A few thoughts:

-~7% annual GDP growth since 1978
-relatively low fixed costs compared to western countries (e.g. housing can be really inexpensive) --> huge increase in disposable income
-members of the 小黄帝 ("little emperor" stemming from the one child policy) generation are accustomed to being spoiled rotten and frown upon "cheapness"

I try to minimize my time in fake markets because the experience is old/boring for me, but whenever I end up in one (either to purchase a necessary item like a belt or to accompany an out of town guest), I always seize the opportunity to observe. In spite of my comments above, I still have a great deal of respect for Chinese women over 40 (who have presumably have memories of what it is like to be poor). And, Chinese people who left China x years ago also tend to be pretty good at the game. Finally, air crews (many of which operate businesses reselling Xiushui merchandise in their home countries) can be just as tenacious.

Meanwhile, pretty much everybody else seems to have no problem being taken for a ride; sure they might pay 25% of the asking price, but this is often still much greater than the night time minimum price.