Why do you assume there is no demand for $50 phone outside China ? Cheap phones are in huge demands in developing countries such as India and Indonesia where per capita income are still very low compared to developed countries such as US and Western Europe.
If there is a 50$ smartphone with decent build quality and reasonable user experience there would be market in the developed world as a second/backup phone. I would gladly buy one for backup. But the problem is that these devices, even though may be functional, lacks in build quality and UI, which makes it a pain to use them after using iOS or Samsung devices.