Dear Hardware'ish Entrepreneurs: Some Questions

With the explosion of all the affordable Consumer Electronics crap pouring into the world, I'm curious as to how the engineering end of it all is happening. I'm a s/w guy through and through. I have a grasp of physical, EE, materials, chemistry, and such, but I don't know how h/w gets produced in tandem with s/w development. Nor (and more importantly to me), I don't understand who has the power in the production flow.

Do product people and s/w engineers sit down with designers, build specs, and email them to some firm in China to have the product built, then contract with a local (US) embedded/firmware engineer to build s/w that gets burned into the chipset somewhere that just talks HTTP (99% of the time) between the devices and Skynet? Does China build the firmware too?

Are ideas coming from embedded/firmware engineers and products/companies growing up around them?

Are the embedded/firmware people commoditized labor that lack "creative class" status? Or, on the contrary, are they new Kings?

Having lots of thoughts/questions around how this glue/binding between the server-side software running in Skynet somewhere, is occurring, and who the players are.

Not meaning this post to be a big "homegrown-in-the-US" vs. "China will run the world forever" thing. I get that there are firms doing everything here at home in the US, and that there are firms... not.

Nor is this post about true hardware/electronics science. I'm curious about relatively commodity logic applied to physical objects. I get that, for example, the true creative science behind getting the chemistry right for plastic going through a 3D printer is hard.