Photo: Chinese queue up for iPhones

Despite high prices and lack of Wi-Fi, hundreds line up in Beijing to buy Apple's smartphone

Nobody camped out overnight and the lines didn't stretch for whole city blocks, but an hour before the iPhone was set to make its official debut in China, reporters in Beijing counted nearly 300 customers queued up to buy it, according to ChinaNews.com.

The first sale was scheduled to be made at 6:30 p.m. Friday Beijing time following an elaborate launch ceremony at the "The Place," China Unicom's flagship store. Apple vice president Greg Joswiak spoke at the event, calling it "an extraordinary day."

The line at Apple's all-glass store in the Village at Sanlitun retail development was smaller, but at one point grew to at least 150 customers long, according to a late update on MobileCrunch. Customers at the Sanlitun store told reporters they hoped to get better service by buying directly from Apple.

Although China is the world's largest cellphone market with more than 700 million subscribers, Western press reports have suggested that China Unicom (CHU) might have trouble attracting buyers under the terms of the deal it struck with Apple (AAPL). Due to restrictions imposed by the Chinese government, the iPhones being sold Friday won't have a Wi-Fi receiver.

They also cost from 4,999 yuan ($730) to 6,999 yuan ($1,025) for a 32 gig iPhone 3GS without a service plan. That is 20% more than the 5,700 yuan ($835) street merchants are changing for an unlocked gray-market 32 gig iPhone 3GS with Wi-Fi. China Unicom's iPhones are much cheaper -- in some cases, free -- when purchased with a long-term service contract.  

Earlier this week, iPhonAsia's Dan Butterfield reported that China Unicom is offering an amnesty program to entice the estimated 1.5 to 2 million gray-market iPhones already in China to sign up for its services. Under the "upgrade to 3G" program, owners of older iPhones can sign a contract and pop in a Unicom 3G sim card to take advantage of the carrier's WCDMA speeds and a variety of new 3G services

At the ceremony Friday, China Unicom officials announced that they now have more than 1 million iPhone 3G subscribers.

[Follow Philip Elmer-DeWitt on Twitter @philiped]