Chinese investors pour cash into the Glass City of Toledo, Ohio

Chinese investors are pouring money into 'little old' Toledo, a city that has forged unlikely relationships that have become the envy of major centres

PUBLISHED : Saturday, 28 December, 2013, 4:39am
UPDATED : Saturday, 28 December, 2013, 4:39am

The realisation was as surprising as it was momentous. Toledo, long known as Glass City, needed glass, and it could no longer be manufactured locally quickly enough.

So Toledo turned to China to make the 360 panels, weighing 589kg each, that were needed for an extension to the Toledo Museum of Art. Some in the fourth largest city in the state of Ohio resented the move after China supplanted the United States as the world's top glass producer. But in the process, city leaders began an improbable and remarkable relationship.

Over the past seven years since the museum project was completed, the ties between Toledo and China have flourished. Chinese companies have paid more than US$10 million for two local hotels, a restaurant complex and a 69-acre waterfront property. Mayor Michael Bell has taken four trips to China in as many years in search of investors. His business cards are double-sided, in English and Chinese.

Huaqiao University in Fujian province, one of the mainland's largest higher-education institutions, recently signed an agreement to open a branch in Toledo.

There have also been preliminary talks between local officials and a Chinese company about an arrangement in which industrial tools would be produced in China, shipped for assembly in Toledo and labelled "made in the USA", which would allow them to be sold at a premium.

Toledo has also reached a deal for rarely seen Chinese antiques to be shown at the museum next year, and there are plans for the city to host a Chinese technology trade fair at its convention centre. More than 100 Toledo businesspeople have travelled to China in recent years, and hundreds of Chinese investors have been welcomed in return, treated to special performances by Toledo Symphony Orchestra members.

"For little old Podunk, Ohio, it's been pretty phenomenal what we've been able to do," said Dean Monske, president and chief executive of the Regional Growth Partnership, a local economic development group.

Toledo is hardly the only American city to make common cause with China.

Chinese companies made US$12.2 billion in direct investments in the United States during the first nine months of 2013. That is up from US$7.1 billion in all of 2012, which was itself a record at the time, according to the Rhodium Group, a New York-based consulting company.

Chinese investors have been snapping up commercial and residential real estate in financially troubled Detroit, and have agreed to finance a US$1.5 billion waterfront development in Oakland, California.

In April, on a trade trip to China, California Governor Jerry Brown discussed Chinese investment in the state's troubled US$91 billion bullet train project.

Brown and the business leaders who joined him were trying to rebuild the state's official relationship with China after it closed its two trade offices on the mainland and others around the world a decade ago to cut costs.

Oklahoma, South Dakota and Tennessee have also increased their push for Chinese investment. But Toledo, a largely blue-collar city of about 280,000 people, appears to be punching well above its weight at a time when mayors from Philadelphia to San Francisco are returning from China empty-handed.

"They looked on a map, figured out where we were sitting and saw the benefit," said Bell, a gregarious former University of Toledo American footballer, referring to Toledo's location near a number of large cities in the US and Canada. "They could see that this town needed to be helped a little bit, and that it could be on the upswing - that there was potential, that they could do something, that it could be incredible, and it would not probably take a whole lot to do."

After their initial approaches, the city's government and business leaders began pitching the fung shui of Toledo, where wind meets water. The city is a major transit hub, crossed by railways and highways, and has the busiest general cargo port in the Great Lakes region.

Housing is affordable, and the abandoned factories, including those where windows, bottles and windshields were once made and shipped around the world, mean there is plenty of space.

The city's informal "handshake culture" has also helped, Chinese and American business officials said, as deals that might fall apart amid the bureaucratic machinations of a bigger city can be completed in Toledo in a matter of weeks.

Simon Zhixin Guo, who recently moved to Toledo with his family and owns the Park Inn Toledo hotel and other properties, has been instrumental in introducing Toledo officials to influential counterparts in China.

Guo's long résumé includes stints working for Rong Yiren - an industrialist and financier, and later a vice-president of China, credited with opening the economy to Western investment beginning in the late 1970s - and as a translator for government and business officials, including former US secretary of state Henry Kissinger.

"When you think about the US, you can't just think about New York and Los Angeles," Guo said recently as he sat in a conference room at the offices of his company, Five Lakes Global Group. "Don't get me wrong, LA is fabulous. New York is great. But if you want to connect with American life, it's Toledo."

Mayor Bell said he had tried to educate residents about the need for foreign investment and the importance of building personal relationships. Business leaders say they do not anticipate much change once Bell leaves office next month and is replaced by D. Michael Collins, a former City Council member. Collins said he had no intention of changing course, although there has been some criticism of some of the land purchases in the city.

During one of his visits to China, Bell said, he and other officials were enjoying a gathering at which the drinks flowed freely. At one point, his hosts presented him with two more glasses of baijiu, but this time the spirit came with something extra. One glass contained snake blood; the other a snake's gallbladder.

With a potential investment on the line, the mayor recalled, he grabbed the glass with the gallbladder and nudged the snake blood over to Monske, who was a deputy mayor at the time. Each swallowed his drink in a gulp, leaving the hosts with mouths agape.

"The guy sitting on the other side of the table said, 'I've lived in China all my life, and I've never done that one'," Bell said. The mayor, who has a habit of sealing friendships with a bear hug, became an instant celebrity as news of his exploit preceded him from city to city on his tour of China.

"The people travelling with me told me at the end of the 10-day trip, 'You know, giving hugs - that's not protocol'," Bell said. He asked, "Then why did you let me do it?"

Bell paused before adding that his aide had responded, "Because it was working."

"The interesting thing," Bell said, "is they'd started hugging me back."