China Speakers Bureau: Apple picked the wrong iPhone partner

Image representing iPhone 3G as depicted in Cr...

Picking your right partner in China is one of the key choices foreign companies have to make when they enter the Chinese market. While many industries no longer need a foreign entrant to pick a Chinese partner, for telecommunication that is still needed. And Apple made the wrong choice when it picked China Unicom as a partner for its iPhone in China, argues Shaun Rein, managing director of the research firm CMR in Shanghai.
In the WSJ-blog:

But a recent survey of 2,000 mobile users in China between the ages of 22 and 32 by China Market Research Group, or CMR, suggests that the cause of the iPhone’s performance in China may stem from the relative unpopularity of Apple’s partner, China Unicom, among its target users, as well as a lack of desire among those users to sign up for two-year contracts and subscribe to 3G services.

CMR found that while the iPhone was highly desired by users, less than 10% of respondents use China Unicom, and of those respondents, a majority said they were unhappy with the company’s service. In comparison, 95% of respondents said they felt competitor China Mobile was more stable and had better coverage when traveling around the country.

According to the firm’s managing director, Shaun Rein, such considerations by mobile subscribers didn’t matter as much in the U.S. when the iPhone first launched because Apple signed an exclusive deal with AT&T and users had no other choice. But in China, gray-market iPhones are readily available and can be used without 3G service with China Unicom’s competitors and there is less incentive to buy an official China Unicom iPhone.

CMR also found that 80% of respondents used prepaid mobile services rather than monthly subscription-based services, and had no plans to switch within the next three years.