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One of the few bright points in HTC's recent quarter was good growth in China, at a time when most non-local players are losing out to ZTE and others. The Taiwanese company plans to build on this with a major push in China, even as it saves cost by pulling back from many other markets.

HTC said when it made its most recent profit warning that it would reduce its presence, or pull out altogether, in some territories in South East Asia and Latin America, where its market share is declining. To compensate, it will step up its efforts in China, where its smartphone share grew from 2.6% in the first quarter of this year, to 6% in Q2.

To try to build on this, HTC will increase its engineering teams and salesforce in the country, with the ambitious aim to be a top two smartphone brand in the country by 2015. This may prove over-optimistic, given the even faster growth of some domestic brands in recent quarters, often at the expense of Apple, Motorola and Nokia.

Ray Yam, head of HTC China, told reporters that he aimed to gain another 3-4% market share in each of the last two quarters of this year, riding the smartphone explosion in China, which is now the world's largest market. HTC has 2,700 branded counters in China, with a planned expansion to 3,500 by the end of the year - though this is still dwarfed by Samsung's 6,000.

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

Meanwhile, in other areas HTC is looking for cost reductions and CEO Peter Chou, in a memo to employees, said the firm must "kill bureaucracy" and improve communication in order to regain share. "We have people in meetings and talking all the time but without decision, strategic direction or sense of urgency," he wrote. "Bureaucracy crept in without clear ownership. We agreed to do something but we either didn't do it or executed it loosely."

He added his thoughts on HTC's current predicament, writing: "We are disappointed that our sales are down while smartphone market share is growing. Our competitors can leverage their scale, brand awareness and big marketing budget to do things which HTC could not do." He conceded that "the fast growth from the last two years has slowed us down", but insisted "we are coming back".

HTC's share of the global smartphone market dropped to 4.5% in the first quarter of 2012 from a peak of 10.7% in Q211 but its sales have missed analyst estimates for the past four quarters, according to Bloomberg.

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