The reason is because corporate suits think engineering and manufacturing are fungible commodities. They don't value it and they see a bigger bonus for themselves by moving manufacturing to china. To them it's all the same but X costs less than Y. Not to mention that the economic central planners have done everything to favor that action from currencies to taxes as well. The reason for has nothing to do with free market and everything to do with unfree market, politics and other meddling combined with the typical fundamental ignorance and personality traits of who rises to the top in political systems such as governments and large corporations.
Are we talking corporate suits here or everyday people? Seems like you've switched back to people who have to be more concerned with having to pay the rent than buying the best made stuff. In that case, look to the devaluation of the US dollar and other economic manipulations from central planning. It's cheap crap that is currently holding people's standard of living together. Sure they may end up spending more in the long run, but they don't have the capital now to buy for the long run. You're not going to find many people driving the lowest priced Kia model because they are just buying on price but could afford to buy a new Lincoln.
The free market demands both, high quality at a low price. There are people who accept more low price than high quality, there are some who demand more high quality than low price. But those are individual decisions made on a case by case basis. When a giant sucking sound in one direction appears or some sort of bubble it means some great force is distorting the market.
As to cheap crap and regulation, when government steps in with regulation, then what is above and below the standard often becomes forbidden. The FDA does that time and time again, and when it's not forbidden to exceed the standards it's often forbidden to use that as a selling point. It is a great way to protect politically favored companies from new upstarts that want to make a better mouse trap. Example? Want to make safe raw milk? It can be done, but it's expensive. Some people will pay that premium. Guess what? It's illegal. Want to test every cow for mad cow for premium beef? That's illegal too, must follow the standard to the letter, no better, no worse.