No kidding--was talking to the local guitar shop owner today and he said one of the reasons is the increased use of CNC in (electric) guitar manufacturing. After that it's all fitting and finishing. In fact China's labor rates are now too high now for truly "cheap" axes, and Indonesia and India are where it's at for the real bargains.
I have a Korean-made ES-335 copy that I picked up in a pawn shop back in the mid-90's for $250. It's amazing how much nicer a brand-new $250 guitar is than that POS.
I also found out how much my '93 Ibanez JEM is bringing on the secondary market and nearly collapsed.
To think it just hangs out on its stand where my kids can wipe their grubby hands on it...
Time to "invest" in a few decent cheap guitars and put the Vai away for safekeeping.