I don't own an XRC or Hobbypro 1/5 scale, but I got to drive them both. Naturally, they are as fun as any on-road entry-level R/C I have had the pleasure to drive. Both the XRC and the Hobbypro performed like you would expect a basic R/C to handle...
i.e., poor grip, lots of chassis flex (some bounce, actually, on the XRC it was so bad) and poor brake balance but as a parking-lot basher they are, as has been said, perfect.
The quality is not an issue, in my book. The XRC and Hobbypro have similar design flaws, and it is the design aspect that suffers. FG, H.A.R.M., Lauderbacher and brands like them have a certain passion for their craft, and they have long since worked out the kinks in the design grade of their art. These Chinese knock-offs are worthy, but they are not finished by any means.
After driving the XRC and Hobbypro cars, I was able to take my buddy's 1/5 FG Evo for a spin, and of course you like the $4k Evo better than a sub-$1k Hobbypro or XRC any day. But it's a pricepoint to separate the passionate (read: insane?) and the frugal buyer who doesn't need nor know how to use a tuned racing machine.
However...yes, with enough money, no doubt the XRC and the Hobbypro could be made to compete. There seems to be a shortage of XRC and Hobbypro hop ups for their cars, but since it is a knock-off, no doubt Technokit, Smartech or FG hop ups could be made to work with no or little modification. Can they compete as they sit? Sure. Well? Umm...no, not well. But they can compete. Especially the Hobbypro...it is farther along the kinks-worked-out evolutionary ladder than the XRC, which is clearly made for parking lot fun. I suspect, also, that the XRC will be more difficult to upgrade due to its slight deviation from any known 1/5 scale design I have seen to date. It might actually have more in common with ancient RACO cars than any of the modern 1/5 scales available to us now.
Anyway...my $.02