Regulation doesn't have much to do with quality. For example, there's plenty of regulation to make food safe, but almost nothing about making your food high quality in the sense of taste and texture.

You get quality from competition and customers opening their wallets for quality.

Another example: Apple assembles some nice consumer hardware in China. Their quality doesn't depend on regulation.

And also have the proverb, “If you can cheat, then cheat”. I guess it's just part of their culture.