Whilst they are more often in the spotlight, I don't think it's a Chinese problem but a human, and in some cases even an inhuman problem.
Here in Birmingham, UK there have been some quite well documented instances of small factories turning out cheap, fake sports gear bearing famous names such as Nike, Addidas and the like; and in the last month or so, Trading Standards found a small factory producing fake Rolex & Omega watches that were such good imitations the discovery only came after an investigation prompted by a jeweller sending a fake watch to the manufacturer for repair.
A couple of years ago, there was a well publicised 'accident' when a well known celebrity's daughter was badly burned on Halloween night when her costume caught fire and it later emerged that the fireproof label on the material was actually fake.
As for the Chinese, someone has already said, you gets what you pays for, but .. .. .. in business we buy for wholesale trade laundry materials - coat hangers, shoulder protectors, shirt bags, suit bags, tie bags, layflat wrap etc in 20 ft container load bulk from China; the quality is good, the price is excellent and we've yet to find another market that can compete with them.
I think what is at a premium these days is the integrity of the seller, and to a certain extent the buyer also, regardless of the nationality of the source.
MM