Google and Apple are set to go head-to-head in the fast-growing Chinese smartphone space having struck landmark deals with China’s two largest mobile operators. The Financial Times reports today that China Mobile’s long-awaited ‘OPhone’ – a device made by Lenovo Mobile based on Google’s Android platform – could launch as early as next week, according to sources close to Lenovo Mobile. Reports earlier this week suggest China Mobile – the world’s largest mobile operator by subscribers – is also close to launching a customised version of HTC’s Magic Android smartphone. The latter device will trade under the Dopod brand used by Taiwan’s HTC in China. It is designed for China Mobile’s TD-SCDMA network and will use OMS (Open Mobile System), the operator’s own Android-based mobile platform. Meanwhile, number-two operator China Unicom is heavily rumoured to have sealed a deal to bring Apple’s iPhone 3G to China, and is expected to offer the device when it launches its country-wide 3G services in September or October.

According to the Financial Times, smartphone penetration in China is running at 10 percent of all handsets sold, but the devices are expected to generate higher revenues as subscribers access features such as music and games downloads made possible by the rollout of 3G in China this year. China Mobile is expected to offer a subsidy of up to CNY2,000 (US$293) on the OPhone, almost half the price of the device, to its prepaid and contract customers, say industry sources. According to earlier reports, China Unicom is expected to start selling the iPhone at the end of September at a price point of around CNY3,000 (US$440) as part of a three-year exclusive deal.