Guanxia and Wenxian OEM Factories Fined and Forfeited 2.386 Million Yuan, Domestic High-End Fragrance Faces Quality Control Crisis

Well-Known Fragrance OEM Factory Fined for Violations

The administrative penalty decision document “Huzhou Wu City Market Supervision Punishment [2026] No. 93” shows that on February 27, the well-known fragrance brands Guansha and Wenzhen’s OEM factory, Huzhou Kaisen Cosmetics Technology Co., Ltd. (hereinafter “Huzhou Kaisen”), was fined and had illegal gains confiscated by the Huzhou Wuxing District Market Supervision Administration. The illegal income of 100,000 yuan was confiscated, and a fine of 138,567.28 yuan was imposed for multiple violations, including unlicensed production, false labeling, and failure to organize production in accordance with cosmetic quality management standards.

Although established in 2018, Huzhou Kaisen’s official website shows that its client list nearly covers half of the domestic beauty brands. These include well-known brands such as Yangshengtang, Liran, Jiao Se, Red Earth, Ximu Yuan, Chunni Laixin, as well as international and influential domestic giants like Revlon and Yixian E-commerce.

In this violation incident, Huzhou Kaisen committed three major illegal acts:

1. Producing cosmetics beyond licensed scope

Huzhou Kaisen illegally produced “cosmetics not within the permitted categories listed on the cosmetic production license.” The involved products include children’s plaque-visible toothpaste “BBA Le,” YOCHA zeolite whitening semi-automatic toothpaste, Guansha perfume spray, and Wenzhen perfume spray (i.e., Wenzhen concentrated perfume). The total value of these products involved is 942,431.88 yuan, with sales totaling 938,037.88 yuan, and illegal gains of 123,511.28 yuan.

2. False labeling content

Huzhou Kaisen also engaged in “producing labels with false or inaccurate content.” The products involved are FULOVJELL Fragrant Memory Powder Foundation and Laxal Double Essence Brightening Serum. The involved goods are valued at 116,330.2 yuan, with sales of 114,816 yuan, and illegal gains of 15,056 yuan.

3. Unlicensed production of disinfectants (already transferred to health authorities)

Additionally, investigations found that Huzhou Kaisen produced hand sanitizers without obtaining the “Disinfection Product Production Enterprise Hygiene License,” involving two disinfectant products. According to the “Disinfection Management Measures,” such unlicensed production of disinfectants is outside the jurisdiction of market supervision departments and has been lawfully transferred to higher-level health and family planning administrative departments for further handling.

Small Samples, Big Responsibility for Quality

It should be noted that after being fined, Wenzhen told the media that they had commissioned the penalized company to produce a “Wenzhen Perfume Spray” product, which was only distributed as a promotional gift during certain periods, not a long-term product for sale. Upon learning of the supplier’s related production qualification issues, they immediately terminated all cooperation and fully ceased distribution and removal of the non-compliant products.

Clearly, Wenzhen tried to distance itself from Huzhou Kaisen’s unqualified production at the first opportunity, but did not recall the related products.

Currently, some brands often mistakenly regard samples and trial products as inferior or secondary products, leading to lax standards in quality control and supply chain management. They may believe these small-volume products are just “door openers” to attract consumers to buy full-sized products, and thus do not need to invest the same effort in quality control.

However, regardless of whether the product bears the brand logo, whether it is a 30ml perfume or a 0.5ml tester card, it carries consumers’ trust and expectations for the brand. Even if these products are provided as gifts, consumers will not lower their quality expectations, nor relax their standards for the overall brand image.

Samples and trial sizes are “small windows” for brands to establish initial connections with consumers. Once problems occur, it not only causes dissatisfaction with the trial product itself but also extends to doubts about the overall reputation of the brand, potentially losing long-term customers.

In the fragrance industry, many top international brands generally adopt OEM models, but this carries hidden risks: as independent operating entities, OEM factories’ compliance awareness, quality management systems, and production capacity directly determine the upper limit of the final product quality.

This risk has precedents in the luxury goods sector. In 2023, Chanel discovered during quality inspection that a factory in Florence, Italy, replaced the water-based adhesive specified in the contract with cheap latex to cut costs. This violation caused many handbags to have serious craftsmanship defects, failing to meet brand standards. Ultimately, Chanel decided to scrap all 383 handbags from that batch to uphold its quality bottom line.

High-End Brands Face Quality Control Challenges

Interestingly, two leading domestic high-end fragrance brands, “Wenzhen” and “Guansha,” have recently gained strategic favor from global beauty giant L’Oréal Group.

In September 2022, L’Oréal China’s first investment company, “Shanghai Meicifang,” in partnership with Caisse de dépôt et placement du Québec (Caisse), led a multi-million RMB Series A+ funding round for Wenzhen. This was not only L’Oréal’s first venture capital investment after establishing its investment arm in China but also marked its official strategic entry into the domestic high-end fragrance market through capital.

Just over a year later, in January 2024, L’Oréal made another move, with “Shanghai Meicifang” and BOLD, the Group’s global strategic innovation fund, taking minority stakes in Guansha, promising to leverage global resources to help it expand internationally. These two major investments demonstrate L’Oréal’s strong confidence in China’s “scent economy” and the rise of domestic original brands.

With capital support and brand storytelling, Wenzhen and Guansha have successfully broken the stereotype of “affordable” domestic products, with pricing strategies even surpassing some international top-tier brands. For example, data from Tmall’s official flagship store shows: Guansha’s core product “Treading Cloud Rose” perfume (30ml) is priced close to 500 yuan; while Wenzhen’s “Flexible Thorns” concentrated perfume (30ml), positioned as ultra-high-end, sells for as high as 980 yuan daily, often above 900 yuan even during promotions. In comparison, Chanel’s classic 30ml perfume generally ranges from 800 to 900 yuan. This means these emerging domestic brands have already achieved per-milliliter prices exceeding traditional luxury brands, demonstrating remarkable brand premium power.

This phenomenon reflects a profound transformation in China’s fragrance market: consumers are no longer blindly following international brands but are willing to pay high premiums for unique Oriental cultural narratives, high-quality raw materials, and exquisite design experiences. L’Oréal’s continuous investments and high-end sales confirm their strong confidence in China’s “scent economy” and the rise of local brands.

In offline marketing, Wenzhen’s “Xitang” uses intense red to create a strong visual impact and festive atmosphere, with bold, vivid styles that attract young consumers seeking personality and ritual, echoing its avant-garde, artistic fragrance experience, quickly capturing attention and stimulating exploration.

Guansha’s “Xianting” is located in a historic Shanghai old house, emphasizing white space and natural beauty to create a tranquil, elegant, and oriental aesthetic, aligning with the brand’s focus on “Oriental plant notes,” “healing,” and “slow living.” This appeals to consumers pursuing quality life, appreciating Oriental aesthetics and culture, and seeking moments of tranquility amid urban hustle.

However, this OEM factory’s quality control issues are a severe test of such brand identity. When consumers experience the atmosphere created by high-priced fragrances in carefully curated brand spaces, discovering that their trial samples come from unlicensed, falsified-label OEM factories could sharply undermine the brand’s high-end positioning.

Sharp Commentary from Qingyan:

When brands go all out to build a high-end image on the front end, but their supply chain’s quality control and management lag behind, it’s like a beautifully built structure with an unstable foundation—ultimately risking the brand’s value collapsing over these seemingly minor details.

In rapid expansion and pursuit of high premiums, it’s crucial to uphold the original commitment to quality, embedding strict quality standards throughout every stage of the product lifecycle—whether full-sized or samples, core products or gifts. This is not only responsible to consumers but also the foundation for sustainable brand development.

Once issues arise in OEM, even seemingly insignificant trial samples can cause irreparable damage to the brand’s carefully cultivated high-end image. Consumers pay a premium not just for the product but for the promise and experience the brand represents.

Only by extending the meticulousness from store design and packaging aesthetics to every detail in the supply chain can brands stand out in fierce market competition and truly earn consumers’ long-term trust and loyalty.

Source: Enterprise Credit Publicity Platform, JD.com