I also recall a bunch of articles about Chinese factories - from what I remember, you could still live off the factory in most, but rent would still be subtracted from your paycheck. Lovely - but if you take a look back, not exactly unprecedented.
The worst thing for us is that the jobs left here, went overseas, and now, if they come back, the wages suck - either less or exactly the same as when they left - which, when you factor in a few years of inflation really means the employees are taking a pay cut.
That, combined with the fact that people have moved on (assuming the company even comes back to the original location) means that even with American workers, you still don't have the training and skillset you had when the factory disbanded, so you're really starting from scratch. It does refresh everything and bring in fresh blood, but you can't claim that something isn't lost there.
This applies to pretty much all industries, not just knife manufacturing.
As for quality - we have to stop pretending that the company is blameless here - it's ultimately their decision to allow a crap product on the market. Recently it seems the companies just don't care - they announce layoffs, the board's stock options go up. Ditto with outsourcing and the "damn everything else, we need ever increasing profits" that the market loves so much.
If China gets their shit together - and I think they will because we're giving them the opportunity (if I can be so arrogant) to practice on the shiploads of stuff we're buying from them - we're going to be in for an interesting time.
China is a country that has built the equivalent of the us highway system in the last 10 years and expects 400 million workers to migrate to major cities in the next few years. 25-30 years ago, most people thought anything "Made in Japan" was the worst garbage. They managed to pull themselves out of that hole and I think - given sufficient motivation and resolve - the same is possible for China.