iPhonAsia reports on an article [Google translation] from Chinese web portal Sina.com noting that a number of retailers that had reached agreements with China Unicom to offer the iPhone there have received threatening letters from rival China Mobile warning them that offering the iPhone is not permitted.
Many cell phone distributors received formal notification that "Selling iPhones is not recommended," or "Selling iPhones is not allowed or China Mobile will fine you or stop cooperation with you."
The issue appears to be with vendors who have distribution agreements with China Mobile and have also been selling phones and service for other wireless carriers such as China Unicom. According to the letter:
Any social channel that signed a contract with us (China Mobile) is not allowed to engage and process related business for our competitors, is not allowed to display and sell competitors' products, is not allowed to market or recommend competitors' products in any form.
Just last week, it was reported that China Mobile is still working to try to land a deal to offer the iPhone, despite having been passed over by Apple in favor of China Unicom after negotiations between Apple and China Mobile faced a number of stumbling blocks.