Budding FT's without Western degrees who failed to find teaching appointments in China from afar, so-called backpackers, come to China on L visas solely to land teaching jobs through Chinese agents. Some such agents even accommodate them in their homes, which tend to be based in provincial capitals. So, it is convenient for the agents to get work approval from the provincial education authority for their clients, most of whom will be taking up appointments in minor cities within the province, maybe a ten-hour train ride from the capital. The FAO's in those schools needn't waste time visiting the capital to get work approval on behalf of new FT's, and offer the degree-less new arrivals lower salaries, so school accountants are happy, money saved on the school's annual budget.
Misappropriating the degrees of other foreigners doesn't concern agents nor school FAO's. It's a means to an end, and is not considered a serious matter in mainstream culture here. Anyways, there won't be real teaching. The students are there to be entertained, preferably by white monkeys, who are more acceptable to parents than coloreds!