This model is definitely better at serving niche markets. For example there are phone manufacturers in China that don't follow the silly trend of making phones

This model is definitely better at serving niche markets. For example there are phone manufacturers in China that don't follow the silly trend of making phones slimmer, more fragile and with smaller batteries. Another example are mini notebooks like the GPD Pocket and its many clones which you can (could? haven't looked in a while) only get from china. I'm a happy user of both product categories and don't think any western company could have been convinced to build these. The market is just too small. Since I find myself in these small markets quite often (I love robust/rugged devices, phones with hardware keyboards, open hardware, ...) that's a super useful development for me. And I think there are more people like me, maybe with different wishes, but in similarly small markets, that would profit from more product diversity and easier customization of products.