Apple Getting a China Partner?

 | Jan 17, 2012 | 12:30 PM EST  | Comments
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According to the Marbridge Daily, Apple (AAPL) is rumored to be close to signing up China Telecom (CHA) as a partner in China to bring the iPhone 4S to market.

Supposedly, the operator will bring out the phone in February or March.

According to reports, China Telecom is already training its sales force on how to sell the iPhone.

There were first reports that China Telecom was preparing to sell Apple phones back in September. But these new rumors appear to be much more concrete.

If true, the partnership is significant for Apple from several aspects. In the first place, despite its massive popularity and revenues from China, Apple only has five physical stores in mainland China (although a couple more are planned to open this year). That limited supply of stores can lead to huge bottlenecks like we saw last week in Beijing. After queuing up for more than a day at the Soho-like Sanlitun store in Beijing for the iPhone 4S, Chinese consumers were massively disappointed when Apple announced they were no longer selling the phones a few minutes after the store opened due to fears for the customers' own safety.

The angry customers were so upset with announcement that they started pelting the store with eggs. (Good thinking ahead by the ones who thought in advance to bring eggs just in case such a situation occurred.)

At the moment, China Unicom (CHU) is Apple's sole (AT&T-like) partner in China and the country's second-largest mobile provider. China Telecom is the largest fixed-line service in China and the third-largest mobile provider with 43 million subscribers.

So, the deal will also significantly increase the footprint of providers for the iPhone in China.

It's also important that Apple will launch with this partner so soon after the iPhone 4S' launch in China, to add further fire to the momentum behind the product in the country.

One of the open questions remaining is why Apple isn't being more aggressive in opening more stores in China. Last year, rumors came out that Apple had shelved plans for 25 new stores in mainland China over the next two years.  Apple first set this goal at the February 2010 shareholders' meeting.  It had been thought that Apple would open these stores in the second-tier cities like Hangzhou, Suzhou and Wuhan.

It's hard to understand why Apple is being so conservative, considering it's doing so well in the country.

Other retailers like Burberry have jumped into to China with both feet. The English high-end clothing retailer has more than 50 stores in China.

Perhaps we'll get some more answers from CEO Tim Cook soon.

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