"Where is the incentive to avoid product failures if no one suffers? Executives are actually being patted on the back for their handling of the crisis."
That's a really good point. As long as everything's going well for the company, they aren't going to change. Money is the most influential entity in the world, and boycotting a product is sometimes the best and loudest way to make a change.
Now, as for why people aren't boycotting Chinese made products after all the serious problems connected to them, it really comes down to people having to change habits and do something that isn't quite as easy as they'd like it to be. Most people don't want to be bothered into doing something that takes time and effort. Checking out companies and products to find out where they're made is troublesome sometimes. This is the same reason we see people not changing their energy-consuming habits, it's even an argument I've heard time and again about why someone's not a vegetarian even though they'd like to be. "It's just too hard". Americans are lazy. Until we're inspired enough to take a stand and refuse to by that toy with lead paint nothing is going to change.
If you want to boycott China, head over to Boycott Made in China. Granted, it's based on Tibetan Freedom, but it's useful nonetheless.