The iPhone’s launch in China has met with a “lukewarm” response, according to the WSJ.com, not much of a surprise given the sky high price tag, lack of Wi-Fi functionality and grey market alternatives. Though the phone was able to attract a crowd of “hundreds,” it seems not many of them actually bought the phone, priced between $730-$1,024 depending on the model. Beijing stores still had stock on Sunday night, and one Unicom outlet in the capital city reported that it had only sold 11 phones during the launch weekend. UPDATE: China Unicom confirmed that it has sold an unimpressive 5,000 iPhones during the first weekend, reports Bloomberg (via 9to5Mac.com). The small turn-out is likely because the iPhone has been on sale on the gray market for some time and the official version doesn’t come with Wi-Fi. CLSA Ltd. estimates Apple (NSDQ: AAPL) may sell 460,000 of its smart phones annually through China Unicom, which is fewer than the number sold through unauthorized channels each year in the country.

In the land of 710 mobile phone subscribers, Apple, like other mobile handset makers, see China as an important market, which makes the pricing of the phones difficult to understand. The phones are more expensive than in neighboring Hong Kong, and depending on the monthly price plan and China Unicom’s complex subsidy rules more expensive that the US versions. They are also more expensive than their grey market versions—that is, iPhones (with Wi-Fi intact) brought into the country and sold unlocked—and run anywhere from $440-$840. Indeed, if anyone is happy with the price its Li Haiwei, who owns a Beijing store that unofficially sells the devices. Li told the WSJ that he sells four to five grey market iPhones a day, and expects to sell more to consumers fleeing the sticker shock of Unicom’s prices.

• iPhone Minus Wi-Fi Goes On Sale In China For $1,024