I hear what you sayin', Warren, but I still disagree on the "scam" part...

1) Chinese teachers are paid for all 12 months...!

True. But Chinese teachers generally try to make lifetime careers as teachers at their universities. They get the basic Chinese benefits (which foreigners are only starting to see) and operate under a tenure system not unlike Western universities. They tend to be seen as relatively "permanent" employees, and the universities are willing to make some investment in them.

On the other hand, while some foreigners may try to stay at a university for a long haul, most just do a year, maybe two, and then move on. They aren't generally eligible for tenure, and tend to be seen as relatively "transient" employees, so the universities aren't going to sink much in the way of resources into them.

Unequal? Maybe. But Western universities tend to be the same with their short-term teachers.
Scam? No. I just don't see it.