Apple wants in on the world’s largest mobile market, China. At least that’s what China Mobile wants the world to know, boosting its company shares up7.8% to a $87.03 close on Tuesday. With a 523 million subscriber base in mainland China alone, that’s a lot of iPhones.

If current talks gain any positive ground, that would bring Apple to a brand new market larger than the total population of Europe. The question that seems to remain is, Is China ready for the iPhone?

Chinese mobile subscribers are not used to having locked in subscriptions, much less long term contract obligations. The iPhone is networked locked everywhere else. In the United States, AT&T has exclusive rights to the iPhone in return for a handsome profit share with Apple. Elsewhere in Europe, the iPhone is locked to France’s Orange, T-Mobile in Germany and O2 in the UK. For China, it’s either China Mobile or the slightly smaller China Unicom based in Taiwan.

Neither is profit sharing the norm for Chinese business plans, which just happens to be the entire premise of the Apple business model. Although Apple usually gets its way, dealing with the Chinese nation state may be an entirely different thing.

Apple has already announced plans of making the iPhone available in Asia by 2008. Starting

with the more affluent Japanese mobile market would be the logical business first step, with Australia not far behind. China’s expanding middle and upper class may be Apple’s next target, even though Chinese middle class is an entirely different social class from what the United States is used to. But still, if just half of that middle class population were to buy the iPhone, that would mean a market of 125 million people, larger than the iPhone buying population of the entire US. The revenue potential is staggering. Unfortunately, the Chinese are not willing to share.

Technical nuances like the network locked sims and the lack of 3G connectivity are just issues not worth groveling about. Indeed, the iPhone has a lot of technical catching up to do, like text messaging capabilities in Chinese dialects. These issues are easily remedied through slight technological tweaking and both sides seem more than willing to accommodate each other’s technical needs.

Apple does look like it stands to lose more if in case the talks with the Chinese fail to push through. The Chinese already have their own iClone versions of the iPhone. And as for Apple? It stands to lose millions in potential customer revenue. But then again, one can not lose what one does not have in the first place.