Taiwanese phone manufacturer HTC is reportedly developing its own mobile operating system targeted specifically at Chinese consumers, the Wall Street Journal cites people familiar with the project as saying.

The mobile OS is said to align closely with Chinese apps such as the Twitter-like microblogging platform Sina Weibo, and is scheduled to launch before the end of this year. Certain smartphones running the OS are reportedly being tested now, with some prototypes already sent to the Chinese government.

HTC Chairwoman Cher Wang is said to be in talks with Chinese government officials, which plays well into a wider government policy encouraging the development of a local software ecosystem, as China’s technology ministry seeks to reduce its dependence on Western companies — in particular Google, as the Android operating system has dominated China’s mobile market.

The WSJ report says it isn’t clear whether the mobile OS will be entirely proprietary or built on top of Android — as just like Acer, HTC is part of Google’s Open Handset Alliance, and that means it needs to abide by certain rules laid down by Google.

The ambitious reported move by HTC comes as it has been struggling financially. CEO Peter Chou said in the company’s recent second-quarter earnings call that HTC is expecting Q3 revenue to decline as much as 29.3 percent from the amount of revenue it posted in Q2.

The company has also noted that in China, competition at the mid-tier sector of the smartphone market intensified despite improved sales of its high-end models, which could be adding a sense of urgency for HTC to diversify its product range — and the development of a mobile OS is clearly an attempt to boost its overall strategy.

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