China has been going the same way. They are now capable of making very high quality products. Taiwan went down the same route, South Korea too.
In the long term, it's not China that has a problem, it's complacent western manufacturing companies. It's not just a failure to innovate. Some have used their market power to exploit consumers such as the US vehicle manufacturers pushing people to 'trucks' because it served their own interests. They abandoned the small (read sensible) car market. Top selling car recently in Brazil was the BYD Seagull - knocking Ford off.