Do they know that foreign audience find their wholesale copying shameless? Do they need to copy right down to the smallest details? But you poor copies of foreign goods. Instead of copying the same quality, they make the products thinner and use lower quality plastics and they never seem to test for endurance. After one week of use, they break.
The shoes look good and cheap, but last only three months because the heels are hollow with a thin sheet of rubber. Garden shears that rust after three to four months so that they seize and becomes unusable. Selley's shears, though costing double, rust only slightly and I am still using it after more than ten years. So, actually the Chinese goods end up costing more.
You need to understand something: it is not the producers decide what and how to produce, but rather the consumers.
In a free market--for consumer goods China's markets are largely free and experience very little government intervention. E.g. the government won't interfere with what phone, computer, car, or diapers you buy--these decisions are made by the consumers.
In any economy there's three and only three fundamental questions: WHAT to produce, FOR WHOM to produce, and HOW to produce. In a free market, the price mechanism solves all of these questions assuming everyone maximizes their own interests.
What to produce? Those goods that can make a profit. As demand increases, prices will increases if supply remains same, hence this signals to the producers that more people want this good, therefore they'll produce more of it.
For whom to produce? Those who can afford it. It's simple.
How to produce? Produce using the most efficient method. This simply means that producers will cut down costs and corners in order to maintain or wider their profit margin.
Now let's tie theory back to reality. You got to know that although many millions of Chinese has gotten rich or at least richer, many other millions are barely making their ends meet. Their priority in terms of purchasing a good is vastly different from that of Western consumers. If a good is good enough to at least fulfill its role relatively well, and if it is cheap, there's going to be a huge market (the poorer people) in China with a population more than the whole population of US to purchase it.
Let's put it this way. These firms who produce these goods are making profits producing such low-quality goods, and as long as there's a market for their goods and they can maintain this profit, they'll have little to none incentive to improve upon the quality of their goods. If they try to do so, they'll increase their costs of production significantly and without a high demand for the improved goods, they'll lose out to competition. Furthermore, such firms are usually small and competing in a monopolistic competitive market (many small firms), hence they do not have the means and resources to invest in R&D as well. On the other hand, if the demand shifts from low-quality goods to higher quality ones, they'll HAVE to improve otherwise they'll be wiped out of competition.
Hence, this explains why those industries exposed to a high degree of foreign competition improves the most in quality of their products.
Take the example of Personal Computers (PC). China's home-grown producers were faced with competition from international brands like HP and Dell from the start, and today Lenovo, China's home-grown brand, is the world's largest PC vendor and the quality of their computers are often praised even in the United States.
Another example will be Huawei. Due to the nature of the goods they produce, which is network gears, they don't face normal consumers but rather corporate or government clients. Thus price leverage becomes less of importance and quality and services are top priority. Today Huawei is the world's largest network gears producer, exporting gears to over a hundred countries/regions, including some of the highly regulated and highly quality-prioritized markets in Europe.
