New iPhone starts from China next month…

Apple Inc. (AAPL) will sell the new iPhone 6 and iPhone 6 Plus in China next month after agreeing to improve user security and privacy.

The devices will go on sale Oct. 17, the company said after China’s Ministry of Industry and Information Technology granted the smartphones a network access permit, the final step in the approval process. Pre-orders will start Oct. 10, and the phones will be available at all three state-run carriers, Apple said.

The approval process included discussions on potential leaks of personal data through weaknesses in Apple’s operating system, with the company taking measures in iOS 8 to eliminate risks stemming from three background diagnostic tools, the ministry said. The government’s increased focus on security may pose long-term risks for Apple in China, where it doesn’t crack the top five in smartphone shipments behind domestic makers Xiaomi Corp. and Lenovo Group Ltd.

“Apple is coming under greater scrutiny on personal data security from the government,” said Shaun Rein, managing director for China Market Research Group in Shanghai. “This is definitely starting to affect consumers and some are thinking twice about buying Apple now because the government has made them nervous.”

Apple pledged it has never built, and will never build, a “back door” with any government agencies for products or services, the ministry said.

Subsidies Cut

Carolyn Wu, a Beijing-based spokeswoman for Apple, declined to comment on specific changes made to the operating system to satisfy the Chinese government. She referred questions about personal data security to the company’s privacy website.

The 16-gigabyte iPhone 6 will retail for 5,288 yuan ($860) and the 16-gigabyte iPhone 6 Plus for 6,088 yuan, Apple said.

“We are thrilled to bring iPhone 6 and iPhone 6 Plus to our customers in China on all three carriers at launch,” Apple Chief Executive Officer Tim Cook said in a statement.

The release will come as the state carriers cut their spending on subsidies for high-end smartphones by as much as $3.9 billion. The new iPhones also will trail the release of Samsung Electronics Co. (005930)’s new Note 4 device in China.

China Mobile Ltd. (941), the world’s largest carrier, said it will focus on selling cheaper phones that don’t require subsidies. The wireless company, with more than 790 million subscribers, is taking steps toward eliminating $2 billion in subsidies, almost doubling the costs of some devices including the iPhone 5s.

Black Market

Apple released the new iPhones in 10 markets, including the U.S., Hong Kong, Japan and Australia, on Sept. 19 before adding another 20 countries a week later.

China consumers typically have waited at least three months for Apple to start selling new iPhones in the world’s biggest smartphone market, triggering a flood of devices into the black market. Last year’s iPhone 5s release was the first time Apple devices were available in China on the same day as the global debut.

In the first week of its international debut this year, the new iPhones were selling in China for almost double the price at Apple’s stores in Hong Kong.

The devices are still selling in Beijing at premiums between 47 percent and 87 percent more than the Hong Kong price, with the widest gaps for the iPhone 6 Plus.

Vendors near the Apple store in the Sanlitun district are selling the 128-gigabyte iPhone 6 Plus for 12,000 yuan ($1,952), compared with HK$8,088 ($1,042) in Hong Kong.

Apple got $5.9 billion of sales in the June quarter from the Greater China region, including Taiwan and Hong Kong. That is about 16 percent of the company’s total.

The iPhone ranks sixth in China with about 6 percent market share in the second quarter, according to International Data Corp. Bloomberg