Yes. Same reason iPhones and iPads sold in China can't make or receive FaceTime Audio(-only) calls, even when used outside China, and even after firmware upgrades etc.
I assumed they were reselling locally in the NYC grey market electronics shops, but why all Chinese? Taking non-crippled phones back home, or making it easier for tourists to get in these shops, makes sense.
* The cheapest is actually iPhone in Japan, but due to hardware enabled sound when taking photos as required by law, there aren't any demand for Japanese iPhone.