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HTC looks to China to boost turnaround effort

Troubled handset maker is beefing up operations in the country after capturing a larger share of the market in the second quarter, an HTC executive tells The Wall Street Journal.

HTC hopes China can help it boost lagging sales figures.
Sarah Tew/CNET

As troubled Taiwanese phone maker HTC retreats from markets in Southeast Asia and South America due to declining market share, the company is ramping up for a big push in China.

The company, which is struggling with intense competition from Apple and Samsung, is looking to China to help turnaround the company's lagging sales after increasing its market share in the country, The Wall Street Journal reports. HTC market share in China grew from 2.6 percent in the first quarter to 6 percent in the second quarter.

As a result, the company is beefing up its engineering team and sales channels in the country and expects to be one of the top two smartphone brands in China by 2015, Ray Yam, head of HTC's China operations, told the Journal. Yam said the company hopes to gain another 3 percent to 4 percent in each of the next two quarters.

HTC hopes to harness an expected explosion in smartphone sales in China. Sales are expected to nearly double to 300 million units from the 150 million to 170 million expected to be sold this year, Yam told the Journal. HTC has 2,700 branded counters in China, with a planned expansion to 3,500 counters by the end of the year. But Yam said HTC doesn't have the scale to compete with Samsung, which has about 6,000 counters.

HTC plans to follow a sales model based on offering devices in China for around the same price as Samsung's Galaxy and Apple's iPhone, although Yam concedes that the effort will take a few years.

"I do believe HTC has all the elements for success...but we need to be cautious and we need to make every step right," he said. "If we make one wrong step, then it will take us a much longer time to recover."

Earlier this month, the struggling smartphone company reported a second-quarter profit of $247 million, a nearly 60 percent decline from its year-earlier profit of $584.3 million. The company has also been locked in a patent dispute with Apple that briefly prevented two of its key products -- the One X and Evo 4G LTE -- from hitting the U.S. market.

Struggling to compete against technology giant Samsung on its home turf, HTC decided last month to close up shop in South Korea. And after failing to capitalize on the growing market in Brazil, the handset maker announced in June that it would close down operations in the South American country.