Chinese carriers beat even the most aggressive U.S. iPhone 5s/5c offers

By , Sep 19, 2013

iphone 5c plastic

Remember last week’s Apple stock tailspin launched by the high price in China of the iPhone 5c and iPhone 5s? Talk centered on no-contract versions of the new handsets costing more than $730 and how Apple should just keep dreaming about competing against inexpensive Android alternatives.

Forget all that, because China’s No. 2 and No. 3 carriers are out with prices on subsidized iPhones and they are low. In fact, one market observer believes the deals could beat even the most aggressive American offers…

“It’s clear that Chinese buyers will have plenty of opportunities to avoid the full unlocked price,” writes Fortune’s Philip Elmer-DeWitt.

Just as U.S. carrier compete by offering steep discounts, China Telecom and China Unicom – No. 2 and No. 3 carriers respectively – offer a number of ways to get both the iPhone 5s and iPhone 5c for “free”.

In the case of China Telecom, it has three plans for a free iPhone 5s – all of course requiring a contract. By contrast, American carriers charge $199 for Apple’s latest device, after a two-year contract with a carrier.

China Telecom iPhone 5s price points

In the case of the iPhone 5c, China Unicom provides eight plans to get the $99 handset for free – and here’s your fine print – “as long as [Chinese consumers] are willing to lock themselves into a long and relatively expensive contract,” notes Elmer-DeWitt.

As Bloomberg reports, China’s carriers are trimming past subsidies for Apple’s latest smartphones.

In the case of China Telecom, a monthly plan for the iPhone 5s includes a subsidy of 2,890 yuan ($47), smaller than the 3,400 yuan subsidy for the iPhone 5. Although the carrier charges 4,488 yuan ($733 US) downpayment for a 16GB iPhone 5s, the handset is free with a two-year contract of 329 yuan ($53 US) per month.

5c case 6

Likewise, the iPhone 5c is available free (read:subsidized) from China Telecom with a two-year contract of 389 yuan ($63 US), according to the report. According to a note by ISI analyst Brian Marshall Monday:

Carriers across the U.S. (and internationally) are already offering a wide range of price and plan choices for the 5c/5s. We believe the actual choices consumers have for iPhone adoption (e.g. both upfront and monthly costs) are much more varied than can be captured by a single, unlocked ‘sticker’ price.

Also on the subject of iPhone prices, Elmer-DeWitt sees the disparity between the U.S. and China opening an arbitrage for the new iPhones. For instance, the $549 unlocked iPhone 5c in the U.S. sells for 4,488 yuan ($731 US) in China.

China Unicom iPhone 5c price points

That 33 percent difference could go into anyone’s pocket able to find a way around China’s taxes.

Indeed, in 2010 the New York Times recounted how residents of the Big Apple’s China Town would buy a no-contract iPhone 4 for $600, smuggle it into the mainland, where it sold for $750 to a gray market middleman.

From there, the iPhone was marked up to $1,000 and sold to consumers.

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  • Abdl

    Sometimes all these contract thingy confuses me…i think iDB should make a comprehensive guide about it for those living outside the US.

    • Rowan09

      Well I live in NY and companies such as AT&T and Verizon will offer you an iPhone 5S starting at 16GB for $199 for the phone as long as you sign a 2 year contract. You will have to stay with that company for 2 years usually paying $90+ for service. The purpose of the contract is to offset the full price of the phone but in the long run its cheaper to buy the phone and just get a cheaper plan.

      • Abdl

        Oh cool. Thanks. Good to know. But the $90+…like monthly? And does it cover calls and sms or just data plan? And why do some people prefer sim-free/contract-free phone atimes?

      • Andy

        Because not everyone needs to use calls/SMS/data as much as others. Also, your phone is unlocked so you can change to other carriers if they have better deals or if you’re going abroad. I don’t know how it works in the US, but most people here (especially teenagers) don’t have contracts and use pay-as-you-go SIM cards (you just top up whatever you need, minimum is 10 Euro).

      • Rowan09

        The US plans suck the best deal we have is probably Virginmobile which is month by month for $45 I believe but I don’t know how much data it gives you.

      • Rowan09

        To add to what Andy said, you can shop around with an unlocked phone. Instead of paying $90+ per month you can go to T-mobile and prepaid type companies to get the same service for $50-$70 per month.

  • Bill Slenter

    No wonder Apple didn’t cut the price of the 5c way down. They negotiated like crazy with the Chinese carriers instead, and protected their profit margins. Well done!

  • batongxue

    A subsidy of 2,890 yuan?
    No, it’s 289

  • batongxue

    FYI, I don’t think they offer as much traffic and talk time, not to mention data speed, as the US carriers.
    Fact is Americans always get the cheapest deal. As for Chinese people, no comment.