I guess your Yamaha guitar was made in Kaohsiung, a big city in southern Taiwan (in older models there may also have the words "Republic of China" ).
That factory has been making mid- and low-end guitars for Yamaha since early 1970s and is one of the largest guitar factories in the world.
Some rumor says that Yamaha also has guitar factory in China, although I have never seen the words "made in China" inside new Yamaha guitars so far.
I agree with you that chinese factories are tapping a portion of the market that otherwise would not have access to guitar. However, they get what they pay for. I did own a guitar built in China by Yamaha, long time ago. It was a good guitar, but it was a Yamaha. Your English is fine, you do not have to appologize all the time. Flingdream: Do you work for a guitar factory in China, or own one? Just curious!!
I have heard that statement before from high business people, and it was used as an excuse to get special preference in taxes, disregard copyright laws (or not signing the copyright act, etc.,), and using cheap, almost slave labor.