Sounds like a lot of you are making judgements about Chinese phones before even trying them. You do realize HTC, Samsung, LG were all thought of as lesser brands just like Japanese cars once used to be. China is making the same in-roads, but at a much faster pace.
Android is an open platform, Chinese manufacturers can make them without worrying about intellectual property such as for Apple's iOS. The only part that Google is tight about is their apps like Google Now, Google Maps, Google Search...etc. So the only cost is hardware, even the design has already been worked out by Apple/Samsung/HTC/LG & other manufacturers, they copy them pretty well. The investments are already made, they may not be the most innovative or new (at least yet). But recently China manufacturers are experimenting with their own designs rather than copying the bigger OEMs.
As for quality, smartphones (just like other electronics & PC components) are commodities now, mainly electronic boards inside, with a glass touchscreen panel. Just like how luxury car makers try to sell you on faux wood, high-quality cow-hide leather, prestige... etc not everyone wants to pay for that fluff, & most don't.
Finally don't forget Apple's products are made in China, so anyone who has worked in their factories can pass the knowledge & manufacturing expertise to a smaller startup and start making similar devices in ShenZhen.