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China Unicom's e-commerce partner Taobao.com has only been able to sell 5 iPhones since launch.  (Source: China Unicom)
To say that the iPhone is a flop in China is to put it mildly

China is arguably the world's biggest potential electronics market.  If you can make a product that's a big hit with Chinese consumers it's almost as big a deal as a hit product in the U.S. -- and China's buying power is expected to only grow even more in the near future.  Thus optimism was high when the iPhone finally launched in China.

However, in the time since, the iPhone has proved an epic flop in China even as Chinese telecoms try to defend their weak sales.  China Unicom, the phone's carrier only managed to sell 5,000 handsets in the phone's first few days, far less than at equivalent launches in the U.S., UK, France, and Germany.  While the telecom says it is satisfied with the phone's sales performance, the numbers are disappointing for a phone that has burned up international sales charts.

One major problem is price.  The phone is available in China for 6,999 yuan, or $1,024 without a contract, but can be purchased much cheaper in Hong Kong's so-called "grey market".  The grey market cost in Hong Kong is approximately $800.  Sales were also hindered by the exclusion of Wi-Fi from the phone, following China's ban on the standard, which it was trying to replace with its own standard.  Since May China has begun reallowing Wi-Fi, but new Wi-Fi-ready models still aren't available yet in China.

The epic failure of the phone in terms of sales is epitomized by the sales figures just released by Taobao.com, the nation's leading e-tailer and only firm besides China Unicom authorized to sell iPhones inside China.  According to IDG News Service, since the phone launched on the site on November 22, only two 8 GB models were sold, three 16 GB, and no 32 GB models.  That's right -- in an increasingly prosperous and tech-hungry nation of over 1 billion, the country's largest E-Tailer has only been able to sell 5 iPhones.

In its report IDG says that difficulties with the app store may also be partially to blame for the phone's dismal sales.  Explains the report, "Credit cards are increasingly common in China, but their holders rarely use them to make small payments via mobile phone, local consultancy Analysys International said in a research note.  Credit card penetration also remains low among young people of the sort that would like the App Store, it said. Many Chinese make payments via mobile phone but do so with prepaid cards sold by local carriers. The App Store will need to add new payment options and more localized content to win more users in China."

China Unicom still hasn't given up on the struggling phone.  The company just launched 3G services last month and currently has around 1 million total subscribers.  The company hopes that the iPhone will help drive over 1 million new subscribers per month to the next-generation network service.  Currently the company has over 150 million subscribers on its older networks.  The company is aiming for 10 percent of its 3G subscriptions to be iPhones by three years from now.

In South Korea the iPhone enjoyed a much more enthusiastic launch last week with 60,000 online orders.  That number looks especially pretty when compared to the Chinese total of 5 orders.

Earlier this year, before the launch of the phone, the iPhone made headlines in China for a far different reason.  An employee at Foxconn, a hardware partner of Apple's, reportedly was beaten and tormented by company security officers after loosing a prototype of a next-generation iPhone.  After the ordeal the employee committed suicide.  The company has since paid the family of the victim $52,000 and dismissed several employees.


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Maybe because...
By bravacentauri83 on 12/3/2009 1:54:44 PM , Rating: 4
...the Chinese don't have the money or want to pay for what they are charging?




RE: Maybe because...
By mmntech on 12/3/2009 1:57:53 PM , Rating: 5
Duh. Well, maybe if they threw her in with the phone. I think she should become the official DT iPhone girl.


RE: Maybe because...
By kattanna on 12/3/2009 2:22:25 PM , Rating: 4
LOL only reason i even clicked on this article was to see a bigger pic of her.. damn cute


RE: Maybe because...
By bubbastrangelove on 12/4/2009 9:53:26 AM , Rating: 2
Independently moving eyes are sexy!

=)


RE: Maybe because...
By dtm4trix on 12/4/2009 3:03:05 PM , Rating: 2
quote:
Independently moving eyes are sexy!

Word!!


RE: Maybe because...
By HrilL on 12/3/2009 4:32:32 PM , Rating: 5
It is China. You could get a cuter girl and an iPhone for less than what they are charging. China's monthly average income is around $227 and they want people to spend $1000+ you got to be kidding me if you expect people to spend 3 and half months worth of income on a phone.


RE: Maybe because...
By walk2k on 12/3/2009 4:55:00 PM , Rating: 2
How much for the girl??


RE: Maybe because...
By HrilL on 12/3/2009 5:17:30 PM , Rating: 3
probably depends on how long you want her for.


RE: Maybe because...
By 67STANG on 12/4/2009 2:58:48 AM , Rating: 5
longtime?


RE: Maybe because...
By bennyg on 12/4/2009 11:44:46 PM , Rating: 3
less than the iPhone?

...maybe that's the probrem


RE: Maybe because...
By Yongsta on 12/3/2009 5:18:05 PM , Rating: 4
$227 is because of all the rural people in China. In the cities, wages are a lot higher and there's a lot of people with disposable income.


RE: Maybe because...
By Jcfili on 12/3/09, Rating: 0
RE: Maybe because...
By Alexstarfire on 12/4/2009 12:34:23 AM , Rating: 2
No they won't, cause if you haven't noticed pretty much every phone that doesn't have a subsidy through the cell phones providers has very poor sales. If the cell phone providers don't pick it up then it pretty much has no chance of gaining traction no matter how much better it is.


RE: Maybe because...
By subhajit on 12/4/2009 2:02:51 AM , Rating: 3
I don't know about China but in India, no operator provides any subsidy for any phone. That doesn't stop sell of high end phones like Nokia N97 or the likes. Yet somehow the iPhone sales are pretty low.
I think it's because the brand "Apple" is not as well known or well positioned here as in the case of the US and lets face it, it's the status symbol of brand Apple that sales iPhones in such large volume.


RE: Maybe because...
By Radnor on 12/4/2009 4:46:10 AM , Rating: 4
Why a 1000$ Iphone when you can a have a dual SIM, WIFI, BT, TV, Aphone, HIphone, Noklas and alike.

I have an Aphone and im perfectly happy. Yes, i know it is a knockoff of a clone. But pretty decent for the price none the less.


RE: Maybe because...
By The0ne on 12/4/2009 9:54:14 AM , Rating: 2
At least in cities I've visited in China they don't have phones "cooler" than IPhone. Most are older models. Of all the retailers I visited from my trips last year, and I'm talking about huge stores here (1-5 stories big), they didn't even carry a smartphone. No 8525, no blackberries, just your regular phones.

I think this year might have seen a change in the smartphone, however. That's a good thing but they are still expensive for the average Joe. You're talking about laborers making $50-%100 a month to professionals like engineers making $1000 per month. And since they don't like credit, how long before they save enough cash to be able to pay for one? LONG time :D


RE: Maybe because...
By ksherman on 12/3/2009 1:58:25 PM , Rating: 5
For sure! why pay over $1,000 for a semi-crippled product when you can just go down the street and pick up a fully functional unit for several hundred dollars less? The iPhone didn't take off until it was subsidized and priced near $200-300. Not as many people were willing to jump in at $600 a unit.


RE: Maybe because...
By Headfoot on 12/3/2009 10:20:36 PM , Rating: 2
FIVE HUNDRED AND NINTY NINE US DOLLARS!


RE: Maybe because...
By secretanchitman on 12/4/2009 2:12:17 AM , Rating: 2
hahahahaha best press conference ever! i literally laughed out loud when i saw/heard that from kaz.


RE: Maybe because...
By defter on 12/3/2009 2:13:14 PM , Rating: 3
It's latter. Considering that you can get this kind of phone with WLAN, dual SIMs, memory card slot and replacable battery for $139: http://www.dealextreme.com/details.dx/sku.29240

It's not surprising that Chinese don't want to spend $1000 for the original.


RE: Maybe because...
By ksfa10 on 12/3/2009 2:46:08 PM , Rating: 2
This is what China does best, copy not innovate.


RE: Maybe because...
By sandhuatdt on 12/3/2009 3:00:20 PM , Rating: 5
Everyone started by copying someone and then innovated as they matured. The mighty Japanese electronics and photo industry started as cheap knock-offs of American and European. Later, the Japanese led in innovation and quality. Same for their auto industry.

Then came the Koreans. They started as copycats too. In fact, Samsung and Mitsubishi, both have even the same meaning - three stars or diamonds. Today, Samsung is a premium brand in electronics because of their innovation. In the auto industry too Korean products are now being recognised for their quality and value but they started off as cheap unreliable knock-offs.

Now come the Chinese and manufacturers like Asus and Acer that were bulk OEMs for a long time (read copycats) are now making nicer laptops and other products. Yes, they are still learning but in a decade their brands will become synonymous with innovation.

It's just evolution, the Chinese aren't doing anything new (pun intended).


RE: Maybe because...
By eddieroolz on 12/3/2009 4:33:10 PM , Rating: 2
Amazing how much it changes in 20 years.

We still have 1999-era Hyundais on the road around here. Worth pretty much nothing, but the 2009 Hyundai Sonatas are nice looking cars with high quality.


RE: Maybe because...
By sandhuatdt on 12/3/2009 5:06:11 PM , Rating: 2
Yep. In the US, in the past two years while major US automakers were being rescued from death and even the mighty Japanese were looking to cut costs, one manufacturer was looking to setup a new plant here, very much in the US. And that manufacturer is Kia. Recently, not only did they finish building this new plant but also started production at this facility in Georgia.


RE: Maybe because...
By ShaolinSoccer on 12/3/2009 7:34:09 PM , Rating: 2
I love my Kia Sorenta. One of the best vehicles I ever owned. And believe it or not, it does get good gas mileage.


RE: Maybe because...
By ss284 on 12/3/2009 6:08:46 PM , Rating: 3
Acer and Asus are Taiwanese companies.


RE: Maybe because...
By Oregonian2 on 12/4/2009 12:11:57 PM , Rating: 2
True, but I think (at least Asus) they "outsource" to mainland China.


RE: Maybe because...
By Hieyeck on 12/3/2009 5:14:05 PM , Rating: 2
Damned europeans copying gunpowder, block printing.

Copy and improve. That's what innovation is. If they can clone an iPhone, cram MORE features, and sell it for a fraction of the price, it means something in their process is much improved over Apple.


RE: Maybe because...
By mindless1 on 12/3/2009 7:03:14 PM , Rating: 4
iPhone is made in the orient too, yes? What is improved is cutting out the Apple middleman, avoiding the absurd Apple Tax.


RE: Maybe because...
By The0ne on 12/4/2009 1:47:52 PM , Rating: 2
http://dictionary.reference.com/browse/innovation

China hardly "innovates." They copy. If they were able to innovate the world would really be in big trouble. Thankfully, the people are so fck up it's not going to happen anytime soon.


RE: Maybe because...
By chick0n on 12/5/09, Rating: -1
RE: Maybe because...
By michael2k on 12/3/2009 3:35:23 PM , Rating: 2
Or maybe this?
The grey market cost in Hong Kong is approximately $800.


RE: Maybe because...
By idannyb on 12/3/2009 5:47:23 PM , Rating: 3
Dual SIM is cool but not enough. The pretty on the outside but crippled underneath iClones have much in common. Their UIs are weak and touch screens are unresponsive (often freeze up).

I just spent 10-days touring China and had a chance to demo about a dozen different Shanzhai (counterfeit) iPhone models. More > http://iphonasia.com/?p=8261


RE: Maybe because...
By RjBass on 12/4/2009 9:11:49 AM , Rating: 2
Nice blog piece. Could you maybe go into a little more detail about your user experience with some of the clones?


RE: Maybe because...
By RjBass on 12/4/2009 9:07:28 AM , Rating: 2
lol, look at the reviews, lots of people ordered and paid for their iphone knockoff and never got it.


RE: Maybe because...
By Sazar on 12/3/2009 2:30:11 PM , Rating: 3
China has the world's largest middle-class population and a growing population of newly rich, tech savvy professionals.

I don't think the whole "they don't have money" thing holds true. But in relation to the ridiculous initial cost of a stripped down iPhone, I agree with you completely, they don't want to pay for those ridiculously inflated prices.


RE: Maybe because...
By Hakuryu on 12/3/2009 2:50:07 PM , Rating: 2
I agree, it isn't an issue of not having money, but being able to buy something as good if not better for half the price .

Search Google for 'Popular Science iclone' and you will see what I'm talking about. With China not respecting any other countries patent laws, these things are bound to happen, and if I was Chinese, I'd rather buy a model made in my country if it was available.


RE: Maybe because...
By JediJeb on 12/4/2009 4:59:52 PM , Rating: 2
But aren't the iPhones made by Foxxcon in China?


RE: Maybe because...
By MrBlastman on 12/3/2009 2:52:30 PM , Rating: 3
The power of the Jobs does not translate well to Chinese I suppose. Perhaps due to their restrictive Government policy on Internet access and media the toxic brainwashing aura has not been able to set in there.

I suppose I could say that the Chinese aren't as dumb a fortune cookie as Apple was counting on. :)


RE: Maybe because...
By GodisanAtheist on 12/3/2009 5:34:07 PM , Rating: 3
Yeah, the cult of Mao doesn't like competition...


RE: Maybe because...
By FITCamaro on 12/3/2009 9:08:13 PM , Rating: 4
Having seen phones from 3-4 years ago when I worked for a fingerprint sensor company, Asia had far better phones than the iPhone even then. They had 5 MP cameras, touch screens, the ability to buy products with the swipe of a finger, etc all back then.


RE: Maybe because...
By kmmatney on 12/4/2009 2:36:54 AM , Rating: 1
I'm in Taiwan for a 3 week trip, and I would say that my iPhone is still a lot better all the phones the locals are using. I've compared feature sdirectly with people I'm working with. Their phones technically have a lot of features, but they are hard to use, or just plain suck. And they don't have the useful apps - there are a lot of crap apps for the iPhone, but there are a lot of good ones as well. Maybe gthe average Asian phone has more features than the average american phone, but the iPhone holds it own.


RE: Maybe because...
By KoolAidMan1 on 12/4/2009 7:07:26 AM , Rating: 1
Completely agreed, I observed the same thing when I was in Tokyo last year.

Lots of features, horrible interfaces, and more focused on form than anything. In a nutshell, phones with many hard to use and poorly implemented features with crap UIs on top in dozens and dozens of colors to mix and match with your clothing, that's my impression of phones in Japan.


RE: Maybe because...
By Chiisuchianu on 12/3/2009 3:25:01 PM , Rating: 2
Or maybe they're more intelligent than the average American?

Hong Kong ranks #1, and China ranks quite a bit higher than America.


RE: Maybe because...
By Headfoot on 12/3/2009 10:23:05 PM , Rating: 2
I wonder if Hong Kong's rank in intelligence has any relation to it's #1 rank in economic freedom? Hmmm...


RE: Maybe because...
By hashish2020 on 12/8/2009 8:13:31 PM , Rating: 2
Yes, #1 in economic freedom even though the government technically owns all land, they have universal healthcare that is highly regulated, and they have only public universities

Maybe it has more to do with the fact that small differences in IQ have more to do with random variation and test-retest reliability than anything else


RE: Maybe because...
By ianweck on 12/6/2009 3:34:57 PM , Rating: 2
Get your wang out of my face.


RE: Maybe because...
By Hiawa23 on 12/3/2009 4:12:19 PM , Rating: 2
I know all of Apple's products are way overpriced but those figures are crazy. Who would they pay that? All I need is a phone that rings, no contract, none of the extra stuff. Even if there was no recession, or for alot no depression, that's way too much. What were they thinking..


RE: Maybe because...
By jconan on 12/4/2009 10:28:36 AM , Rating: 2
they already bought an O-Phone/Android so an iPhone didn't make much any sense since the O-Phone more or less had similar features


RE: Maybe because...
By Red Rain on 12/4/2009 1:38:35 PM , Rating: 2
1.they dont need it. there are so many phone stores, with phones and features not available in the US for 2500 rmb and less. 2. China Unicom sucks, China Mobile has superior service by far. 3.the people here are not wasteful spenders, nor do they live on credit.


RE: Maybe because...
By chick0n on 12/5/09, Rating: 0
RE: Maybe because...
By chick0n on 12/5/09, Rating: -1
RE: Maybe because...
By jconan on 12/6/2009 5:00:46 PM , Rating: 2
however on their site the HD2 is only for 480- so it's a no brainer what the consumers would choose http://item.taobao.com/auction/item_detail-0db2-80... but then again i think i'll wait until win mo 7 or android 2.1 updates to come out


RE: Maybe because...
By etrading59 on 12/7/2009 7:33:33 AM , Rating: 1
Dear Ladies and Gentlemen, Christmas sales, there are exquisite gift, here are the most fashionable and most noble gift, please come to order.For details, please consult:
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shoes,handbags.


"We’re Apple. We don’t wear suits. We don’t even own suits." -- Apple CEO Steve Jobs














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