Apple 2.0

Covering the business that Steve Jobs built

iPhone hardball and soft sell in China

November 22, 2009: 3:18 PM ET

Apple airs its first Chinese-language ads as reports of retailer intimidation emerge

Supplementing print advertisements like the one at right, the first Apple-produced iPhone ads appeared on Chinese TV over the weekend.

They come on the heels of the device's somewhat sluggish start last month in the world's largest mobile phone market (more than 720 million subscribers).

Apple's (AAPL) local carrier, China Unicom (CHU), reported signing up only 5,000 new subscribers in the iPhone's first four days of sale, a result Western analysts viewed as disappointing.

In addition to the several reasons put forward -- e.g., high prices, lack of Wi-Fi, a market saturated with knock-off and black-market phones -- iPhonAsia's Dan Butterfield has added another: strong-arm tactics on the part of China Unicom's chief rival, China Mobile (CHL).

According to Butterfield, some of the country's most important mobile phone distributors are not yet selling the iPhone despite signed agreements with China Unicom. Reason: threatening letters from China Mobile warning them not to.

"The precise wording of these letters is unknown," writes Butterfield, "but this is more than just a suggestion." He then quotes -- in translation -- an article in sina.com:

"Many cell phone distributors received formal notification that 'Selling iPhones is not recommended,' or 'Selling iPhones is not allowed or China Mobile will fine you or stop cooperation with you.' "

Tactics like this, as 9to5Mac's Seth Weintraub puts it, "make Verizon and AT&T's little sissy war seem silly."

Below the fold: An iPhone ad with a Chinese accent and Chinese apps.

See also:

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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