iPhone 4 is in huge demand in China.
And there are a lot of angry people not being able to lay their hands on one. The problem was exacerbated by the problems of scalpers, a lot of them hired by cell phone resellers in places like Zhongguancun to be resold for extra RMB$300 - $600 (or around USD$50 - $90). If you ever live in China for any length of time, you know this is a land filled with opportunities and opportunists. In fact, when iPhone 4 first became available in HK, it didn't take long before someone figured out the demand can be met by smuggling the phones from HK. Goods obtained in this manner are called water goods （水货). It was so named because importers that were trying to evade having to pay taxes in the early days would wrap their imported goods in bags and dumped them at dock in shallow water for them to be picked up by small boats later on.
Just to get an idea how rampant the "water goods" problem is - we were just sitting next to one guy in Beijing airport subway a few weeks ago who had purchased a few phones for his friends from HK.
Fighting this is no easy matter. Word has it that Apple has delayed or stopped shipments to HK. Instead of fighting it, perhaps Apple should consider setting up reseller programs like they did with Apple Developers Program?