An exclusive report by the Wall Street Journal, based on anonymous sources familiar with the project, states that an HTC China-targeted smartphone operating system is well on the way and it’s possible that it will hit the Chinese market as early as the end of this year. The news is no surprise, considering that the company had already voiced their intentions of creating their own smartphone software platform in 2010 and it looks like they’ve been working on it a lot.

The Taiwanese company is trying to win a better market share from China with this new operating system tailored specifically for the Chinese consumer. All of this is done with the blessing of the government, and there are several reasons for it.

First of all, HTC’s new flagship, the high end HTC One didn’t perform as well as the company had hoped. It’s no secret that the corporation has been going through some tough financial times in the past years so a lot of hope was put into launching their latest high end product. Since they’ve lost the majority of their market share in the West, HTC have decided to use their close proximity and shared language with mainland China. An original operating system made specifically for the needs of the Chinese consumer may be exactly what the company needs in order to solve their financial difficulties.

Second, China is already starting to make attempts at reducing its dependency on Western software, which means that HTC’s project falls perfectly in place within this plan. Several companies have already started creating their alternative software but HTC are the first company that isn’t located on the mainland.

There is one more thing that definitely needs to be taken into consideration. Google‘s Android had a huge share of the smartphone market of 79% globally in Q2 if this year and it’s become clear that companies don’t want to put all their eggs in the Android basket. What isn’t clear is whether or not the new in-house operating system by HTC will be based Android or not.

Those are the main reasons. The truth is HTC isn’t doing all that well in the global market, as its competitors at Sony and Samsung re seeing better profits and more general approval. That’s why the company is shifting its attention to China, in an effort to mitigate the effects of the bad decisions taken lately by the people who run the company. The Chinese market would be an easier target for them than most of their current competitors which is why his seems like a really good idea to begin with.

The main question that remains is whether or not the new operating system will actually received the much needed approval and good sales the company is hoping for. It’s usually hard for a new operating system to perform well on an already established market, even though the China-specific OS might be a huge success and appeal well to Chinese consumers. After all, let’s not forget that Android had to fight its way through Symbian and Windows Mobile in order to get to the top of the smartphone (OS) food chain. All of this is to say anything is possible. How well the new operating system will perform is anyone’s guess.

This begs a different question, though. If HTC’s new software does well in China, should we get ready for an international release, or will the Taiwanese manufacturer stay clear from such ideas. I guess we will know soon enough. Personally, I’m curious to see what the new OS would look like.