I don’t need to guess. I know from having been to China and having talked to people.

It’s mostly a combination of 3 things:

1. Tons of infrastructure. If you decide to start manufacturing some random thing you can easily get all the stuff you need to get started.
2. Regulations are generally very favorable to small startups and businesses. This is partly why so much of the stuff on Temu is crap.
3. A huge population. That’s the main source of ultra cheap labor. Farmers in rural China can still make as little as $1.90 per day. All a factory owner needs to offer is more than that and they’ll have a line of applicants.

The thing is that it’s not PURE crap.

It’s kind of like going to a flea market. Most of it is crap and you can still find some decent and good stuff that’s way cheaper than it should be.