The Chinese culture of manufacturing industry.
I won't want to use the word 'fake' to demean them.
(1) New factory started to make new product- Chinese manufacturers will use the most inferior material or the cheapest raw material to process into finished goods (FG).
(2) The 'lowest grade' of few batches of finished goods produced. Chinese advertised or lie that this products is of highest grade produce & of good quality. Thus consumers believe & paid higher price for it & got cheated.
(3) After making huge profits from the inferior FG the Chinese will use the profits generated into buying better raw materials now to produce and improve on quality assurance. The remaining profits use to advertised its product loud & big as prove the manufacturer make & sell real goods
The above is just simple process of how Chinese businessmen started out first before making a good reputation for their business.