It's all about the Dollar. If you can produce a product that's similar, for a cheaper price people will go buy it.
Is the cheaper price worth it?
In a small town when you buy something from a local vendor the money will spread throughout the village and all within that village will prosper. Jobs are created. However, the sad truth is...it doesn't matter if the manufacturer is from your village. We now can easily extend past the village. The enticement is powerful. Even if they are a friend or neighbor people will now quietly buy the cheaper product to save money. Even though it will hurt the local economy and possibly put your friend out of business, it doesn't matter, there is NO loyalty to do so.
I believe that people would buy product from the Devil himself if it was a cheaper price. A short sighted view with no consideration of long term effects.