Second Wave of Money-Making in China

Mitch Free is founder and CEO of MFG.com, a global-sourcing marketplace for manufacturers. He writes about manufacturing, trade, globalization, outsourcing, turning a venture into a global business, angel investing and more. Free has given presentations to the Kellogg School of Business at Northwestern University, Harvard Business School, Wharton and the Society of Manufacturing Engineers.

NEW YORK (TheStreet) -- The opportunity for American companies of all sizes to export products to China is huge, and the time to establish brands there is now. Unfortunately, many American companies haven't a clue because our past success is clouding their vision.

The American economy has been so large and robust for so long that most product manufacturers haven't had to think about exporting. In contrast, European companies have a lot of export experience due to the smaller size of their economies.

I saw this made-in-America opportunity first-hand on a recent trip to Shanghai. Walking along a major street called Nanjing Liu, I dropped into an indoor market that locals call Tao Bao City (no affiliation with taobao.com, the eBay(EBAY) of China). The market is known for low-cost imitations of just about anything imaginable, and the quality is pretty darn good. That afternoon, the place was packed with Westerners, not locals, haggling over the prices of watches, purses, DVDs and all manner of electronic gadgets. Some were even buying extra luggage to carry their counterfeit purchases home.

Heading back to my hotel, I checked out an upscale shopping mall called Plaza 66. The likes of Prada, Louis Vuitton, Van Cleef & Arpels and Armani have swanky stores in Plaza 66. You can also find American brands like Luxottica Group's(LUX) LensCrafters, Starbucks(SBUX) and Wrangler(VFC).

It would be an understatement to say some of these stores were full of Chinese consumers buying authentic products at prices higher than in America and Europe. People waited in lines for up to an hour just to get through the door to buy genuine quality. This behavior was telling, given that just a few blocks away, I'd seen knock-offs of some of the same products for less than 10% of the cost of the real thing.