Ray Yam, head of HTC China

BEIJING - Taiwan-based smartphone maker HTC Corp aims for a major expansion on the mainland this year by greatly increasing the number of sales outlets and winning customers back from the gray market, according to the company's newly appointed China president.

HTC, which overtook Nokia Group in early April to become the third-largest global phone maker by market value, plans to increase the number of retail booths and outlets on the Chinese mainland from 445 to 2,000 by the end of this year, Ray Yam, who joined HTC in January as company's head of China, told China Daily.

According to Yam, the inefficient distribution and sales network has hampered HTC to gain bigger share in the mainland's smartphone market. Since HTC officially entered the mainland only nine months ago, establishing a retail network will be one of the company's first priorities, Yam said.

HTC will team up with national electronic chain stores such as Suning Corp and Gome Electrical Appliances Holding Ltd, as well as smaller local electronic retailers in Beijing, Shanghai and Shenzhen.

HTC also plans to use the Internet to promote its cell phones and may set up an online store on Taobao.com, China's biggest online retail website by transactions, in the second half of this year, Yam said.

Founded in 1997, HTC made the world's first Android-based cell phone in 2008. The company became the world's fifth-largest smartphone manufacturer by shipments last year, with 21.5 million handsets distributed worldwide in 2010, according to the research company IDC.

However, HTC has been a latecomer on the mainland, as it entered the market in July 2010.

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Motorola Mobility Inc has posed the greatest challenge to HTC, as it led sales of Android smartphones on the mainland and grabbed more than half of the Android smartphone market share last year.

However, Yam stressed that the mainland is the "home market" for HTC, though the market contributed "very limited sales" in 2010, probably less than 4 percent of its total shipments.

He said that he expects a faster near-term growth rate on the mainland compared with other markets. HTC's annual global growth more than doubled last year, so the mainland's development should be "quicker in order to catch up with other markets".

Unofficial vendors of HTC handsets on the mainland may block the company's ambition, said Lu Libin, an analyst with Beijing-based research company Analysys International.

The price gap for a device between an official HTC outlet and the gray market is as high as 1,500 yuan ($230). The average price spread is 500 yuan, a report by Analysys International showed.

The different tax rates on mobile phones in different countries and regions result in the problem, according to HTC's Yam. He said that the company will seek to unify its global prices and seek terminal subsidies from the mainland's three telecom carriers to reduce buyers' burden.

"In addition, we will cooperate with some mainland social-networking service websites to launch tailored social smartphones, a function that overseas HTC phones do not have," Yam said.

HTC also has plans to introduce its first tablet computer - HTC Flyer - on the mainland in the third quarter. The device will run on China Unicom's Wideband Code Division Multiple Access (WCDMA) network and include tailored functions for mainland users, said Yam.