China Unicom, the potential exclusive distributor of iPhones in China, has poured 10 billion yuan ($1.46 billion) to buy 5 million units from Apple, ready to sell the first batch in September, local media reported on Wednesday.
China Unicom had already paid Apple 10 billion yuan ($1.46 billion) for 5 million WCDMA standard iPhones with unit price of 2,000 yuan ($293), CBN news said, citing a well-informed source.
Details of launching the iPhone have been finalized and the first batch of iPhone will appear in China Unicom 3G stalls at Carrefour and some large retail outlets run by China Unicom in September, said Zhou Youmeng, vice general manager of China Unicom.
The price of the 8G standard iPhone is set at about 2,400 yuan and the 16G may be sold at 4,800 yuan, said Yu Zaonan, general manager of the customer development department of China Unicom in Guangzhou.
A batch of iPhones was subjected to a battery of tests and so far no network problems or mechanical damage have been found, Yu told the CBN news reporter.
Insider of Carrefour, iPhone's retailer in China said it was unbelievable that Apple changed its original profit model and gave up dividends. China Unicom picked up a good deal as Apple is striving to enter the massive Chinese market.
According to Toni Sacconaghi, an analyst from Sanford C Bernstein, in the original profit model, Apple would share 20% to 30% of the profit dividends with its distributors, so Apple's profit share amounts to 32%, while its sales share only account for 8%.
Apple made compromises in the China market because of its great demand and intense competition, but Apple can still make profits from each unit from 1,000 yuan and 1,100 yuan as China Unicom offers a good price for each unit.
China Unicom's Guangzhou manager Yu added that every employee at China Unicom is excited about the potential profits the iPhone may bring since 5 million iPhones means 5 million new customers for China Unicom, leading to profits from cell phone fees three to four times higher.
China Unicom will likely catch up with China Mobile if our profits grow by 40% with the boost of iPhones, Yu said.
However, the spokesman of China Unicom said that the final agreement hasn't been reached with Apple.
Meanwhile, there are many smuggled iPhones in China, which challenges the legal copy with lower prices.
According to police officer in Pudong New Area, Shanghai, 49 smuggled iPhones were found in a Scientific Square on Monday. The prices of smuggled iPhones vary from 400 yuan ($59) to 1000 yuan ($146), much lower than the average price of 2000 yuan ($293) to 3000 yuan ($439) of legal ones.
An industry source also pointed out that whether China Unicom can win more profits through the iPhone is uncertain and it may largely depend on the iPhone's hardware facilities.