I agree I thought it was a tiny bit cringeworthy, a bit close to the bone, almost Benny Hill, and jokes like this wouldn't ever be broadcast on UK TV for example, or generally tolerated in your average UK workplace. But there is a reality that the quality of some stuff from China is of low quality. I have had my own experiences, documented elsewhere, that nearly made me close down the manufacturing side of my business as a result. Only last week, I purchased a Chinese laser cutter, distributed locally, and when I looked inside there were bits fallen off rattling around inside, I had to dismantle it and fix it before turning it on. Yes, it's a generalisation, and certainly it just isn't true all the time.
But I'd like to draw your attention to something you said.
The thing about racism is that it's not really about individual comments, it's about more general feelings and harmful stereotypes.
So you talk about stereotypes, and then you state, directly afterwards, regarding the UK population:
People say they aren't racist, but if you talk to them they soon start complaining ... They just assume ... They assume all Chinese people ... they also seem to think ...
Now by your own logic, shouldn't a Brit be equally offended to have been put into a pre-judged stereotype?
I realise, in my own experience, that there are fundamental culture differences, and we all have to try to work with those. However, that should definitely not stifle discussion about it, we shouldn't be afraid to discuss things like the quality of stuff coming from a certain part of the world.
As to a bit of humour, if it did offend you then that is a shame, and we should all be wary of that.
I'd like to ask what you think to an Aussie calling a Brit a Pommie bastard? I've been called that many times, although usually it's a whinging Pommie bastard, a far worse put down if ever there was one. There are jokes galore about it online, including, interestingly enough, loads on a British ex-pat website. As an indigenous Pommie bastard myself, who admittedly does whinge occasionally, I found them really pretty amusing if rather NSFW. I don't take offence, far from it in fact, I almost wear it as a badge of honour, and have no problem in laughing it off, but then Brits are generally good at self-deprecation, something that I notice doesn't always travel well across the pond (so there's a cultural difference for you right away).
It's the culture difference that we should all be aware of, and it's not always appropriate just to say "grow a pair", or to suggest to someone that they should give as good as they get much as some might like to. That's life I'm afraid, you have to make a judgement. However, I do think that there is an onus on both parties to consider whether what is said is meant in jest or has a more sinister undertone, and I really can't think how it can possibly construed that this was meant in a deliberately bad way, although at the same time I can at the same time see that it might possibly offend someone.