If you make it in China, don't plan to sell it in China!

A recent article by Simon Pitman in Cosmetics design-europe reported that Chinese consumers are increasingly unwilling to pay more for foreign cosmetic's brands (and, presumably, perfume.)

While Pitman cites several reasons for this trend -- revealed in a report by Vincent Chan -- one possible reason is pretty obvious: most of our (U.S.) consumer goods are made in China and the push to use of Chinese facilities to produce more and more consumer goods in accelerating.

For many years China has provided raw materials for perfume and cosmetics. China currently provides packaging components for both mass market and "prestige" perfume lines. Why would someone in China pay a premium price for a Chinese-made item assembled in the U.S. or Europe and then re-exported to China? It doesn't make sense.

The implications of this trend are vast. Companies that are looking at China as a huge, untapped market may find themselves out in the cold because of the price structures they wish to impose on Chinese consumers.

Think of China as a giant Wal-Mart forcing small competitors to close and large competitors to (with great pain!) match the everyday low prices charged by Chinese companies to Chinese consumers.

Perhaps the best strategy to survive the growing dominance of China in the market is to (1) get absolutely fixated on product quality and (2) knock yourself out to provide far better service than any competitor.

Funny how these two strategies work well for small U.S. and European companies -- and individuals -- trying to sell their own perfume under the noses of the dominant perfume marketing giants.