By capturing off-shored manufacturing of Western companies, Chinese companies have acquired some decent "basic" manufacturing know-how/quality at unbeatable prices, often resulting in finished components that are lower-cost than locally sourced raw materials here.

The second-order effect is that other companies can then build on those cheap basic components and integrate into something higher-tech. Initially usually some sort of cheaper knock-off of some idea but constantly improving it while keeping cost cheaper than the Western competitors, reinvesting most of the proceeds into continued development. Eventually the product stands out in its own right and the manufacturer becomes world-class in its niche.

I've seen this a couple times - DJI or Bambu Labs to some degree are imo examples of this, Unitree seems to be another example.