My daughter spent last year teaching in China. She says Chinese made goods are, in most cases, actually the same price or even cheaper in Wal-Mart than in China. China subsidizes their exports for a reason.
Goods sold in China are collected value added tax at a rate of 17%, which export goods are relieved of.
Your daughter is right. A decent polo-type shirt from Old Navy is $15. A similar quality polo-type shirt in China is $20. Distribution in China is in the Stone Age, relatively-speaking. At the same time, I should say that Wal Mart quality items are considered high quality in China. Goods made for Chinese consumption have way lower standards, because that's all they can afford on 1/8 the wages. For instance, paper thin T-shirts are routinely sold for $1.50 in places like Wal Mart, and ultra-basic sandals are $1 a pair.