Rumors persist about the iPhone officially coming to China -- unofficially it's been here for more than a year and widely available as 水货, or smuggled goods. Some Chinese also pay an even higher premium for unlocked phones sold at the Apple store in Hong Kong. The easy bet is that China Unicom will strike a deal with Apple, with the iPhone coming as early as May 17 when Unicom is to officially launch its 3G service. The latest is that Unicom has completed network compatibility tests in Hebei Province, and has penned a tentative agreement with Apple.

A deal with Unicom has always made the most sense, despite even more persistent rumors that Apple and China Mobile would team up. Only the most strident supporters of China's homegrown TD-SCDMA -- used by China Mobile -- could believe Apple would launch a TD-SCDMA iPhone (makes little sense), or that China Mobile would use the 2.5G version, which, by the way, would also disable the Wi-Fi (makes even less sense).  China Mobile is struggling to get local companies to make TD-SCDMA phones, and even Nokia -- the largest player in China -- is dragging its feet on launching TD-SCDMA models.

In short, there still isn't enough faith that the TD-SCDMA cell phone market will be lucrative enough, so crafting a special edition iPhone carries more downside risk. Currently, TD-SCDMA chip design trails that of W-CDMA and CDMA EV-DO designs. So Apple would probably need to overhaul the iPhone's design, resulting in a bulkier version to accommodate larger chips that throw off more heat.

By teaming up with Unicom, Apple can stick with its W-CDMA model. The sticking point will be how much Unicom subsidizes the phone, but I suspect that both parties will bend like the bamboo. After all, Unicom needs a high-profile phone to attract high-end users and juice up its 3G network, which will be the last one to ramp up in China. And Apple needs to be in the China market -- it's simply to big to ignore. Now that China Mobile is out of the picture, Unicom is really the only game in town since Apple doesn't have a CDMA EV-DO version yet.

Plus, Apple's competition is eager to make further inroads in China this year. ZTE, Huawei and a bunch of small local firms like Qiji are sharpening their skills in smartphone design. I expect even more local companies to enter the fray as Taiwan chipmaker Mediatek launches a Windows Mobile chip platform in the second half of the year.

Today, Taiwan's Dopod Communications Corp, a subsidiary of smartphone maker HTC Corp., said it alone will launch 15 new cell phone models in China this year, with 80 percent of them being 3G models, according to a report in the Shanghai Daily. Sometime in May it's also expected to roll out a smartphone using Google's Android operating system, probably for use on China Mobile's 2G network. Overall, Dopod is targeting a 50-percent jump in sales in China, bucking a slowing economy. Many of the models will be W-CDMA, but five or six will be CDMA and one or two will support TD-SCDMA.

For all these phones, there is speculation still that Wi-Fi won't be enabled because it conflicts with China's homegrown Wi-Fi variant, known as WAPI. But I'll leave that for a future post.