Hokay...

"I wish you would let us in on how you can afford to 'stand up' for teachers wronged by your employer"...
I don't see how I could afford NOT to.
But I'm not completely sure of in what sense you mean "afford." If you mean financially, then it hasn't been a problem. Sometimes things have worked out; sometimes I've left jobs that were obviously embarking on a program of not performing their contracts. But it's not like it's hard to find a new job here.

"and how you establish in the first place whether they truly were wronged."
This is simple. I listen to both sides of the situation, and I look at the contracts.
If the teacher is demanding something his contract doesn't entitle him to, then I figure the school is in the right and I back them up.
If the school is trying to force something outside the contract, and/or trying to change the contract in their favor in midstream, then I figure the school is in the wrong and I back up the teacher.

As for knowing the circumstances of the problem...note that I've not done these things while working simply as a teacher. But I have sometimes been in the position of DoS or something similar, and the job of acting as negotiator between Chinese managers and foreign teachers has come with that territory. In these circumstances, both sides were more than happy to tell me their side of the case...and this was done in private meetings with each side, not in general department or public settings. So, no one's privacy has been violated.
It's just AMAZING what can happen sometimes when people decide you can be trusted...which is one reason I "can't afford" to not back a teacher who's clearly in the right, when I am in a position to do so. Nor could I afford to not back a school who's clearly in the right.

"Are you saying some employers choose to shaft a laowai teacher?"
Are you saying that no employers in China ever choose to shaft a laowai teacher?
Really??!?!?!?
I find that hard to imagine from someone of your extensive experience in China.
It's pretty obvious that some managers DO try to pull a fast one on their employees- and the Chinese get it at least as bad as we do. Whether this is planning or impulse is to me totally irrelevant...no matter how you slice and dice it, "weasel" is still "weasel".

I do agree with you, though, that most Chinese school owners/managers are hopeless failures as businessmen and administrators, and that they strongly tend to make impulsive decisions that they don't think through.
But I don't think this in any way justifies dishonesty as a means of cleaning up their mistakes. I've seen several cases myself of school owners apparently realizing that honoring the contract terms will cost them some money, or spontaneously envisioning some grandiose new project for the school, and suddenly demanding gross revisions of standing contracts. I don't help them with that. I fight it tooth and nail. I always shall, as long as I'm here and working.