Apple to launch iPhone in China

iPhone is set to debut in China by the end of the year.
Apple’s iPhone is set to make its debut in China by the end of this year after the US company reached agreement with China Unicom, the country’s second-largest mobile operator.

China Unicom on Friday said it would start selling the 3G iPhone in the fourth quarter after signing a non-exclusive three-year contract with Apple. The company said it would not use Apple’s traditional revenue-sharing model and would instead pay the group on a wholesale basis. China Unicom said it hoped the introduction of the iPhone would boost falling profitability. The company said on Friday that first-half net profit fell 42.1 per cent to Rmb6.62bn ($969m) amid heated competition, while revenues dropped 4.3 per cent to Rmb74.51bn. Chang Xiaobing, chairman and chief executive, said he expected iPhones to lure more high-end users who spend more on data services.

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“IPhones will help us to change the structure of our customer base and improve [average revenue per user],” said Mr Chang. The news, which ended months of speculation about a partnership between the two companies, will open up a vast new market for Apple, which has sold an estimated 26m iPhones. The move will put China Unicom and Apple in direct competition with China Mobile, which is set to launch a range of smartphones based on Google’s Android operating system. The world’s largest mobile telecoms operator by subscribers will launch smartphones made by Dell, the US computer manufacturer, China’s Lenovo and Taiwan’s HTC. China Telecom, meanwhile, is in talks with Research In Motion, maker of the Blackberry, and Palm to offer devices. “I fear marketing expenses of the whole industry will rise because of this,” said Marvin Lo, analyst at Daiwa Securities. Analysts doubted how much of a boost the iPhone would provide to China Unicom as grey-market iPhones not tied to any operator are widely available. Analysts estimate 1m-2m iPhones are in use in China, which has nearly 700m mobile users.

Sandy Shen, analyst at Gartner, a research firm, said that, while grey-market imports had proved popular among some wealthy customers, many users have complained about the inconvenience of inputting Chinese characters into their phones, a grave disadvantage on mainland China were text messaging is hugely popular. If the iPhone does prove a hit in China, analysts said, it could revive the Apple brand in the country. Apple’s Mac computers are rarely seen on the mainland.