Buying a Mobile Phone in China

We've bought way too many mobile phones during our time in China, having either broken them or lost them in the back of taxis (or simply just lusting for the newest and latest tech toy), it seems one of our writers is always changing their phone. The process of buying a mobile phone in China is far different from that of what we're used to being from the US and UK, where phone choices are limited to 5-10 and you only get them from a carrier. In China, Nokia, alone, offers more than 10 choices, and its true of almost any major phone maker. This means you're left with 100s of choices, and those are only the main phone makers, through in smaller Chinese brands and other options and its easy to be overwhelmed. In some cases, there are malls that sell nothing but mobile phones. We don't do many of these "welcome to China" style posts, but after recent experiences, we thought this one is in order.

It seems that everywhere you go sells mobile phones, the company's have their own stores, there are the larger mobile phone shops, the electronics stores, big box retailers like Carrefour, department stores, Silk Alley and the like, and of course taobao is in on the action. Making things harder nowadays is that all phones that legally enter China (ie that taxes have been paid on, the type you'll find in above the board places) all must have wifi disabled.

For many people, no wifi is a major deal breaker, leading them to the grey market. This is the equivalent of a friendly person telling you about a shortcut and leading you into a dark alleyway, it could prove to be quicker, but you're not liking your odds as you could also end up beaten up and with your wallet gone. Grey market products are themselves divided into two categories, "shuihuo" (水货) and "ganghang" (港行). When buying shuihuo, you usually don't know what you're getting and there is no guarantee, you might get lucky and well, you might not. Ganghang is a bit safer because the product will include a Hong Kong receipt and in many cases means that, if for example you buy a Nokia, Nokia will honor their warranty (typically 1 year) and service the phone for you on the mainland. This is not always the case and if say, you buy an iPhone, you're SOL (for the time being) and the phone has to be sent to HK to be fixed. Ganghang phones are usually RMB300-600 more than the same shuihuo version, but still cheaper (and often times considerably so) than the phones that legally enter China.

Of course I'd be remiss if I didn't mention the other option, the "shanzhai" (山寨) mobile phone. These phones often look a lot like popular models and may even come packed with features like the ability to use multiple SIM cards or watch tv, all for low low prices typically under US$100. These phones, like shuihuo models, are unpredictable as to how long they'll last, but unlike the shuihuo variety these won't make you cry if they suddenly stop working or are lost/broken as it will only be RMB200-500 down the drain.

On the Subway 2: Improvement or Nightmare?

Waiting for a train in a Line 1 or 2 subway station you get a phone call, your friend is looking to meet you, but you haven't decided where yet, the train comes and you get on, your friend is babbling about a trieste he/she had the night before and just about to get to the juicy details when...The train leaves the station, enters a tunnel, the line goes dead, and you curse loudly, drawing the ire of your fellow riders, who are squeezed against every possible part of your body.

The above scenario has happened to us all, probably countless times, right? Well, no more according to the Beijing government, as they are expanding cell coverage in the subway tunnels meaning that by June, there will be no more dropped calls on the subway.

Whether or not this is good news, it depends on your outlook on mobile phones, are they a gift or a curse? For those who think our world is already too connected, you have one more thing to complain about as you are attempting to enjoy the "peace" (yeah, right!) of a Beijing subway ride.

No iPhone in China: Who is to Congratulate and Who is to Blame?

I try to read as many other blogs as my time allows and there are many times I will have some kind of response to what someone else posted, but its rare that they will drive me to post. Well, here goes. As someone who paid close attention to the China Mobile-Apple negotiations and was really hoping to get my hands on a licensed iPhone (as on my last trip to the US I discovered I was too late to get one that could be easily unlocked), the breaking off of negotiations between those two parties left me somewhat sad.

In reality, it didn't stop iPhones from entering the China market through the backdoor, as the New York Times has explained. Is Steve Jobs being too greedy or did China Mobile have too much confidence in its hand? The reality is somewhere in between, but if anything, its probably easier to blame Jobs.

Therefore, I was a bit surprised to see The China Game, a recent blog that is a pretty good read, take the side of Jobs, even stating:

While everyone was slamming poor old Steve, I wished to congratulate him at
least for holding his ground. So many have gone to China and given away the
store, and here you had a guy who knew where he stood, someone unfazed by all of
the China hype. Bravo

Okay, the "China hype"? "Given away the store"? This language seems to be going back to the wild, wild west days when JVs were the name of the game.

China Game wrongly states that Chinese consumers who got an iPhone through the backdoor don't have to use China Mobile. While it is true that a user could probably go with China Unicom, despite its horrible GSM services, its highly unlikely. China Unicom's focus is on CDMA and therefore any iPhone purchaser is probably choosing China Mobile and its also highly unlikely that Apple will do a deal with Unicom.

Consumers are paying a premium for the iPhone here, but none of that money is going back to Apple, because the phones are usually purchased in the US or Europe. Just think, they could offer the iPhone in China for a price of up to US$100 more than it sells in the US and still have no problem garnering major interest. A licensed iPhone through a Chinese carrier offered at the same price as it is in the US would almost immediately make it the top selling phone in China, especially if you look at what is currently available in the RMB2500-3000 price range.

Also, while China Game sees Apple as creating "customers" in China, the reality is that they are only creating "window shoppers." The current price of the iPhone, hiked up by greedy importers, is making it a tough sell. I've yet to see an iPhone used by someone in China who isn't an expat or an overseas Chinese. The idea that the iPhone is a "hit" in China is insane, sure, as the NYT says "thousands" have been smuggled back into China, but 1. they aren't selling like hotcakes, and 2. "thousands" is a miniscule number in the Chinese mobile phone market. The price issue matches much of the talk you hear from Chinese about Apple products. While many love the design and are highly interested in Apple's other products, price and concerns about software often keep them away from purchasing computers, legit iPhones could have been the first step in really creating "customers."

Granted, China Mobile lost out on getting a cut of sales from the iPhone (at least for now), but as for services, most people are still choosing to go with China Mobile. Equally, the corresponding cut Apple would have gotten from China Mobile on iPhone service usage would have been much greater to what China Mobile would get from sales. If a customer uses an iPhone or not, there are still a lot of premium services that China Mobile offers and that bring in a lot of money. Unlike in the US and Europe, its unlikely a Chinese version of iTunes would be released (and even if it did, there's no way Chinese would pay for music online), so the one new area of revenue that China Mobile would have seen (other than sales of handsets) was a moot point.

Neither of these companies are hurting, but the iPhone was Apple's chance to enter China in a big way and it fell through. If anyone comes crawling back to the table, its going to be Jobs.

A Week Can Make All the Difference...

A week ago I was getting ready to post an entry that started out like this:

According to a source Sinobyte says that the iPhone could be out in China as early as Spring 2008. As an aside, it looks like Sinobyte's going to be a great new blog for anyone interested in technology in Asia.

While Sinobyte still looks like its going to be a great blog, I, like many others, am left playing Monday morning quarterback as to why Apple and China Mobile have halted negotiations on bringing the iPhone to China. Last week, I was contemplating whether iTunes would open up a China store and if it could lead to people starting to pay for music through high-quality downloads and other new features (I know this is basically an impossibility, but its something to ponder on a slow day). This week, I'm left wondering whether I will be able to get my hand on an authorized release of an iPhone in China before the Olympics.

These negotiations dragged on for a long time with more than a few fits and starts and this was mainly caused by the fact that neither party really needed the other. Sure, China Mobile is going to lose a bit of money, but they are still the biggest player in the world's largest wireless market. The Apple juggernaut isn't going to be slowed down by lack of entry in China at this point, either.

From all the media reports that have come out so far, it seems like Apple overplayed a relatively weak hand and China Mobile called their bluff. Now Apple can choose to wait things out, go to China Unicom, or crawl back to the negotiating table. Waiting it out seems like the most likely option, as Apple has only slowly started entering the China laptop/mp3 market, though the iPhone could serve as their first real mainstream entry and draw people toward other Mac products, much like the iPod drew people in the US toward Apple laptops. Grey market iPhones will still be readily available, but rarely purchased due to the high price tag and the glut of reliable dealers selling them.

I'm most interested now in seeing if China Unicom can capitalize as this could be the big draw they need to attract customers and take a bite out of China Mobile, but on the other hand, doesn't this make Apple look like the spurned prom date who waited too long and is now desperate to say yes to anybody? This isn't like being in the US and switching from T-Mobile to Cingular AT&T, its more drastic as Unicom is, for all intents and purposes, only a CDMA network. My guess is that Apple will attempt to first wrap up negotiations in other major national markets as not to weaken their position first and then come back to China Mobile accepting a lower percentage of the profits.

Slapping Wu Yi in the Face

Back in my old "hometown", down south in Shenzhen, the local government, along with the central government, is striking hard against counterfeit products. An inspection team from the central government that is to include Wu Yi is set to visit Shenzhen and its electronics markets this week and in the lead up to this, the local government has been actively raiding and threatening stall owners and market managers in and around the most famous of Shenzhen's electronics streets, Huaqiangbei.

What is so stunning about it is the open defiance shown by certain stall owners at the markets. Rumors about the markets future have taken over causing even legit businesses to close their doors, including in some cases grocers (am I being overly optimistic in suspecting the grocers are legit and not selling "fake" goods?). While the counterfeit sellers are shutting up shop, they were also reported to be promising customers that this was only temporary, after Wu Yi and the central government comes through, they'll reopen, and some had the audacity to say they'd reopen stronger than before.

I'm a bit surprised because there's yet to be much discussion of this in the English blogshpere or in the English dailies (especially Shenzhen Daily, or did I just miss it?). "Fake" mobile phones is a lot harder to deal with than fake LV bags. Everyone who is shopping at Luohu Commercial Center (Shenzhen's "Xiushui") knows they're buying fake goods, but when you go into the electronics markets at Huaqiangbei, you have no clue what you are buying. The phone could be an original Motorola, or a used one, or one reconstructed with a Motorola case and who-knows-what under the case. Only the briefest of looks at the repair shops they have in these markets lets you know the huge number of components and the skill the workers have with those items. Therefore, a crackdown on a market like this is much harder than one that is selling fake clothes and leads to confidence among stall owners of their success in avoiding the authorities. It's going to take a combination of harsher punishments and more diligent policing (it appears the Shenzhen PSB and other government agencies have been stepping up to the task so far) to shut them down entirely.

Until that happens, the cat-and-mouse game and trips like this central government inspection will only have a minimal impact at holding back the counterfeiters.

Boys Love Toys

I love gadgets and as such, I'm constantly switching cell phones. It was pointed out to me that in the past year, I've used 3 different phones, none of them cheap. But the mother of all phones, the iPhone, is going to be coming out next month and looking at the pictures, it leaves me drooling.

Plus, this bad boy is only available on Cingular, the provider that I use and currently my contract is up for renewal, which means I'm able to get a new phone. Hello, my pretty...

For those in China, you may not be used to the US mobile phone market where everything has to be done through providers and choice is severely limited. You have choices between 5 or so service providers and then, on top of that, the choice of 6-10 different phones, of which 3 or 4 are the same no matter the provider and many of them are cheap and crappy. Ultimately, everyone basically uses the same phone, something I attempt to buck by getting my phone in China. Unfortunately, my beloved Nokia 8800 is now going haywire.

The problem is, unlike in China, there aren't Nokia service centers all over the place and thus, I basically have a very expensive, beautiful, and useless phone that can't be fixed in the US. Anyways, in China (and Asia as a whole), one's mobile often is meant as more than just a phone, but an attempt to grasp for individuality, decorating it with covers, different wallpapers, ring tones, and trying to get a unique (and thus expensive) phone. In the US, for the majority of people, a mobile phone is wholly utilaterian.

The iPhone is the most desired phone around and I'd imagine its going to become almost as ubequitous as the iPod is now. This part discourages me about it, as well as the fact its brand new, so will probably have more than a few bugs which will slowly be revised. I'm also more than a little concerned about its lack of any regular buttons. The "buttons" will appear on the phone's touch screen. This isn't a big issue for making a phone call, but as someone who sends a lot of text messages, I'm very, very concerned about this element. Obviously, the big plus side is the coolness factor and the (likely) extreme ease of synching the phone with my Mac computer. Ultimately, the price will be the biggest issue in my current jobless and financially challenged state. I just hope its $400+ and will thus totally discourage me from purchasing it, though I'm guessing with an extended contract, it will probably be around $300 (or am I just dreaming?).