1. When a protectionist market is created, global companies generally tend to avoid competing in them. What this means is that the local companies producing the protected goods are generally one-market only. They're only interested in the protected market and know they're shielded from foreign competition... less competition == less incentive to make world class products. And new firms will not generally target the captive market created by regulation unless they know the regulations will stay that way for many decades to come.
2. If you can create regulations to keep foreign competitors out, you can also use regulations to keep domestic competitors out. This is a favorite strategy used by bigger corporations in countries with lax implementation of laws, but strict laws on paper. Just threaten smaller firms that they will be sued and take them over.
As an example making a PCB with a nominal impedance spec. A domestic company will take that to mean you want full testing and careful analysis. A foreign company will quickly rough out a stack up and send you the boards.
Because my impedance spec was nominal and not critical the foreign company is the correct approach.