Welcome to one of the joys when you outsource things to another company (and this applies across the board, not just a China thing), in reality you have very little control over the other company, Service level agreements only work when you have real power to enforce them, but when a manufacturer basically has all the power because shifting production is so difficult, in the end there isn't much you can do, you can try suing them,not paying them, but all that will happen then is they will retaliate knowing you can't go anywhere else. SLA's work where the one doing the outsourcing has some leverage, for example, if you site host your software on a vendor's cloud or server farm and they screw up, it is a lot easier to find another place to run it (as long as you own your own code and the site place didn't write the code, too...). If you own the tooling and you have the backing of the law and the courts(as you would in the US, Canada and Europe, unlike China) you can shift production, China even if you own the tooling it is next to impossible to move it, lot of places that do that end up creating new tooling from what i have been told by people who do such work. It gets even more complicated with suppliers, one of the things that made lean production work is they shifted from low cost bidding to working with suppliers in a kind of partnership, to allow real control over the quality of the parts themselves (which in Chinese supply chain doesn't exist, supplier and vendor relationships are like GM in the 1950's).
And sure, getting caught short like this happens here, people have been left high and dry when a vendor shuts down, but it happens a lot less frequently, in part because there are both contractual and legal requirements that require notification, to give the outsourcer the ability to find another vendor and shift production (doesn't stop fly by night vendors from the old midnight pull out of town dodge, happens with construction businesses all the time), but this happens quite frequently overseas from what I have seen.
The companies and we the customers are caught in the same bind, because of the nature of this market the company can't/won't operate its own factory, and both of us get the shaft when the supplier goes under or otherwise doesn't do what expected, it is the nature of the beast. If this were a much larger market, for something like tv sets or the like, would be a different story, or Iphones for that matter, there is so much money they you aren't talking about small companies using small factories overseas, very different relationship.
