I have a similar experience manufacturing a kickstarter hardware in China. Although we could ship with a few months of delay, we lost $9k.
Our story was a bit different. We first got to know about factories through a hardware service provider and consultant firm. We decided to continue with two well-known factories, one for molding and the other for pcb and assembly. At some point, we paid $9k to start the final injection. Our project manager in the molding factory made up a story that their email were hacked and someone had intercepted the invoices and that we had paid to a wrong account! He knew we could not follow up the story as we were under pressure and investigating the issue could delay the production for at least a year.
We paid again, this time with a lot of double confirmations in each step. A lot more problems occurred after that. The final quality of the product was different from what we expected and from what we controlled in the factory. So we did not continue with them.
These factories have no control over their staff. There should be multiple points of contact to avoid these problems. Overall, hardware is hard and manufacturing in china is even harder.