A variation of "The Tragedy Of The Commons"
What you have is a bunch of companies trying to produce products for the smallest possible price in an effort to keep their respecticve CEO bonus's at record levels.
To do this they cut costs in every manner possible, and this includes the purchasing of raw materials.
Then you have a large supplier of those raw materials who comes in and undercuts all the other suppliers, causing all the companies using the raw material to beat a path to their door in order to get access to the material at the cheapest possible price.
Because nobody is buying from any of the other suppliers they all go out of business.
Of course now that China has a monopoly they can go ahead and jack prices up.
Naive? Not really. It's more about companies being focused entirely on the short term status of their balance sheets, which is a disease that has infected almost the entire Western world these days.
Russia tried the exact same thing only in the international shipping market in the 80's. They almost succeeded in gaining a worldwide monopoly back then before the Berlin wall fell.