Why won’t China get the iPhone 6 on launch day?

6 Comments

Credit: Tom Krazit/Gigaom

Apple’s newest two iPhones are going to sell a lot of units, and many of those phones will be sold in China. Some have even speculated that the reason Apple made the iPhone 6 Plus with its bigger screen was to appeal to Chinese (and more generally, Asian) tastes. So why then is China missing from the list of countries getting the latest iPhone on launch day?

Both the New York Times and Re/Code are pointing to regulatory issues as the reason for the delayed launch. [company]Apple[/company] appears to lack a routine certification from the Ministry of Industry and Information Technology, China’s equivalent of the FCC. This could be related to Chinese government rumblings that Apple products and iPhones pose a threat to national security, a claim that was repeated on state TV this July. Or it could be a routine example of a slow bureaucracy at work.

But I suspect the MIIT certification doesn’t tell the whole story. The Times story quotes a sales manager from China Telecom, one of the big three Chinese carriers along with China Mobile and China Unicom. He says they were surprised by the “last-minute change of plans.” But this could simply be gamesmanship from the Chinese carriers, who have been attempting to reduce hardware subsidies recently based on a Chinese government agency “recommendation.”

The iPhone is an expensive and popular device, so it likely accounts for a large amount of the carrier subsidy pool in China. It’s not hard to imagine hardball negotiations gone wrong, where Apple wants to keep large subsidies for its devices but the Chinese carriers — with hundreds of millions of subscribers — are balking.

Another possibility is that there simply won’t be enough iPhones to support a global launch in China as well as the other 10 mostly Western countries getting the iPhone on the same day. It’s still likely that supplies of the iPhone 6 Plus could be in short supply for weeks after launch. Hong Kong is getting the device on September 19, so some will obviously flow to mainland China, most likely at a markup.

There are certainly people in mainland China who want the new iPhone the first day it’s available. Last year’s model, the iPhone 5S, was launched simultaneously in the United States and China. But before that, when Apple devices hit China months after the United States, it was a common sight on Apple launch days, at least in New York, to find older Chinese immigrants in line with the Apple fanatics. They didn’t usually keep the devices they purchased, but rather sent them over to relatives or associates in mainland China who would sell them for a profit.

This delay could actually end up working in Apple’s favor. As Ben Thompson points out, the iPhone 6 positions itself in Asia as a “veblen good,” or a product which sees increased demand with increased prices. For many in China, an iPhone is like a Chanel bag — a symbol of conspicuous consumption. Imagine a rich Chinese celebrity getting his or her hands on an imported iPhone 6 before it officially goes on sale — a few Weibo posts later, and demand is stoked even higher.

It’s no secret that China is a key market for Apple going forward. In the last Apple quarterly earnings, CFO Luca Maestri reported that China accounted for 26 percent of Apple’s total revenue growth. While it is odd that such an important market would be relegated to the second wave of region availability, the iPhone 6 going on sale in mainland China is still a certainty, and when it does go on sale, Apple expects to sell a lot.

6 Comments

Kif Leswing

Apple is starting to release a number of regions that are getting the iPhone 6 in the second wave on September 26. But still no China.

JenniferDawn

Why? So it will take longer for them to reverse-engineer it and steal their secrets…

Shawn

You got any evidence? your irresponsible words could only expose your ignorance.

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