But entering the world's most competitive phone market poses significant challenges. While more than 284 million phones were sold in China in the first nine months of 2014, according to government data, shipments fell 10.9 percent year over year.

Moreover, in excess of 90 percent of handsets were sold by domestic brands, which charge around $200 for increasingly sophisticated smartphones, leaving less than 10 percent of the market to foreign brands priced at $400 to $500 or more.

Martynov said Yota was betting its unique dual-screen features and localized content would distinguish it from other high-end phones running Google's Android software, while selling at somewhat lower prices than rival premium-priced phones.

Data from market research firm IDC showed Yota shipped only 109,000 phones in the five quarters ending in December. Russia received 55 percent, Central and Eastern Europe took 26 percent, but shipments to Western Europe and elsewhere were tiny.

“The problem with Yota is that it looks like an interesting concept," IDC mobile analyst Francisco Jeronimo said of the dual-screen. "But when we started playing around with the latest model, we asked ourselves whether we really needed two screens.”

Yota is 25.1 percent-owned by Russian state conglomerate Rostec, while Telconet Capital, a fund backed by Russian technology entrepreneurs, has a 74.9 pct stake.