Apple’s iPhone dilemma: Should it make a “Chinese special”?

If Apple(s aapl) would just support China’s unique 3G technology, the iPhone would make a killing in the largest country in the world – or so concludes Kevin Wang, director of China electronics research at IHS iSuppli. Apple ranks a woeful seventh in China’s smartphone sales, but according to Wang it could easily do something about it.

“Among all the international smartphone brands competing in China, Apple is the only one not offering a product that complies with the domestic TD-SCDMA air standard,” Wang said in a new IHS iSuppli’s report. “For Apple, this is a huge disadvantage, as TD-SCDMA represents the fastest-growing major air standard for smartphones in China, with shipments of compliant phones expected to rise by a factor of 10 from 2011 to 2016.”

He’s not wrong. By snubbing TD-SCDMA, Apple misses the opportunity to sell the iPhone through the country’s largest carrier China Mobile(s chl), and by “large” we’re talking scale unheard of in the U.S. or Europe. China Mobile is the world’s largest operator with 650 million connections – six times more than Verizon Wireless(s vz)(s vod). While Apple counts the country’s No. 2 and No. 3 carriers, China Unicom(s chu) and China Telecom(s cha) as distributors, together they only serve 30 percent of the market. In other words, China Mobile is the big enchilada of the globe.

An Apple store in China.

So why doesn’t Apple take a bite? Adding TD-SCDMA support to the iPhone isn’t quite as simple as it sounds. As I’ve written before, adding a new radio technology to a phone isn’t just a matter of procuring the right Qualcomm(s qcom) chip, it requires power amplifiers, antennas and filters – all of which add expense, drain power and generally make a mess of the radio frequency characteristics of the device. Apple could do it, sure, but it would wind up with a crappier and costlier iPhone.

If Apple really wants to tackle China Mobile, it will need to come out with an iPhone variant for China, and so far Apple has been loath to do any such thing. Apple did build a CDMA iPhone for Verizon, but after the first generation of device, Apple once again unified its product line, embedding both CDMA and GSM radios in every phone. Plus, it didn’t take long before Apple started selling that device to other CDMA carriers globally.

Would Apple consider designing a “Chinese Special”? The answer is a big maybe.

China Mobile may be a big juicy target, but Apple’s strategy has always been to move markets rather than move with the market. It’s so far taken the attitude that if you want an iPhone in China, you should move to Unicom or Telecom. It took that same approach in the U.S. for years with AT&T(s t). And it’s why some of the world’s other large carriers, T-Mobile USA and NTT DoCoMo(s dcm) for two, get snubbed.

But at some point Apple will have to start making iPhone variants whether it wants to or not. There’s a huge amount of fragmentation in the LTE bands used globally –there are six designated 4G bands in the U.S. alone – which will force Apple and other vendors to create region-specific and even carrier-specific devices (subscription required). The new iPad is just the first example: there are separate devices for AT&T and Verizon’s separate LTE networks.

If Apple has to start churning out variants anyway, it may figure it might as well make a Chinese iPhone, too.