Fuck 'em, it's just the biggest market

China Mobile is eventually expected to offer the iPhone to mainland China but has requested that Apple deliver a model with Wi-Fi and 3G technology disabled, according to the South China Morning Post. The paper cited a Daiwa Institute of Research analyst as saying Beijing has not yet approved handsets with such features, and that Apple's iPhone manufacturing partner Foxconn is now waiting for authorization to begin shipping models to China Mobile with the W-CDMA and Wi-Fi chips disabled.
Cellular News (by way of CNet) explains the odd request is a result of competitive concerns. China Mobile is believed to be building its 3G network using the Chinese developed TD-SCDMA format, so it hopes that disabling 3G functionality will deter users from unlocking the device and jumping ship to rival China Telecom, whose network supports W-CDMA. "Apple shouldn't customise a model of iPhone for the mainland market, given that it only provides a standardised product to operators around the world," Frederick Wong, an analyst with BNP Paribas, told the Post.
For its part, China Mobile is all too familiar with the propensity of consumers to unlock iPhones when given the opportunity. Market research firm In-Stat reported earlier this year that 400,000 unlocked iPhones were loose on the carrier's network, which represented about 10 percent of the units ever produced at the time.
In its report, Cellular News highlighted the broad market opportunity presented to Apple by the Chinese market. Unlike in the US, where advanced smart phones still cater to a relatively small percentage of users, the market in China is a vast, entertainment-oriented business driven by consumers. "The main reasons that Chinese mobile users purchase smartphones include entertainment and to access mobile Internet applications," the publication said. With In-Stat estimating that 20 percent of handsets sold in the region cost more than 4,000 RMB (US$533), that adds up to 28 million potential iPhone buyers.