Because it's a form of population control in a country where the average person makes $12 a day for four people to eat off of, and there's virtually no living space. Why do you think WoW gold farming is so popular there? So they can spend 12 hours a day online to make $100 as opposed to 12 hours in a factory of toxic metals to make $15-20.
Frankly, I think the other article said it best- a Chinese agent for the factories said that they produce metals with the budget their foreign people give them. If they pay for cadmium, they get cadmium. If they pay for zinc, they get zinc. But American companies want zinc for cadmium prices- and zinc is four times more expensive. But we don't want to pay that. We want huge quantities for almost nothing, and so long as it meets export regulations, they don't care who it goes to.
They wouldn't make it if we weren't buying it. If we stop buying things tainted with cadmium the way we stopped buying things tainted with lead, dollars speak louder than words. They will stop producing with cadmium if there's no market for it, and our American companies will stop demanding cadmium if we stop buying it. This is the nature of big business. Do you really think these big companies didn't know? All these years? Really? No. Read the original reports- Disney, Claire's, and Wal-mart all said the same thing: "Our products meet all established safety guidelines in the US." They didn't care at all until they got the bad PR, and THEN they pulled the tainted goods off the shelves. This is how they operate.
We could do better than this. I wish there were more local crafters to go into business here with- we could have pooled for supplies and testing together, making it cheaper on all of us.