The online-only brand, which started operations from April 2015, will be called 'Shenqi' - a Chinese word meaning 'magical' or 'miraculous'.

Apart from selling smartphones online, the new company also focus on the Internet-connected (IoT) devices and the development of mobile applications, as the smartphone growth slows in China.

Lenovo had announced plans for the company in October. According to Huffington Post, the move is aimed at its rival Xiaomi, which raised USD 1.1 billion in funding late last year at a valuation of USD 45 billion late last year, three times the market capitalisation of Lenovo Group.

Lenovo, whose phones are selling well in markets outside China, said its annual net profit rose 1 percent to USD 829 million, slightly below analyst expectations, as intense competition in the Chinese smartphone market eroded margins.
Industry analyst group IDC said last week smartphone shipments in the world's most populous country shrank for the first time in six years as the market became saturated.
Yang said the company needed to improve profitability in China after the smartphone division's performance crimped Lenovo's overall operating margin in China.

Lenovo has been expanding into enterprise computing and smartphones to offset the decline in PC sales globally. The Beijing-based firm closed in October its USD 2.1 billion acquisition of IBM's low-end server unit and also its USD 2.9 billion purchase of Motorola.