Chinese iPhone users embrace the AppStore

iPhone just recently made its debut in China. Thanks to a three-year deal with China Unicom, Apple (NSDQ: AAPL) has finally managed to bring the iPhone to the world’s largest pool of mobile phone users. With hundreds of millions of wireless subscribers in China, Apple’s got to be raking in iPhone sales, right? Well, yes and no. Yes, the introduction of the iPhone is bringing in some serious revenue, but that money isn’t necessarily coming from iPhone sales. Turns out, the iPhone AppStore is a huge hit in China.

China Unicom reportedly sold just 5,000 iPhones during its first week of sales. China Unicom Chairman Chang Xiobing says he’s satisfied with that number, but in a country that boasts more wireless users than there are people in the US, 5,000 units is a really small number. The silver lining, though, is that the introduction of the Chinese iPhone opened the doors to the AppStore. iPhone users in China have so far generated $1 million in legit iPhone app revenue from the AppStore.

It all makes sense. China Unicom’s iPhone is currently crippled. Apple disabled the WiFi radio on Chinese iPhones to comply with China’s Golden Shield Project. Considering that gray-market iPhones with fully functional WiFi radios are readily available in China, it’s not surprising to hear that China Unicom’s iPhones aren’t blockbuster hits. The flip-side is that there are an estimated 2 million iPhones roaming across China, most of them coming through unofficial channels. All those iPhones are likely driving users to embrace the AppStore. China Unicom also hopes to have a WiFi-capable iPhone available by the end of the year, which could boost AppStore revenue even further.

Still, things may not be all rainbows and happy faces for Apple’s Chinese AppStore revenue. iPhone app piracy is a significant threat to Apple’s bottom line, and could come back to bite Apple. It’s unclear just how much of the $1 million in iPhone app sales came from users looking to download an app with the intention of pirating the software, but it would be interesting to see how China’s pirated app ecosystem compares to the legit AppStore market.