Sharp has confirmed that it is laying off 70 employees from its mobile business in China, but the company maintains it will not exit the country’s phone market, according to local media reports.

A Sharp PR representative told Chinese new site National Business Daily that the firm is adjusting its business in China with the restructuring, which will see partner Foxconn take control of the development and manufacturing of its devices in the country. Sharp says it will continue to “provide brand and sales support” for its mobile business, a Morning Whistle report explains.

Foxconn’s parent company Hon Hai struck a deal with Sharp to work together to build mobile devices in June 2012. But now it appears that the financially troubled Japanese tech company is downsizing its China-based operations, leaving Foxconn to step into the void.

Sharp originally exited China’s mobile market in 2005, but returned to the space in 2009 when it agree to build high-end devices with MTK, NBD says. Critics have argued that a growth in the production and sales of mid- and low-range devices — exemplified by local brands such as Xiaomi — have made Sharp’s phones too expensive for many, and less desirable than similarly priced devices.

An IDC report on China’s smartphone industry released in August ranked Samsung top on market share, with Lenovo second and ZTE third. Apple (fourth) and Huawei completed a top five that did not include Sharp.

It announced it would cut 11,000 jobs in September, and then revealed plans to lay off 5,000 employees and introduced a $350 million voluntary redundancy program that saw 3,000 staff exit. The 100-year-old company fell into poor financial health following lower than expected sales performance and increased competition.

Qualcomm boosted Sharp in December when it agreed to invest to invest $120 million into the company, but Sharp spent much of last year restructuring its debt crippled business. The company estimates it will post annual losses of $5.6 billion.

We’ve reached out to Foxconn and Sharp for comment.

Update: A spokesperson from Foxconn Technology Group told TNW: “It is our policy not to comment on any matters related to current or potential customers.”

Image via stevensnodgrass / Flickr