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This is not exactly true the contract manufacturers are being paid to learn to make their own phones and they are.

http://www.wsj.com/articles/foxconn-aims-to-fashion-its-own-...

Foxconn is a Taiwanese company

... The factories are still in China, meaning Chinese are gaining the skills and thus creating an industry for themselves

"Making the physical iPhone" is not a very lucrative industry. "Designing and marketing the iPhone and its software ecosystem" is.

Now all they need is a billion dollar marketing department.

It's called Huawei, or Xiaomi.

Xiaomi isn't doing very well these days. Their growth fell off a cliff last year, and is very unlikely to recover to the brief glory days. The smartphone market is going to grow extremely slow from here forward. Xiaomi will end up as just another irrelevant smartphone maker, in a heap of dozens of them like HTC or Motorola.

http://fortune.com/2016/01/15/xiaomi-smartphone-sales-fall-s...

The Chinese are definitely focused on markets with new growing cellphone adoption rather then the US where it is hyper competitive. I don't believe their success here is an indicator of there overall wellbeing.

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