diff --git a/packages/playwright-test/src/transform.ts b/packages/playwright-test/src/transform.ts
index a6e4ffe5c6..ad19c2d6c9 100644
--- a/packages/playwright-test/src/transform.ts
+++ b/packages/playwright-test/src/transform.ts
@@ -26,7 +26,7 @@ import { tsConfigLoader } from './third_party/tsconfig-loader';
 import Module from 'module';
 import type { BabelTransformFunction } from './babelBundle';
 
-const version = 10;
+const version = 11;
 const cacheDir = process.env.PWTEST_CACHE_DIR || path.join(os.tmpdir(), 'playwright-transform-cache');
 const sourceMaps: Map<string, string> = new Map();
 
diff --git a/packages/playwright-test/src/tsxTransform.ts b/packages/playwright-test/src/tsxTransform.ts
index 77a48f1353..728d7205ea 100644
--- a/packages/playwright-test/src/tsxTransform.ts
+++ b/packages/playwright-test/src/tsxTransform.ts
@@ -124,21 +124,38 @@ export default declare((api: BabelAPI) => {
 });
 
 export function collectComponentUsages(node: T.Node) {
+  const importedLocalNames = new Set<string>();
   const names = new Set<string>();
   const identifiers = new Set<T.Identifier>();
   traverse(node, {
     enter: p => {
+
+      // First look at all the imports.
+      if (t.isImportDeclaration(p.node)) {
+        const importNode = p.node;
+        if (!t.isStringLiteral(importNode.source))
+          return;
+
+        for (const specifier of importNode.specifiers) {
+          if (t.isImportNamespaceSpecifier(specifier))
+            continue;
+          importedLocalNames.add(specifier.local.name);
+        }
+      }
+
       // Treat JSX-everything as component usages.
       if (t.isJSXElement(p.node) && t.isJSXIdentifier(p.node.openingElement.name))
         names.add(p.node.openingElement.name.name);
 
-      // Treat mount(identifier, ...) as component usage.
+      // Treat mount(identifier, ...) as component usage if it is in the importedLocalNames list.
       if (t.isAwaitExpression(p.node) && t.isCallExpression(p.node.argument) && t.isIdentifier(p.node.argument.callee) && p.node.argument.callee.name === 'mount') {
         const callExpression = p.node.argument;
-        if (t.isIdentifier(callExpression.arguments[0])) {
-          names.add(callExpression.arguments[0].name);
-          identifiers.add(callExpression.arguments[0]);
-        }
+        const arg = callExpression.arguments[0];
+        if (!t.isIdentifier(arg) || !importedLocalNames.has(arg.name))
+          return;
+
+        names.add(arg.name);
+        identifiers.add(arg);
       }
     }
   });
diff --git a/tests/playwright-test/playwright.ct-react.spec.ts b/tests/playwright-test/playwright.ct-react.spec.ts
index 5b16f91cb5..9252c4e97b 100644
--- a/tests/playwright-test/playwright.ct-react.spec.ts
+++ b/tests/playwright-test/playwright.ct-react.spec.ts
@@ -240,3 +240,33 @@ test.fixme('should work with stray JS import', async ({ runInlineTest }) => {
   expect(result.exitCode).toBe(0);
   expect(result.passed).toBe(1);
 });
+
+test('should work with JSX in variable', async ({ runInlineTest }) => {
+  const result = await runInlineTest({
+    'playwright/index.html': `<script type="module" src="/playwright/index.js"></script>`,
+    'playwright/index.js': `
+      //@no-header
+    `,
+
+    'src/button.jsx': `
+      //@no-header
+      export const Button = () => <button>Button</button>;
+    `,
+
+    'src/button.test.jsx': `
+      //@no-header
+      import { test, expect } from '@playwright/experimental-ct-react';
+      import { Button } from './button';
+
+      const button = <Button></Button>;
+
+      test('pass button', async ({ mount }) => {
+        const component = await mount(button);
+        await expect(component).toHaveText('Button'); 
+      });
+    `,
+  }, { workers: 1 });
+
+  expect(result.exitCode).toBe(0);
+  expect(result.passed).toBe(1);
+});