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The lesson is this:

In China, people are not exposed to western marketing. They cherish 'value' more. For the price of the iPhone, they can get so much more performance from other manufacturers. They look at the specifications of the iPhone and think - how come that the cheapest phones are not just better in terms of battery life, but they offer more features too - radio, video recording and decent voice clarity. So partly, at least, it must come down to the fact that the iPhone is not a very good phone. It is a good gadget, but as a phone, it is just appalling.

Utter rubbish that, they are just not prepared to pay more for the 'disabled' iPhone than they can buy the fully featured one for, its as simple as that. Modern China not exposed to western marketing? Who are you kidding? They are obsessed with the west, and more so with Japan.
 
Also with all iPhones sold in Hong Kong being unlocked direct from the Apple Store, 1000's of these will make their way over the border into china every week:

http://store.apple.com/hk/browse/home/shop_iphone/family/iphone

iPhone 3G & iPhone 3GS purchased at the Apple Online Store can be activated with any wireless carrier. Simply insert the SIM from your current phone into iPhone 3G or iPhone 3GS and connect to
iTunes 8.2 to complete activation.2 Purchase limitations may apply.
 
I live in China since 5 years and can make some things clear for you.
In the past years the Chinese mainland was flooded with "grey" imports of original iPhones from Hong Kong and jailbroken US-iPhones. Those phones are easy to get in all big cities even with home delivery. The HK model has no provider restrictions at all and can be used in all networks without jailbreak. People here used it with the local providers and their GPRS service.
Since some weeks China Unicom offers 3G service in all urban areas of China and the WiFi disabled iPhone. The price is 150$ higher then the grey import models and you have to subscribe for a 24 month plan.
China Unicom offers great 3G packages without phone on monthly basis. Thats why people go better with the grey import models together with the monthly Unicom package.
Another advantage of the grey market model is the tethering. The iPhone connected to the macbook allows skype-calls and slingbox streaming which are normally restricted on the phone itself in the 3G network.
Its hard to say why local managers failed in estimating the market situation.
Apple is doing well anyway. The Beijing Apple store is busy 7 days a week.
 
Its sad though that such a wonderfully rich culture is being suppressed by a tyranny.

Yeah, because what they had before (and before I mean for at least 2,000 years before) was so great. Oh wait...

At least we can rely on Americans to assume that because a country is communist then it must be the worst thing that could possibly happen to it. Lets forget about the countries history and the tyranny that was probably rampant before hand and led to the communist uprising in the first place *cough* Vietnam / China / Russia / Cuba *cough*.
 
Yeah, because what they had before (and before I mean for at least 2,000 years before) was so great. Oh wait...

At least we can rely on Americans to assume that because a country is communist then it must be the worst thing that could possibly happen to it. Lets forget about the countries history and the tyranny that was probably rampant before hand and led to the communist uprising in the first place *cough* Vietnam / China / Russia / Cuba *cough*.

*cough*Such hypocrisy coming from the "British Empire." Yeah, good thing you people never went into other countries and try to rule them....*cough* India/Ireland/America and about a dozen others *cough*
 
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