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After several years spent lost in the shuffle of Android handset makers, LG Electronics Inc. is giving up on the China market and making a renewed push in the U.S. with a high-end flagship smartphone, in a bid to regain the world's No. 3 spot.

LG's G5 smartphone, launched on the sidelines of the Mobile World Congress in Barcelona, has a radically different design that has won plaudits from critics, bolstering investor hopes that the South Korean company may have finally found its hit phone. LG needs a best seller as its mobile unit has posted losses for the past two quarters.

The metal-framed G5 has a modular design, which allows users to easily swap in accessories like a camera pack with an optical zoom, a high-fidelity audio booster or an extra battery.

In its efforts to make the G5 a hit, LG executives said the company is planning simultaneous launches in the U.S., Europe and South Korea, working with 200 carrier partners when the phone goes on sale in April.

"We want to give it a big drive this time, setting aside more budget for marketing than we could probably afford," said Juno Cho, LG's mobile chief, without disclosing specific figures.

Mr. Cho was named LG's mobile chief at the end of 2014, largely due to his experience in the U.S. He spent four years as an executive involved in setting business strategies for LG's North American operations.

But LG has a lot of catching up to do. Last year, it ranked sixth in the global smartphone market with a 5.3% market share, behind Samsung Electronics Co., Apple Inc. and a trio of Chinese smartphone makers—Huawei Technologies Co., Lenovo Group Ltd. and Xiaomi Corp., according to data tracker TrendForce. It ranked third globally in early 2013, but was toppled by Huawei. Still, with Lenovo and Xiaomi struggling to improve their market share, LG sees an opportunity to challenge Huawei for the No. 3 spot with differentiated devices.

Analysts estimate that LG could ship more than 10 million units of the G5 this year; which, while modest compared with expected sales for Samsung's Galaxy S7, would be a record for the company.

"Now that smartphones have fully penetrated the market, it's so hard to impress the consumer, and the G5 can do that," says Jefferson Wang, a wireless and mobility consultant at Philadelphia-based IBB Consulting Group. "They've hit the areas that are traditionally important for the consumer: photos and music."

If the device takes off, LG could also benefit from sales of accessories, which have juicier profit margins, analysts say.

In a reflection of its ambitions, LG eschewed its usual practice of renting out a modest hotel conference room on the sidelines of Mobile World Congress for its launch event. Instead, it booked a jumbo airplane hangar-sized hall on a hill overlooking Barcelona. In a break from practice, it held its event just hours before Samsung's event, and in direct competition with Huawei's news conference.

Committing to a bigger marketing budget could make LG a key partner for U.S. carriers, who are looking for fresh products to drive excitement and typically pour in marketing dollars alongside handset manufacturers, says Jeff Fieldhack, a Rancho Santa Fe, Calif.-based research director for Counterpoint Technology Market Research.

Spending big on advertising could help LG steal market share from struggling handset makers like HTC Corp., Sony Corp. and Microsoft Corp., Mr. Fieldhack added.

Mr. Cho concedes that marketing could take a toll on the company's bottom line. But executives say that with a potential hit smartphone on its hands, now is the time for LG to be aggressive.

Late last year, LG introduced the V10 smartphone in the U.S. In order to play up the device's video-shooting features to consumers in their 20s and 30s, it hired movie star Joseph Gordon-Levitt to promote the phone.

Thanks in part to these efforts, LG's smartphone shipments in the U.S. market rose to 13% in the last three months of 2015, according to research firm Counterpoint. That marked a strong gain for LG from a year earlier—a period during which both Apple and Samsung lost ground.

Despite its progress, challenges still abound. The company has backpedaled from China, the world's largest smartphone market, due to stiff competition where companies like Samsung, which was dominant there for years, and Lenovo, a technology pioneer in China, have also struggled.

LG's China sales accounted for just 6% of the company's total revenue, including sales of televisions and home appliances, during the first three quarters of 2015. This compares with 28% for North America and 26% for South Korea during the same period.

"China is a very brand-sensitive market, and it requires huge retail costs in the early stages to push products," Mr. Cho said.

Its focus on the U.S. also comes as other Chinese makers like Huawei are eyeing the market.

To diversify, LG is also pushing into other segments such as accessories to go with phones, including a lightweight virtual-reality headset, a 360-degree camera and a rolling robot that can serve as a real-time surveillance camera for the home.

Write to Min-Jeong Lee at min-jeong.lee@wsj.com and Jonathan Cheng at jonathan.cheng@wsj.com

(END) Dow Jones Newswires

February 24, 2016 00:35 ET (05:35 GMT)

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