iPhone Big in China

But Apple has not released it there yet. See in above picture: aside from the obviously Chinese labels, notice that the network bar doesn’t show AT&T.

As I said in an earlier blog, China is one of the biggest knock-off markets in the world. Aside from that, they are also considered one of the biggest smugglers.

Factories in Shanghai, China produce millions of gadgets each day: from laptop computers to flat screen television sets, to the latest in mobile technology: the iPhone. Out of the hundreds of thousands exported to the United States and Europe, a lot are smuggled right back into the mainland; a lot more are then sold to other countries in the region.

Apple has been struggling to confine the hot product in US and European markets. The initial plan (actually still the existing plan) is to slowly introduce the product to the global market. Part of that plan was to build exclusive partnerships with mobile networks (like that in the United States with AT&T), where Apple will also be gaining profit from the mobile network provider (with AT&T it was reported to be $120 per customer per year). But the world just can’t wait. People from all over the globe are itching to get their hands on an iPhone.

For almost half a year now, people from around the world with access to the United States like tourists, small businessmen/women and, of course, “smugglers” have been purchasing iPhones in the US for shipment overseas. They buy iPhones in 10’s, 20’s and above. So much for personal use!

This helps explain why there is a large discrepancy between the number of iPhones Apple sold last year and the number of iPhones actually registered on the mobile networks of the United States and Europe.

Sellers in China use the same technique: they have someone buy them in the United States and have them shipped or brought to China by airline passengers. Chinese tourist groups or Chinese airline flight attendants reportedly get paid around $30 for every phone they deliver back to sellers.

Upon arrival in China, these phones are “jailbreaked” or “unlocked,” since they are only supposed to work with the AT&T network. This can be done in minutes (you can check the web for further info).

People in China reportedly pay upwards from $450 to $600 for an iPhone (which sells for $400 in the United States).

In related news, negotiations between Apple and China Mobile did not pull through. China being the most populated country, China Mobile is considered as the world’s biggest mobile service operator with approximately 350 million subscribers. Sources say China Mobile cited the revenue sharing component of the deal as the main cause for the breakdown.

They can’t fight the figures: based on a recent report from market research firm In-Stat, 400,000 Chinese mobile phone users have the iPhone – and yet the product hasn’t even been introduced in their market. So why does China Mobile have to pay Apple extra for a non-existent exclusivity? China Mobile is already earning from iPhone users under their network — with or without Apple — and yet Apple is asking for revenue sharing.