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HTC Takes the Apple Approach to China

Oct. 7 (Bloomberg) -- Cher Wang, chairwoman of HTC Corp., the Taiwanese smartphone maker that posted its first-ever quarterly loss last week, talks about the company's business strategy and outlook. She spoke in the sidelines of the Asia-Pacific Economic Cooperation conference in Bali, Indonesia, on Oct. 5 with Bloomberg Television's Haslinda Amin. (Source: Bloomberg)

HTC thinks it has a solution to the company's sales slump: China's high-end market.

Cher Wang, HTC's elusive co-founder and chairwoman, said in an interview with Bloomberg TV over the weekend that the company expects to sell one out of every five high-end smartphones in China next year. The Taiwanese phone maker holds a 1.3 percent market share in the Asia Pacific region, excluding Japan, according to research firm IDC.

"For the upscale market in China, we should be able to reach 20 percent next year," Wang said on Bloomberg TV at the Asia-Pacific Economic Cooperation conference in Bali, Indonesia. "They love our devices."

Before posting its first quarterly loss last week, HTC executives spent a big chunk of the company's earnings call on July 30 talking about the prospects for China's premium market. Chang Chialin, HTC's chief financial officer, defines that segment as phones priced at 4,000 yuan ($653) and above. This is the territory Apple loves : The new iPhone 5c starts at 4,488 yuan.

"In China this year, we have gained a lot of good, very strong product awareness, and we gained a lot of high-end smartphone share," HTC CEO Peter Chou said on the earnings call. "However, it will take some time for us to really, really go big."

HTC is trying to move beyond its roots as a no-name manufacturer of cheap phones. Obviously, margins on high-end devices are wider and could help HTC to get back to profitability. Gadget reviewers loved the HTC One, proving that the company can make a great smartphone. But it doesn't have the brand reputation to match. HTC's share of the global smartphone market fell to 2.8 percent from 5.8 percent during the same period a year ago, according to data compiled by Bloomberg.

The company has been blaming the marketing department for a while. Chairwoman Wang echoed that excuse during the TV interview, saying the next two months will be "the most challenging " as HTC refines its marketing message and delivers new products. Wang said the advertising deal with Robert Downey Jr. , which was first reported by Bloomberg Global Tech, will help change people's perception of the company.

Apple and Samsung Electronics pump billions into marketing to develop their brands. Compared with Samsung, HTC spends a tenth, "or less," Wang said. Even with Iron Man on its side, HTC will have to come up with something really clever to save the day.

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