Raise the pay. I get that at a small scale that might not be possible, but if it isn't that just means they don't have a viable business, at least in their current location.
More expensive than made in China, though with the moral price of supporting sweatshop factories. "Too expensive" is a value judgment. Maybe they could get their customers to accept a higher price, or find other customers who are less price-sensitive or will pay for something they can provide that China cannot.
There is no doubt they know more but no matter the business, if you can’t keep employees you either need to pay more or make the job more attractive in some other way and if you can’t do that and still make a profit then you don’t have a viable business.