While we think we know the on/off iPhone deal is heading toward the on position (though problems still remain), a report sheds light on what those problems might be.

It’s widely-believed China Unicom wants a slice of App Store/iTunes revenue in addition to refusing to grant Apple a slice of per-user iPhone revenue. And while the allegation may be untrue (it’s founded on speculation, after all), at least one report lends weight to the notion, kinda…

Chinese company, NetDragon, has moved to deny reports that it is engaged in talks with Apple for the operation of the App Store in China. The company says it has not entered into any agreements with Apple or any associated company for operation of the store, and is not talking to any involved parties on the matter.

An earlier SinoCast report claimed NetDragon to have agreed to run Apple’s App Store in China once the iPhone ships in September.

NetDragon already operates China’s largest cracked iPhone platform, offering applications, film and TV shows and a range of cracked iPhone management software solutions.

What’s interesting about this report is that it implies business insiders in the world’s most populous nation are chatting about the possibility. While there can be smoke without fire, this is an interesting example of either speculation leading the debate, or a window as to just how complex Apple – and by inference, any Apple competitor with an App Store to run – is finding it to be to enter the Chinese market.

While it waits to get into China, Apple developer relations team members are reportedly approaching local software developers to encourage them to build applications for the iPhone. These in-development apps are being tested on iPod touch devices now, and will be in among the first tranche of local Chinese-made applications to debut on the App Store once it does open for business.

Of course, the question remains: will Apple run the App Store, or, facing layers of Chinese legal complexity, will it license store operation to another local firm?

Whatever the situation, negotiations have entered a critical phase as Apple and China Unicom rush to a September launch. A senior team of Apple execs, led by Greg Joswiak, Apple’s vice president of iPod and iPhone Product Marketing, visited China last week.

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