Aug. 28 (Bloomberg) -- Apple Inc.’s iPhone will go on sale in China in the fourth quarter, entering a market that has more wireless subscribers than the combined populations of the U.S. and the 16 nations that use the euro.

China Unicom (Hong Kong) Ltd., the country’s second-biggest provider of mobile-phone service, will sell the iPhone 3G and the 3GS models, Chairman Chang Xiaobing told reporters in Hong Kong today. The three-year deal isn’t exclusive, Apple said. That means other carriers may offer the iPhone in China.

Apple will compete with Research In Motion Ltd.’s BlackBerry and handsets powered by Google Inc.’s Android software in China, where shipments of smart phones may triple by 2013, according to research company IDC. The world’s third- biggest economy has continued to grow during the global recession, fueling demand for electronics and luxury products. China has 695 million mobile-phone users.

“If Apple can get into the market early, there’s a substantial opportunity for them to win subscribers,” said Jeffrey Fidacaro, an analyst with Susquehanna Financial Group in New York. He has a positive rating on the shares, which he doesn’t own personally.

Unicom’s American depositary receipts climbed 35 cents, or 2.5 percent, to $14.43 at 4 p.m. in New York Stock Exchange composite trading. Apple rose 60 cents to $170.05 in Nasdaq Stock Market trading.

‘Game Changer’

Unicom, which trails China Mobile Ltd. in the wireless market, may use the iPhone to attract higher-spending customers and bolster demand for more profitable Internet services, such as Web browsing and game downloads. Unicom announced the agreement with Apple as it reported a 45 percent decline in first-half profit today.

“Unicom definitely needs the iPhone, or any type of competitive edge, as a game changer,” said Duncan Clark, chairman of BDA China, a Beijing-based technology research firm. The company is the only Chinese carrier using technology that’s compatible with the iPhone, according to Clark.

Unicom had 141.1 million wireless-phone users at the end of July, fewer than a third of China Mobile’s 497.7 million. The company plans to invest 100 billion yuan ($14.6 billion) in mobile services during 2009 and 2010, with most of the money going into so-called third-generation networks.

Phone Subsidies

Unicom will subsidize the iPhone handsets, Chang said, without saying how much they would sell for. Prices of the iPhone 3G in Hong Kong range from HK$4,488 ($579) to HK$6,288, according to Apple’s Web site. The average income per capita in China was $2,370 in 2007, according to the latest World Bank statistics.

China is a “priority project” for Apple, Chief Operating Officer Tim Cook said last month. He said he expected the iPhone to be available in the country in the next 12 months. AT&T Inc., the exclusive carrier for the iPhone in the U.S., reported profit that beat analysts’ estimates last month.

Apple, based in Cupertino, California, began selling the iPhone in June 2007. It has sold 26.4 million worldwide.

“It’s essential for Apple to be in China; it’s a huge market,” said Bertram Lai, deputy head of research at CIMB Securities (HK) Ltd. in Hong Kong. The iPhone “is not just the premium product, it’s an aspirational product,” he said.

Apple plans to offer the iPhone 3GS, the newest model, in more than 80 countries. It introduced the device in June in eight countries, gradually adding markets since then.

Shipments Will Triple

Apple will initially offer iPhones in China without the Wi- Fi communications standard, Unicom said. The technology was previously banned on mobile phones by the Chinese government. That restriction was lifted in May, according to BDA.

In January, Unicom, China Mobile, and China Telecom won licenses to operate 3G services, which allow faster data downloads on mobile phones.

China Mobile said this month it will work with Dell Inc. and HTC Corp. to develop handsets that use its own operating system. The software is based on Google’s Android technology. In 2005, the carrier started offering Research In Motion’s BlackBerry devices.

Shipments of smart phones -- handsets that can handle Web browsing, video and applications -- will more than triple in China by 2013, up from last year’s unit sales of 11 million, said Aloysius Choong, a Singapore-based analyst at IDC.

More than 1.5 million iPhones have already been sold in China through unofficial distributors, according to BDA.

Unicom’s first-half profit fell to 6.62 billion yuan from 12.09 billion yuan a year earlier, the company said. Earnings will stabilize in the second half of the year, Chief Financial Officer Tong Jilu said today.

In October, Unicom bought China Netcom Group Corp., the dominant land-line carrier in northern China, after selling the smaller of its two mobile-phone units to China Telecom. The shakeup was part of a government-led industry restructuring to boost competition.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

Last Updated: August 28, 2009 16:04 EDT