WASHINGTON - Despite its 1.5 billion people, rising living standards and increasing sophistication with plastics molding, China remains an enigma to potential investors from the U.S. plastics industry. Although the number of new investments by publicly held U.S. companies in China in 1994 reached an all-time high of 71, only one of those directly involved a plastics resin or molding concern, according to the findings of a New York corporate research group.
And opinion is mixed among the largely private Society of the Plastics Industry Inc. members, some of whom are planning a second trade mission to the Chinese mainland in two years.
At least one traveler on the last SPI mission holds little faith in the business-building opportunities for Americans in China.
Other SPI leaders believe a foothold in mainland China is assured.
Richard K. Greene, a manager in the international office of Ernst & Young Kenneth Levanthal Real Estate Group in New York, compiled data from three types of plastics companies based on the identification of companies' types of business under the Census Bureau's Standard Identification Code system.
In all, publicly owned U.S. companies that make plastic resin, products or molds announced 27 new investments overseas in 1994, up from 19 the year before, the statistics show.
Japan was the largest recipient of U.S. plastics investment in 1994, with five announced projects, followed by Mexico with four, Italy and Germany with three each, and the United Kingdom, France and Argentina each with two. Spain, Indonesia, Malaysia, the Netherlands, Canada and China each received only one investment from public firms in the United States.
Twelve of the announcements involved joint ventures with U.S. interests; 10 were acquisitions; three were new plants; and two were plant expansions.
The largest number of plastics industry investments of 1994 - 14 - were by companies in the ``miscellaneous plastics products'' SIC category. These firms include manufacturers of unsupported plastic film and sheet, plastic pipe, bottles and foam products, and compounders.
Six of those 14 plastics product investments were in Japan and Mexico alone, according to the Ernst & Young statistics.
The remaining 13 of the 27 total were resin company investments.
Ernst and Young analysis shows that for 1993, U.S. public firms made no overseas investment announcements in China.
The low number of plastics-related projects in China is surprising for two reasons. First, with 71 announced investments in 1994, mainland China logged the second-highest total number of U.S. investments of any country in the world. The United Kingdom ranked first with 132.
Second, as a developing plastics user and producer, China has received much attention from SPI.
One who believes the public figures are vastly different from the private industry investment figures is James L. Meinert, director of international marketing and an owner of Snider Mold Co. Inc. of Mequon, Wis. He is alsochairman of SPI's International Trade Advisory Committee.
Though unable to quantify the amount of private investment in plastics molding in China, he said, ``I know of a lot of it.''
The topic of plastics trade in China is expected to be part of Meinert's committee meeting in Cedarburg, Wis., this week.
Also on the agenda will be the planning for the upcoming China trip, made difficult because of uncertainties in the Commerce Department - which has been marked to be dismantled and has been mostly empty during the past two months of government shutdowns, Meinert said.
Similar sentiment to Meinert's was echoed by Washington-based business consultant Robert Branand, selected by the Commerce Department to lead the first SPI mission in November 1994.
``I don't know where those folks [at Ernst & Young] got their statistics, but there are thousands of businesses in plastics in China.
``Many people run their businesses in China from Hong Kong. The statistics in this case are not reliable,'' Branand said, adding that getting good trade statistics is ``going to be a little bit easier when Hong Kong becomes part of China.''
The only publicly announced U.S. plastics-related investment in China in 1994 was a $100 mil-lion PVC manufacturing joint venture between Occidental Chemical Co. and the South Korean firm of Lucky Ltd. in late September. The statistics do not include recent announcements such as that of Crown Cork & Seal's plan to invest as much as $6 million to make PET bottles in a joint venture with the China National Packaging Industrial Development Corp. in Beijing.
William Sacks, outgoing executive director of the Plastics Institute of America Inc., was surprised by the revelation of so few investments in China. Sacks, a frequent overseas traveler with 38 years' experience in plastics, said, ``Plastics is one of the areas [the Chinese] are interested in expanding. I don't understand it.''
But John von Holdt Jr., president of Plas-Tool Co., a Niles, Ill., toolmaker, was not so surprised.
Privately held Plas-Tool was represented on the November 1994 SPI China trade mission by Plas-Tool chairman John von Holdt Sr. The elder von Holdt signed an agreement in principal with ``Chinese interests'' to produce 10 million 5-gallon polyethylene buckets annually for the Chinese market.
``We're waiting to hear from our Chinese partners. We have not heard one word from them since my father's return from China,'' the younger von Holdt said Jan. 15.
``He was supposed to follow up with some official information for them; he provided all that. Absolutely nothing has materialized. It's par for the course, but we're a little disappointed,'' von Holdt Jr. said.
Fifty to 80 percent of Plas-Tool's output is designated for export. By far, the busier overseas markets for its goods now are Pacific Rim nations, he said.
``Our [Chinese] investment was to provide expertise and support for the Chinese and did not involve an investment of capital. Our intent was not to become a competitor.''
``My dad made his first trip [to China] 15-20 years ago; he was involved in one of the first trade missions and has been back subsequently a half dozen times. We know all the people in the plastics packaging positions in China. ... They've kept all our materials.
``We've decided when they're ready, they'll come and get us,'' von Holdt Jr. said. He did note, however, ``If industry is starting over there, you have to move, or you'll be left behind.''
``[The Chinese] crave Western technology. The infrastructure is pretty much there, but political things are happening. A lot of the power is transferring from the federal to the provincial governments; rules change every day. If you are a Chinese businessman, it's difficult to make any commitments,'' von Holdt Jr. said.