HP bought back Palm in 2010 for $1.2 billion with the hope of utilizing its WebOS mobile operating system across many products. HP ultimately mothballed its consumer mobile ambitions, and in 2013 LG bought the WebOS platform, which now powers its smart televisions.

Because TCL is yet to announce business strategies for the Palm unit, analysts are expecting more information before forecasting the brand's future.

Wang Jingwen, an analyst at Shanghai-based consultancy Canalys China, said: "With the rise of multiple local vendors, the competition is very intense."

Industry consultancy IDC also said slowing sales growth is making China a tough market for emerging companies.

"With existing players taking a firm grasp on the mainstream market, newcomers have to offer buyers something new and unique," said James Yan, an IDC researcher.

TCL is not the only Chinese company interested in buying struggling overseas handset brands.

Beijing-based Lenovo, the world's largest personal computer maker, has just said it plans to bring Motorola-branded phones to China before the end of next month, after acquiring Motorola Mobility from Google Inc for $2.9 billion a year ago.

Rick Osterloh, president and chief operating officer of Motorola, told China Daily in mid-December that Lenovo's channel network in China will support the comeback of the brand in the world's largest smartphone market.

Lenovo is hoping the Motorola name will become a serious challenge to Apple and Samsung, particularly in the United States and Europe.