According to Samsung's semi-annual report filed to the South Korea's Financial Supervisory Service, Samsung's second quarter revenue in China was 8.95 trillion won(US$8.4 billion), a 1.99 trillion won(US$1.9 billion) loss from a year ago.
The setback is not limited to China. The world's largest smartphone maker reported its second quarter revenue loss in all region except in North America in varying amounts.
“An increasing number of smartphone stocks in our inventories and the cost of company's marketing made slowdown on the company's revenue in China," a Samsung spokesman said
“Because of local Chinese tech companies, the company was hurt in the low-cost segment of the smartphone market in China."
Earlier this month, market research firm Canalys said Xiaomi has replaced Samsung as the largest mover of smartphones in China, with a market share of 14 percent. The Korean tech giant was second place, followed by Lenovo and Yulong, each with shares of 12 percent.
Samsung is facing one of its biggest challenges in recent years by the emergence of new handset makers — mostly from China — that are offering similar quality goods in the low to mid-end ranges with more competitive prices.
In India, it lost out to Micromax, who is now the largest vendor of handsets in India as of the second quarter with a market share of 16.6 percent, according to Hong Kong-based market research firm Counterpoint Research, while Samsung is now runner-up with 14.4 percent.
The Korean giant is to hold an Unpacked event, an annual event to introduce its new products, in September 3. The event is expected to be held simultaneously in Berlin, New York, and Beijing. The new Galaxy Note 4 is expected to be shown off.
Greg Roh, an analyst at HMC Investment Securities told ZDNet Korea: "The only way for Samsung to expect better second half revenue in China is the new Galaxy Note which is expected to be launched soon."
"Samsung needs a new strategy to attract more Chinese users with the new Note at the center of that plan."
The company reported a 25 percent drop in profits for the second quarter with $7.1 billion in operating profits and admitted that increased competition, especially in low to mid-range handsets, may continue to eat away at its earnings during the second half.