I still think that some does of realism is missing from the 2 posts above.
The first thing that, say US, firms do is cry wolf and go to their government/senator... to complain.
You must understand that there are laws to trade, and 'dumping' is illegal. Dumping simply means selling things below the cost of production so as to drive incumbents out of the market, then slowly increase prices. China has often been accused of dumping, but up to today has only lost 1 case in the WTO. So Chinese made products are generally not sold at below cost, and do not infringe any trade laws.
However, the US lobbies will still complain: they come in, we can't sell our products because their are cheaper, so we will move our production overseas if you do nothing, and people locally will lose jobs, and they will not vote you Mr(s) Senator. This 'threat' povides an incentive for the politician to do what (s)he can to implement laws to restrict the flow of CHinese goods.
Note it's not only the US and it's not only recently that these things have been happening. The EU recentl;y put quotas on Chinese made t-shirts. The US imposed 'Volunraty Export Restraints' on Japanese car makers in the 80s so as to prevent them from geting a large market share...
The second thing that the manufacturers do is start a campaign against the new imports. Remember the case of poison-laden Chinese tyos? SUre there were a few cases of these, but in some cases, the US companies later apologised to the Chinesegiovernment for besmirching their name, and admit for example that they toys were withdrawn because of a design fault, nothing to do with the Chinese manufacturing process.
"Mattel has increased audits and testing of all products. In Aug 2007, CEO, Mr Robert Eckert said, “We were let down, and so we let you down,” while referring to the three massive product recalls for lead contamination of paint.
On September 21, 2007 Mattel’s Executive Vice-President for worldwide operations, Mr Thomas Debrowski, travelled to Beijing and in a meeting with China’s product safety chief, Mr Li Chanjiang, took full responsibility for the magnet recalls and said that, “vast majority of those products that were recalled were the result of a design flaw in Mattel’s design, not through a manufacturing flaw in China’s manufacturers.”   Reading a prepared text, he continued, “Mattel takes full responsibility for these recalls and apologises personally to you, the Chinese people, and all of your customers who received the toys.”"
please rad: http://en.wikipedia.org/wiki/Mattel#2007_Product_recalls
and the following 2 sections.
There's also the 'sweat shop' argument whereby workers are forced to work under deplorable conditions... But think about it. The workers have a choice, the conditions that seem deplorable to you often allow them to earn more than they would outside. The reaction would be to lobby to improve the work conditions of these workers, not ban their output and drive them out of work. What you need to realise is that the percentage of the price you pay for a pair of say Nike sneakers in the US, that goes to the worker in Vietnam is ridiculously low. Most of the price goes to US executives, and US advertising agencies. Doubling the wages in Vietnam wouldn't change the price in the US much. (I'm not saying that there aren't excesses -such as children being forced to work - but you cannot use a blanket defence: imports = child labour/quasi slavery... ...)
Of course another method is to argue about quality. US-made is quality, China-made is low quality, so when you are buying US-made you are paying for quality. There's nothing wrong in that, but it should be up to the consumer to decide whether (s)he wants to pay the extra $ for quality. If I decide that I'd rather buy a low quality t-shirt today and replace it after 2 months rather than buy 1 which will last 2 months, it's my choice. Don't you think consumers have a right to choose *especially in a democracy), and if they choose 'cheap low quality imports' it's our choice and we should be allowed to make it. It simply means that the quality manufacturers should, as explained in the posts above, go for the niche of people who are willing to pay their premium for their quality. Also they could improve their quality without increasing the price too much so as to give the consumer better quality for their $. Think about it, swiss atches cost a huge premium over China-made watches, but do you see them as competing for the same $? Or is the quality difference worth the price?
Other things the manufacturer can do is try to cut costs by changing routes to marker (for example go direct to cut middlemen), innovate in the production process to 'keep ahead', relocate some parts of production into cheaper areas: why pay $10 per t-shirt made when you can pay $2 including transport costs for exactly the same t-shirt?
To me, the bottom line is this: let the consumers decide. If the quality is worth the price difference, we, as consumers, will pay for it. We are not newborns who cannot make our own decisions as to what we prefer to spend our hard-earned $ on. The manufacturers HAVE to compete, that means we get cheaper and better products over time, but if they hide behind 'dumping laws', 'voluntary export restraints' and so on, WE as consumers are losing out by paying much more than what we should be paying.
Ultimately, there can be a 'Buy USA' campaign just as there is a 'Buy Indian' campaign in India. But it should still be up to us as consumers to decide whether the difference is worth the premium of buying our 'own-made' products.
To me manufacturer's job is to produce quality at a price. You cannot have best quality at lowest price, there is a whole spectrum to play and position into. R&D, innovation, process improvem,ents, all these are very legitimate responses to external threats and should be a continuous process. The ones who would gain the most is us, the consumers. However, many manufacturers are lazy and keep using production processes from the 70s. They need to change that in order to survive.