| Apple officially introduced the iPhone in China last | | | | phone is subsidized only if purchased as part of a |
| week. Through a partnership with one of China's | | | | subscription package, starting at almost 150 yuan per |
| telecom providers, China Unicom, the company had | | | | month. Besides the fact that such subscriptions are not |
| hoped that its launch here would be as successful as it | | | | very popular in China, it simply makes the phone too |
| was in the US and Europe. Sales have been very | | | | expensive compared to its fake or smuggled |
| disappointing however, with only 5,000 subscribers | | | | counterparts. Most people will always prefer a real |
| signing up so far. To many, this comes as no surprise. | | | | product as opposed to a fake one. Many will consider |
| There are two camps among those that have been | | | | paying more for it, if the price is right. In this case, the |
| following Apple's plans in China: the optimistic, fair | | | | price is not right - as a fully functional and identical fake |
| weather analysts that remain convinced the iPhone will | | | | iPhone costs one tenth of the original phone sold by |
| do well; and the more cynical camp where general | | | | China Unicom. |
| opinion is that Apple should be lucky to sell any iPhones | | | | Price differences are not the only problem caused by |
| in China at all, considering the amount of fakes that | | | | fake and smuggled goods. The nearly year-long |
| already flood the market. | | | | exposure to the iPhone that the Chinese market has |
| There is some truth to both sides' arguments but as | | | | now had suggests that the iPhone's potential market |
| always, it is important to realize what exactly is going | | | | share is going to be capped at a far lower percentage |
| on here. First of all, let's look at the deal Apple made | | | | than it otherwise would, simply because most people |
| with China Unicom to distribute and sell its phones. | | | | who would want an iPhone already have one by now. |
| While the introduction of the handsets in the US and | | | | The phone is no longer a novelty. It is a very small |
| Europe was based on a revenue sharing model that | | | | group of people that said, back in 2008, "No, instead of |
| split profits between Apple and its telecom partner; in | | | | buying an iPhone abroad or a fake one in China, I will |
| China, Apple has basically just agreed to sell 5,000,000 | | | | wait one year for the phone to be introduced here |
| iPhones to China Unicom at a price of 2,000 yuan per | | | | officially, and then pay 5,000 yuan for one". |
| unit. This is a clever strategy by Apple to reduce their | | | | The more optimistic analysts seem to have a lot of |
| risk, because if China Unicom can sell 5 million phones, | | | | faith in the Chinese consumers. Surely, in a market of |
| they know their product works. On the other hand, if | | | | 700 million mobile phone users there is enough room |
| they do not, Apple still walks away with a 1.5 billion | | | | for the real iPhone, especially when as China develops |
| USD deal. So, in breaking with their traditional way of | | | | and GDP increases, more and more Chinese |
| doing business, Apple must have realized there was | | | | customers will see the merit of owning a genuine |
| some risk associated with the iPhone introduction in | | | | product? They look at numbers and see such |
| China. | | | | staggering figures that even if just a tiny percentage |
| This risk, of course, lies in the knowledge that there | | | | of those were to go towards Apple, the profits would |
| have been millions of 'iPhones' in China for months prior | | | | still be great. The good news for these people is that it |
| to the official launch already. Many of them bought in | | | | seems like Apple's initial target of 5 million sales was |
| the US or Hong Kong, but most of them nearly | | | | already reached before the official launch date. |
| identical copies produced in China and sold at a | | | | Whether these phones will ever make it to the |
| fraction of the price that the real ones are now going | | | | customer (or remain in a China Unicom warehouse for |
| for. The iPhone is being sold by China Unicom for | | | | years to come), remains to be seen. |
| 5,000 yuan ($732) or more in a standalone deal. The | | | | |