This is anecdotal, but in the one instance I've had fist had experience with, your assesment of the quality is about right.
I'm sure they'll get better over time though.
As for your point re the high level jobs staying here: That's fairly true right now, but the problem is there aren't that many of those jobs.
'' I'm sure they'll get better over time though ''
Ya see, I am not sure about that.
I have found that the Asian cultures do not rate "technical expertise" as high as "manages many people" and so their engineers get "adequate", maybe even "pretty good" and then either get promoted to management, or leave for a management job somewhere else.
In R&D, you need good entry level guys to do the grunt work, experts to ensure that they are doing good technical work and making good technical decisions, and architects to put the whole solution together in an efficient and well designed way.
Culturally, they have a hard time with that.
One could argue that Japan has a culture that promotes expertise, however, it is a depth expertise that does not lend well to large projects with multiple threads of technology interleaved. Their expertise is great for doing super-detailed design of a particular technology, but less so at broad technology applications.