When I was a kid, Japanese products were visibly cheap and poorly made. American products were also poorly made, but not quite so bad as the Japanese. The quality gap was relatively easy to overcome. The American electronics manufacturers were not very innovative. When Sony came out with transistor pocket radios, American radios were still table top vacuum tube boxes. When the Japanese captured the TV market with integrated circuits, Zenith was advertising the benefits of hand soldered components. Ampex invented the VCR, but couldnt produce the recording heads needed for the home. The Japanese got their reputation by concentrating in quality on a few key industries. By 1984 HP was refusing American made memory chips, because they were so inferior. That triggered a restructuring of industry that powered the economy for the next 20 years.

Interestingly enough, the Japanese had a similar structure to the Chinese with large companies and lots of subcontractors. However, their motivation was to have the subcontractor absorb employment fluctuations and cost squeezes, not to hide violations of quality standards.