The new iPhone may have a China problem

China iPhone SE preorders exceed 3.4 million
China iPhone SE preorders exceed 3.4 million

Apple's new iPhone SE launches on Thursday and preliminary numbers at Chinese retailers suggest decent demand — but the black market tells a more mixed story.

The U.S. tech giant started taking pre-orders for the smartphone on March 24 and has not released official figures. However, as of Monday in Beijing, total pre-orders on three retailing sites exceeded 3.4 million.

Despite the brisk pre-orders, though, Chinese vendors and scalpers are uncertain if the iPhone SE will be a sure bet like previous models.

"The new iPhone SE has no revolutionary update," one distributor in Henan Province told CNBC. "I don't think the demand will be as strong as the iPhone 6 and 6S." He is offering the iPhone SE at a $20 discount to the official price in China.

In the past, scalpers have been able to charge a premium of roughly $300 over the official price for a newly released iPhone, but one Hong Kong smuggler who refused to be named said he expected to charge just $30 above the listed price for the iPhone SE.

Vendors on Alibaba's Taobao site are offering the new phone at a discount of as much as $100, claiming the phones are being purchased from the U.S. where the SE sells for $399.

Apple could not be immediately reached to comment on the report.

China Retailers: iPhone SE Pre-Orders

Retailer Pre-Order Quantity

Source: Source: Retailers' websites

China Retailers: iPhone SE Pre-Orders

iPhone Color Pre-Orders Sold
Gold1.3 mln
Rose Gold1.2mln

Source: Source: Retailers' websites

China is a major market for Apple, which has seen its iPhone rocket to icon status in the country. The company says the iPhone SE could help expand its business in emerging markets including China even further, reaching a more budget-conscious consumer.

The official price of the 16GB iPhone SE in China is RMB3,288 (US$505).

Apple iPhone SE on display at an Apple event in Cupertino, Calif. on March 21, 2016.
Just how popular will Apple’s smaller iPhone be?

The concerns about the new 4-inch screen iPhone are reflected in online discussions, as potential buyers weigh their admiration for the Apple brand with their desire to have a phone with a larger screen to watch movies and video clips.

Social media user Jessica Jiejie, who posted a screen grab of herself ordering a 64GB rose gold iPhone SE said, "Some people say switching from a big screen to a small screen is unacceptable but I prefer small screens and only Apple has the guts to make its screens smaller."

Another online user dismissed the new iPhone. "As a professional Apple fan, I am not interested in the iPhone SE and the iPhone 5C's poor sales prove my point," Afiefieyounigengmingmei writes, referring to the launch of a previous model that had been seen as a way to target price sensitive customers. "Big screens are the mainstream of the market."

Chinese consumers will be able to get their hands on the new iPhone SE when it launches on March 31.

—Additional reporting By Barry Huang