According to the latest figures, the iPhone has failed to make a strong impact on the Chinese market. In fact, iPhone sales have been far below the target despite extensive marketing campaigns organized by the Chinese distributor.

Many analysts blame the poor sales performance of the iPhone on a blunder Apple made when it failed to negotiate a distribution deal with China Mobile. The company subsequently moved to focus on Android products and recorded profits of up to 6.8%. Apple then moved on to negotiate with China Unicom, which became the only company in China to distribute the iPhone.

Even with its large marketing program the company saw its profits fall by 54% during the second quarter, with a gross revenue of about $205 million only. One of the reasons the iPhone sales have not been strong as expected is because many of the iPhones are sold through the grey market, where they are relatively cheaper and come unlocked.

While the Chinese market has a lot of potential for smart-phones like the iPhone, the majority of the consumers are still quite uneasy about the prices and restrictions based on the iPhone.  This will not mean that Apple plans to scale back its efforts. Instead many hope that Apple will change its strategy and business plan to regain the initiative.