China Mobile (CHL) may sell the Apple iPhone handsets without 3G or Wi-Fi function in the Chinese mainland.

South China Morning Post reports that China Mobile may agree to sell the iPhone in the mainland on the condition that Apple make a customized iPhone product, which will not support the 3G or Wi-Fi function, for the Chinese market.

The reason for China Mobile's requirement is reportedly to protect the development of its TD-SCDMA network, a Chinese-grown 3G network that is managed by the company, because the TD-SCDMA technology is incompatible with the WCDMA standard, on which iPhone's 3G function is based. If the iPhone handset with 3G function is unlocked by Chinese users, it will be used on China Telecom's WCDMA network. By the beginning of 2008, there were over 400,000 unlocked iPhones in the Chinese market.

In November 2007, CEO of China Mobile Wang Jianzhou announced that the company planed to introduce the iPhone into Chinese mainland. At that time, China Mobile did not reach an agreement with Apple because of disputes in the revenue-sharing model.

As earlier reported, Apple has just started selling its iPhone 3G product via its website in Hong Kong as an unlocked product. This means users can freely use the iPhone 3G phone with any compatible telecom operator around the world.