iPhone Debuts in China, Faces Down Grey Market

Many readers have complained to me about the high price of the iPhone—an iPhone 3GS starts at $200 for 16GB and $300 for 32GB 3GS. I admit, that’s a lot of dough.

Just be thankful you’re not in China.

China Unicom began selling iPhones last week, marking the debut of “official” iPhones in China. The price tag for a 32GB iPhone 3GS in mainland China: 6,999 yuan, or $1,024, which doesn’t include the service contract. In nearby Hong Kong, a 32GB iPhone 3GS costs $800.

You’d think the sky-high price tag would dampen consumer enthusiasm.

Not so, according to ChinaNews.com, which found about 300 people standing in line to buy the device at China Unicom’s flagship store in Beijing. Of course, this figure pales in comparison to the lines formed at Apple Stores across the U.S. during the debut of the iPhone 3GS.

Even though the iPhone makes its official debut in China, there are a lot of unofficial iPhones out there. iPhonAsia’s Dan Butterfield estimates there’s some 1.5 million grey-market iPhone owners in China, with more than a third of those iPhones running on China Mobile’s Edge 2G network.

China Business Times reported that China Unicom subsidiary Shanghai Unicom will launch an amnesty program in hopes of wooing some of them. Grey-market iPhone owners will be able to sign an upgrade contract with China Unicom that allows them to pop in a Unicom 3G SIM card and take advantage of 3G speeds.

“Those higher prices and the device’s lack of built-in Wi-Fi don’t seem to be as much of a barrier as you might think,” writes All Things Digital’s John Paczkowski. “And if those issues do end up tempering sales a bit, well, perhaps China Unicom can make them up by poaching iPhone users from rival China Mobile.”

Tom Kaneshige is a senior writer for CIO.com. Send him an email at tkaneshige@cio.com. Or follow him on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline.