> I wonder why nobody has tried to beat the Chinese companies at their own game. The whole schtick is: take a product that people like, vertically integrate and drive down costs. This is like the purest form of capitalism.

I think there are a lot of different reasons:

1. A lot of those Chinese competitors are involved in extremely intense cut-throat competition, which drives a lot of innovation that benefits a lot of stakeholders except investors (IIRC the term is "involution"). The the US, the investors a almost literal kings and their returns are paramount, and they'll even throw their own country under the bus if it means their returns are higher.

2. The US (in-general) has been letting its manufacturing capabilities wither for decades, while China has been building them up. Even if you wanted to beat the Chinese companies at their own game, the skills, suppliers, and scale to do that aren't available in the US anymore.

3. Working conditions in China are atrocious and pay is lower, which really helps if you're trying to undercut on cost.