Yay and nay. That's only for very small manufacturing stuff. To assure the quality control and lower the price, it will eventually head to the large scale factory. The difference between what happened before and now is that, the minimum order quantity has gotten so low (thanks to CNC and computerization etc), now bigger factories can even handle MOQ down to 100.

I would advise you against going to those smaller factories -- QC is a nightmakre. Problems will arise. When you go to Canton fair or Yiwu for trade shows, I always, always, always recommend you to make a factory visit, and for the first batch, have a reliable Chinese person you trust to fly there and do the QC (if you hire someone that you barely know for QC, the other side might just bribe him off) and you will end up getting garbage when it gets to Long Beach port.