If Apple (NASDAQ: AAPL) can sell more than 1.7 million iPhone 4 units in just three days in the U.S., it’s hard to imagine how long the lines will be when it hits the streets of China. The People’s Republic is the world’s largest mobile phone market, and negotiations were finalized yesterday on a contract with a Chinese telecom provider to land the iPhone 4 on mainland China very soon.

With terms of its contract with telecom carrier China Unicom Ltd. (NYSE: CHU) set to be announced on August 1, things do seem to be lining up for Apple to expand its approximate 7% share of sales in the Chinese market ending the second quarter.

But AAPL shareholders shouldn’t uncork the champagne just yet. Apple’s not the only company with its eye on cornering the growing mobile market in China — and a recent push from one smartphone maker could threaten Apple sales with its new campaign for dominance.

Apple will face legitimate competition for mobile phone supremacy in China from Taiwan-based HTC. The smartphone company is a growing power that is trying to capitalize on Apple’s delayed offering of its new smartphone by ramping up production on its own new handsets and aggressively moving to establish its brand as a major player in the market

At a press conference on Tuesday, HTC announced it will be launching four new smartphone models in its name in hopes of attracting new customers and stealing some from popular companies like Apple, Samsung, and market leader Nokia (NYSE: NOK). At present, smartphone users represent only a small part of the overall mobile subscriber numbers in China, presenting an opportunity for the aggressive HTC to capture new customers – and get to them before Apple.

Rumors put the projected release of the iPhone 4 in China some time around the end of the summer or beginning of the fall. Currently China Unicom has a 3G subscriber base of 7.5 million and is looking for the iPhone 4 to be the perfect marriage to expand profits for both companies in the emerging smartphone market.

There is the possibility that China will come down with Apple fever and the launch of the iPhone 4 will eclipse sales numbers seen in the US, but both Apple and HTC will have their work cut out for them to unseat Nokia as the leader in smartphones in China.

But if we’ve learned anything about smartphone users, it’s that the latest phones with the most bells and whistles are key to new subscribers. If HTC’s four new phones can provide a good experience, the company could fend off the late launch of the iPhone and perhaps erode Nokia’s dominant market share.

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