Talks with Apple to sell the iPhone in the Chinese market have stalled again, according to Interfax -- this time over the fact that China Mobile wanted to sell iPhone apps directly to customers, rather than through the App Store.

A source in the Interfax story said that China Mobile CEO Wang Jianzhou said that buying extras for mobile phones is different for Chinese customers, since many are accustomed to using prepaid credits rather than a credit card. Wang said that China Mobile would have to play some part in providing apps to customers, if only to fulfill this payment scheme.

China Mobile's "application shop," announced in November, would have sold apps for not only iPhones, but for Symbian- and Linux-based phones, too. Apple obviously wanted to sell iPhone apps through iTunes, as it does now all over the world.

Wang declared to Apple that "China Mobile should operate the application store itself in order to maintain its advantage."

It's unclear what this means for the future of the iPhone in China. China has other carriers, like China Unicom, and the lengths that Apple has gone to to please China Mobile might be reason enough to look for another partner. Rumors last year suggested China Mobile demanded an iPhone with a reduced feature set that some analysts later predicted could be the iPhone nano.

[Via MacDailyNews.]

China Mobile, the service provider in talks with Apple to distribute the iPhone in the world's most populous country, is still expressing interest in selling the handset, but has plans to open its own online app store.

According to Macworld, Wang Jianzhou, China Mobile's chairman and CEO, said at a recent conference that "We will set up our own shop, and we hope, welcome all content providers to sell their software applications and games and songs and any other products in our application shop."

Cult of Mac's Ed Sutherland notes that Apple and China Mobile are still in talks to bring the handset to China, according to Wang.

Dan Nystedt of the IDG News Service speculated that China Mobile's app store would sell apps for Linux- and Symbian-based mobile phones, but it's unclear how this will affect China Mobile's burgeoning relationship with Apple.

Apple, of course, already has the iTunes store, which offers music, games and apps for the iPhone platform. China Mobile's store is unlikely to interfere technically with the iPhone/iTunes ecosystem, but it would compete financially with Apple's offering. Not that there's anything wrong with competition, of course.

An agreement with China Mobile would mean having the iPhone available to a market of 400 million existing subscribers, and perhaps millions more new subscribers. For comparison, the total population of the United States last year was just over 300 million people.

China Mobile has asked Apple to remove Wi-Fi and 3G networking from the iPhone for its launch in China, according to Apple's Taiwanese manufacturing partner, Foxconn.

China Mobile is asking for the changes to make the phone less appealing to those who would unlock the phone and use it on its major rival's network: China Unicom.

China Mobile has been in sporadic talks with Apple since the original handset was launched last year. Apple agreed to potential revenue sharing, which got talks moving again in July.

Research companies don't doubt that the changes, along with robust Chinese language support, will help Apple's sales in the country. They estimate that there are 28 million potential customers in China.

[Via cellular-news.]

Back at WWDC as Steve Jobs ran down the list of carrier agreements for the 3G iPhone one country in particular was conspicuous in its absence. Now Reuters is reporting that one of the biggest obstacles to bringing the iPhone to China has been overcome. A China Mobile spokeswoman told Reuters that "Apple is no longer insisting on a revenue-sharing policy, so the biggest hurdle for China Mobile to bring in the iPhone has been cleared, but there are practical issues still to be resolved."

Apparently the shift towards carrier subsidies, as has happened even with original partner AT&T, facilitated this move as it has basically brought the iPhone into line with other smartphones. Even at WWDC Jobs was confident that the iPhone would arrive in China (and Russia) before the end of the year, and this latest announcement from China Mobile seems clearly to suggest that the iPhone will soon officially be set to conquer the world's largest mobile phone market, well beyond the gray market for the first iPhone.