Apple Readies iPhone for Launch in China

After months of speculation, Apple (NASDAQ:AAPL), the world’s leading consumer electronics firm, is expected to officially launch its iPhone in the coming months in China and tap one of the last major phone markets the company has yet to penetrate, the WSJ reported on Wednesday.

Apple must still finalize negotiations with wireless operator, China Unicom (NYSE:CHU), which is expected to carry the iPhone, but analysts say those talks are nearing conclusion.

Cynthia Meng, an analyst for Merrill Lynch in Hong Kong, said in a report, according to the Journal – that she expects the iPhone to launch in Q4 this year, in conjunction with Unicom’s planned launch of 3G in October. As you may recall, about two weeks ago China Unicom’s Guangdong subsidiary revealed that the operator had purchased five million iPhone handsets for $1.5 billion. Shanghai Securities News, also within that approximate time-period, reported that China Unicom had signed a three-year agreement with Apple for distributing iPhones exclusively in mainland.  China Unicom however, dismissed the news as a rumor, saying that the two parties were still in negotiation and declined further comment. Well, it seems those rumors are about to materialize with iPhone’s launch in the world’s largest mobile market, possibly as early as October.

The release of the iPhone in China will not however,  be without complications for Apple. The company has faced regulatory hurdles to launching the iPhone, including having to comply with a government rule in China that requires the removal of the device’s wireless Internet function.

While the Chinese market is attractive to Apple because it has almost 700 million cellular subscribers, it may not be a profitable one to do business.  Besides having to contend with the predominance of piracy in the mainland (China has a thriving underground iPhone market) — a factor that will most likely multiply as Apple’s presence in the market increases — the Cupertino, Calif.-based company also faces strong competition from other smart phones that are set to launch in China in coming months. In addition, analysts say the iPhone has struggled in overseas markets, where it has faced more competition from rivals. It remains to be seen how iPhone will perform  in the vast chinese market.

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