Apple selling out iPhone 5S and 5C pre-orders in China with the magic of “free”

Perhaps we’ve been too quick to assume the iPhone 5C’s high price in China will be a barrier to strong sales. The higher-priced iPhone 5S is selling out pre-orders in Hong Kong and Beijing.

Thanks to the magic of free.

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Not a single model of the nine available iPhone 5S configurations in gold, silver, and “space gray” at 16, 32, or 64 GB is still available for pre-order at Apple’s Hong Kong site. Reservations in Beijing, where phones are more expensive due to mainland China government fees and taxes, are almost as tight — only that astronomical grey version is still available.

Interestingly, the 5C does not appear to be nearly as constrained, with reservations still open and ship times of just one to two weeks. Still, China Unicom has apparently taken 100,000 pre-orders for the first colorful iPhone.

What’s now obvious is that Apple has worked with top Chinese mobile carriers to offer the phones for very compelling prices. China Telecom has three plans that present the 5S for free, and China Unicom has eight plans in which the 5C is free. Typically, though, Chinese customers pay up front for the phone and then get their money “back” in the form of pro-rated discounts on their mobile contracts.

So it’s still a pretty big deal for a Chinese consumer to pay $700 or more for a mobile device.

The biggest challenge for Apple internationally is pricing. Smartphones running Android from local manufacturer Xiaomi run just $130 with a 4.7″ 1080P screen, and Apple had slipped last quarter into a humiliating seventh place in the competitive and price-sensitive Chinese market.

Analysts had doubted the new iPhone 5S and 5C could recapture this market.

“Only 15 percent of the 3,500 consumers we polled in emerging markets would pay more than $450 for their mobile device – putting Apple’s hefty price tag way off the mark,” Markellos Diorinos of mobile monetization company Upstream told VentureBeat.

But perhaps, with creative Western-style mobile contracts, Apple will prove us wrong.

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It’s too early to be certain — these are just early indicators. But clearly, something is going well for Apple in China with its new iPhone models. The big question now is China Mobile, which is not just the largest carrier in China, but the world, with over 700 million subscribers.

We haven’t yet seen pricing or contracts from that behemoth — and both will be very important for Apple’s China hopes.