but my question remains... how does American companies, whose entire (or practically entire) production is manufactured in China, avoid those pitfalls?

Good question. Who knows. Maybe have more expensive production in other countries then China, or raw resource import and produce the products yourself. But this is cutting very deep in profits, maybe even impossible as the competition will be a cheaper option for the consumer.

the same cheapening out in materials and corner cutting strategies are applied in North America all the time.

May be so, but within the US there are regulations which are (or should be) checked. There are federal bureaus tasked with this. Doesn't change the fact that many regulations are weird, some non-existant due to loopholes and many regulations are laughable at best compared to EU regulations. But still it's way better then any unregulated stuff from China, or regulated stuff from China but the guy doing the checks got bribed.