Sorry, I'm a bit naive in this area.
How easy is it really for a Chinese vendor set up a shell company and build a fly-by-night business to compete with a legitimate seller who has to spend a considerable amount of money? Especially if they are only able to snipe a few sales away from the legitimate company before getting deleted?
As far as I understand, on Amazon you don’t have to compete with legitimate sellers anymore: many of them are simply gone.
If you are a legitimate seller, you want to be able to communicate with store representative. You want to be able to trust that the store wouldn’t suddenly pull the rug from under you without human contact. You don’t want your products to be displayed alongside fakes. It may be considered wiser not to engage with a store that lacks all of that.
Meanwhile, for a fly-by-night shady seller risk and uncertainty is par for the course, so they would remain and scout for new ways to game the system.