Apple (AAPL) finally has its deal to distribute the iPhone in China after months of rumors and speculation.

China Unicom (CHU), the second largest wireless carrier on the mainland, says it has reached  a three-year deal with Apple and will launch the iPhone toward the end of the year.

According to The Wall Street Journal, China Unicom has 141 million subscribers compared to market leader China Mobile (CHL) which has 498 million. China Unicom may be able to use the iPhone to partially close that gap.

It is too early to say how much competition the iPhone will face in China. Theft of intellectual property is the rule and not the exception in the world’s most populous country. China Mobile will almost certainly launch a handset that borrows literally all of the iPhone features.

Chinese technology pirates are also likely to use the iPhone launch to increase their business in offering “knock-offs” of the Apple product and some of these will probably work on the China Unicom and China Mobile networks.

Apple may have a deal in China, but that is not the same as selling a lot of units in a market where it will have both legitimate and illegitimate competition.

Douglas A. McIntyre

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