It's a fact that many of the German makers are competing with Japanese counterparts, some of whom make products in Southeast Asian countries where labor costs are appallingly cheap. I mean appallingly because the wages these people are paid are a shade above slave labor. That's another discussion, of course.
As we know, as Japanese society became more affluent, manufacturing costs rose. There are so many factors that this could just go on endlessly: use of plastics, mass production vs. hand built, individual testing vs. random testing, and on and on.
However, I think the original post presents an interesting idea. Why not combine efforts to develop a product that could be successful and price competitive? Makes sense to me. It would make sense for Leica and Zeiss to jointly develop a digital M camera, for example. Each could still continue to offer their own lenses. But cost of research and development and manufacturing would be shared -- even if the camera is made by Cosina in Japan. Same goes for digital technology in other areas.
I mean, heck, most of Europe was able to agree on a single currency. That in itself was tremendous. I was talking with an Italian fellow a while back, and he lamented the loss of the Lire. I gave him some old bills that I have had for many years. He seemed very grateful.