They supply what they think the customer wants most.

The problem is largely created by employers who imagine that all or most customers in China demand a white teacher. This is not the case. On occasion, no doubt, some parent's may complain and pull their child out of the class of a non-white teacher. However the problem is often amplified by panicked employers who quickly feel that their business will fold because of the feelings of a few customers.

When I worked in both language and training centres in Beijing there were quite a few black teachers. I found that parents did not focus on colour but on "accent". Three of my white colleagues, two of them native speakers lost their jobs, because they had "accents", and a fourth white guy from Russia was refused a start by the boss of my language centre for the same reason (The debate about "accents" is another matter that could be discussed in another thread). Many blacks, includng myself carried on teaching untroubled while this was going on. Maybe, Beijing being more developed than most cities in China, produced more discerning customers than other places, because there were other criteria that were more important to most parents in the language centre, including being presentable, punctual and regular.

The spectre of racist parents is often used as an excuse by employers who are often too scared to take what they see as a gamble in employing non-whites.