stream fast and go out of business just as quickly. Workers are used to being told to execute tasks, lacking innovative capabilities. Cheap infrastructure and loose law enforcement encourage the abuse of the environment, workers' rights, etc.

You may wonder why I haven't mentioned the low cost. Let's face it. Materials cost more or less the same everywhere. Labor cost is lower in China than in the U.S., but wages are rising faster than business owners would like. Especially at senior management and executive levels, the Chinese pay is not far behind the American pay. Utilities and pollution-related costs are lower, but they, too, will have to catch up soon.

The only way China can overcome its limits in natural resources and maintain industrial growth is through the optimized use of its human capital. A country that doesn't lack entrepreneurship, China needs to overhaul the business system to foster better ethics, mutual trust, long-term vision, fairness, transparency and regulatory enforcement (such as protection of intellectual property). It's the lack of all the above that smother innovative spirits and sustainable growth.