Sam OliverCiting local media's claims this week, the International Business Times states that Apple sold 5 million iPhones to the company at a cost of 10 billion yuan. That means the custom WCDMA phones without Wi-Fi sold for 2,000 yuan, or $293 each.
"The price of the 8G standard iPhone is set at about 2,400 yuan and the 16G may be sold at 4,800 yuan," said Yu Zaonan, general manager of the customer development department of China Unicom in Guangzhou.
To put the 5 million total in perspective, the iPhone maker sold 5.2 million total iPhones worldwide in the last financial quarter.
Apple has reportedly changed its methods and given up dividends on the phone. In other markets, Apple is reported to take 20 percent to 30 percent of profit dividends. But in the nation of over one billion, Apple was allegedly prepared to make concessions: the Cupertino, Calif.-based company will make profits of 1,000 yuan to 1,100 yuan for each device sold.
The iPhone-maker will be forced to compete with China's black market. Smuggled iPhones are common in China, and fetch prices of 400 yuan ($59) to 1,000 yuan ($146), much lower than the asking price Apple will reportedly sell at.
As for China Unicom, the deal is expected to propel the carrier's profits to potentially equal that of rival China Mobile.
Apple's global expansion of the iPhone, particularly in China, is expected to drive the company's profits even higher. While a deal with China Unicom has not been formally announced yet, the WCDMA phone has already received regulatory approval for use for the next five years in the country.
Some reports have alleged that Apple and China Unicom have already agreed to a three-year deal, but representatives from the wireless carrier have been quick to deny those claims.
William Gallagher
Christine McKee
AppleInsider Staff
Chip Loder
Malcolm Owen
29 Comments
Welcome to the real social!
I'm confused as to the black market paragraph. So, are the black market iPhones real iPhones that can be adapted to use for Chinese carriers? Or are they illegally manufactured? So if its a legit iPhone, hasn't Apple made some kind of profit at least? Someone had to buy the iPhone in order to "smuggle" it into China, right?
I thought the production cost of an iPhone was above $59 ... so the black market note seems a bit confusing ... but maybe we are talking of stolen goods?
An older article
China's New 'Love Craze' ? Black Market iPhones
By Aventurina King
Advertisement for an iPhone, in Chinese.
Chinese technology vendors sell unlocked iPhones directly to Chinese consumers, online and in consumer electronics stores.Despite rampant rumors of a deal between Apple and China's largest cellphone carrier, no one knows when the iPhone is supposed to hit China officially. But that hasn't stopped Apple's popular smartphone, known in China as "Ai Feng" ("Love Craze"), from becoming a bona fide black-market hit.
In one Chinese netizen's words: "It's like the whole country has gone iPhone, all my friends have become iPhoners."
The iPhone is readily available in computer superstores in most large Chinese cities. In Beijing's Zhong Guancun, a 15-story mall filled with technology vendors, almost all the stalls are stocked. Two weeks ago, the blogger of Too Many Resources for the iPhone asked several of these vendors whether they could sell him 100 iPhones. They all answered "No problem."
Chinese websites have iPhone fever, too. A search through blog-hosting site Sina returns more than 63,000 posts mentioning the iPhone. There are forums providing instantaneous updates of cracking software (to keep up with Apple's twitchy defense mechanisms) and large support communities -- the largest, bbs.iphone.com, has 170,000 members. Zhong Guancun's homepage gives visitors the Amazon treatment, providing price quotes from various vendors (the cheapest stall, number 1601 B, is selling the unlocked 8-GB model for 3,799 yuan, or $474), starred reviews, Q&As, delivery terms and after-purchase services.
Although these services may look legitimate, the Chinese iPhone market is completely unauthorized. All of the iPhones sold in China are unlocked, and not a single one has Apple insurance or warranty coverage. Although the iPhone is manufactured in China, the device has to sneak around commercial gatekeepers to reach Chinese consumers, taking a circuitous route back to its birthplace.
Most iPhones bound for the Chinese market are first illegally imported into Hong Kong, according to local media reports. From there, workers carry them a short way across the border to Shenzhen (one person can bring in as many as a thousand a day). They are then shipped to all of China's major cities. An alternate, more-direct route is by eBay and international shipping.
Despite Apple's attempts to stem the flow of black-market iPhones by requiring credit cards for purchase and limiting buyers to two iPhones per person, the illegal trade continues. Indeed, Chinese prices for iPhones are at an all-time low, proof of how efficiently these channels provide stock.
The black-market trade started shortly after the iPhone's June 29 U.S. launch. On Aug. 3, a user going by the handle "n000b" first uploaded iPhone unlocking directions in Chinese under the subject "My iPhone can make phone calls." The unlocking method was incomplete, and the phone couldn't receive calls but, as he wrote, "it's better than just having a Wi-Fi iPod."
N000b didn't receive much publicity, and the first wave of iPhones that washed over Shenzhen in the beginning of August still comprised unlocked phones. Stripped of communications capabilities and lacking support for Chinese characters, these devices were glorified, nearly useless PDAs. They sold for $1,200 to $2,400 apiece and weren't much of a hit with Chinese consumers.
New Jersey student George Hotz's highly publicized unlocking feat of Aug. 21 injected some supply into the Chinese iPhone market, and the prices quickly dropped to $700. But by the end of the month, local iPhones still couldn't send text messages in Chinese. And most available iPhones were still not completely unlocked. They could only make calls, not receive any.
The tipping point came Oct. 6, when someone uploaded a text-messaging program to a Chinese iPhone forum. (Text messaging is more important to Chinese than to American cellphone users, partly because mobile phones in China don't have automated voicemail.) The price of an 8-GB iPhone dropped below $500, and Sina blog entries on the subject climbed from one per month to 20 posts per day, covering everything from cracking manuals to love letters. (One forlorn post reads, "More beautiful than a beautiful woman, iPhone I want you, quickly get on the market.")
Although most Chinese iPhones can now make and receive calls, surf the internet by Wi-Fi and download songs, the device still disappoints a good portion of Chinese customers. Blogger Ke Suowo summarizes the shortcomings: Even though local iPhones have a Chinese operating system, sending Chinese text messages is still a hassle. Incoming text messages appear on the iPhone's SMS application, but to send a message, you have to switch to a separate, third-party text-messaging app. To reply to a text message, you have to memorize the sender's number, open the text-messaging program, plug in the number and the Chinese text, and then send the message. There is no text-message forwarding.
Ouch.
Yet these practical concerns haven't cooled China's iPhone fervor. Chinese netizens still douse their posts' praise in exclamation marks and spend hours shopping for iPhone accessories. According to one blogger, the iPhone has become the Chinese elite's way of showing off. Ke Suowo concludes: "All of Apple's products make me both love and hate them, but I still deeply love Apple, because it stands out the most."http://www.wired.com/gadgets/miscell...1/iphone_china
China's market of 1 Billion is not really that larger, most of the country can barely put food on the table each week, only about 10% of that markets has the means to buy a luxury like a cell phone.
On the black market thing, there are knock off being made as well as the real thing, China has GSM service providers in the country not just the big Unicom so you can use the current iphone.Apple will not get the entire market since knock off will get some since most people will not want to pay for the real thing, and China as a large population of people with new found money who want to have the real thing verse the knock offs, that is Apple market.