Xiaomi earmarked an additional CNY5 billion ($724 million) to broaden its retail reach across China over the next three years as rival Huawei turns its focus to the domestic market in the face of ongoing international woes, Bloomberg reported.

Lei Jun, chairman and CEO, said the increased investment will be used to widen distribution channels and expand reward programmes for partners and sales staff, a source told Bloomberg.

The fourth-largest smartphone vendor in China, Xiaomi’s shipments in Q1 dropped 13 per cent year-on-year to 10.5 million units, with its share declining to 11.9 per cent from 13.3 per cent, Canalys data showed.

It has long set its sights on regaining the number one position in China. The company ran into strong headwinds in 2016, when it lost market share in China and globally, after remarkable growth in its first few years.

The Hong Kong-listed company was briefly the third-largest smartphone maker in the world, with its market share almost doubling year-on-year to 5.6 per cent in Q3 2014. The same year it was the top-selling smartphone maker in China from April to July, with its share peaking at 31.6 per cent.

Huawei founder and CEO Ren Zhengfei earlier this week confirmed international smartphone sales fell 40 per cent since a US ban was announced and could cut full year shipments by 40 million to 60 million units. However, he noted performance in China remains strong.

With international opportunities narrowing, Huawei is likely to increase efforts in China, where it is the smartphone leader. It was the only vendor in the top five to grow shipments in Q1, increasing its market share by more than 10 per cent to 34 per cent share.

The company this week also hailed a record-high sales performance for its Honor 20 flagship, with 1 million units sold in China in a fortnight.