Chang Xiaobing, chairman of China Unicom, has confirmed that the company is in talks with Apple to bring the iPhone to China. “We are in talks with many handset suppliers, including Apple,” Chang said, adding, “3G users will account for 20 percent of all mobile phone users in China in the next three years.” A previous report from February cited an anonymous Unicom manager as stating that the companies were in discussions over the iPhone. Interestingly, despite earlier reports that Unicom rival China Mobile had broken off talks with Apple due to a disagreement over control fo the App Store, Reuters reports that China Mobile chairman Wang Jianzhou said that the company would continue to talk to Apple, while declining comment on discussions between Unicom and iPhone maker. Reports of China Mobile and Apple’s iPhone negotiations date back to November 2007, and have reportedly stalled multiple times over various issues.
JP Morgan analysts Jimmy Cheong and Tim Storey suggest that both iPhone clones and large subsidies may be holding back discussions. “iPhone copies (i.e. the Hi-Phone) are available without (users) having to sign long-term contracts,” the analysts said in a note. “iPhone is likely to be highly subsidized and China Unicom may give away large revenue share so earnings upside is possibly limited, in our view. We think this is a reason why China Mobile has refused to sign with Apple to date.”