Revenue is not profit. You can make a TON of revenue selling a bunch of low end phones to a large number of people. Unfortunately, that doesn't translate into profit. The overwhelming majority of the Chinese phone market consists of those purchasing the low profit, low end phones.
That's because in comparison to the U.S., the people just don't have as much income. And that's because the pay is much lower due to the lower standard of living in dollar value. That's why iPhones are made in China, after all.