In another sign of worry for Samsung Electronics, the Korean tech giant has lost its ranking as China's top smartphone vendor, after holding onto the position for two straight years, according to research firm Canalys.

In this year's second quarter, Chinese company Xiaomi overtook Samsung to become the country's largest smartphone maker with a 14 percent market share. Samsung held on to the second spot, with a 12 percent share, slightly ahead of third place Lenovo, outshipping it by 200,000 units.

The Korean electronics giant had been China's leading smartphone maker since 2012's first quarter, said Wang Jingwen, an analyst with Canalys. At the time, the company's market share was 22 percent.

In China, Samsung sells a large range of handsets, from high end to low, and benefits from a strong brand and a vast reseller network. But its Chinese rivals are increasingly putting pressure on the company, especially when it comes to selling lower-end phones, Wang said.

"In the mid-to-low end segment, Samsung devices have not represented great value for money in China," she said. The country's largest mobile carrier, China Mobile, is also partnering more with domestic handset makers to launch phones built for its new 4G network, Wang added.

Xiaomi, on the other hand, has been growing fast, largely by selling feature-packed smartphones at just above cost price. This marks the first time the Chinese company has taken the top spot in China, after only starting to sell phones three years ago.

Xiaomi's low-end series of phones, known as Redmi, are driving the company's shipments in China, which reached almost 15 million in the second quarter, according to Canalys. The Redmi phones can start as low as 699 yuan (US$113) when bought without carrier subsidies.

Xiaomi's aggressive pricing is leading the company's success, Wang said. The company has already sold 26.1 million phones in this year's first half, with the goal of selling a total of 60 million by the end of this year. Although not a big name outside of China, Xiaomi is expanding to ten foreign markets this year.