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The Big Story

How China's state-backed companies fell behind

Efficiency plummets over 10 years, exclusive data show

YUSHO CHO, Nikkei staff writer, and KENJI KAWASE, Nikkei Asian Review chief business news correspondent | China

SHANGHAI/HONG KONG -- In August 2017, the lumbering telecom operator China Unicom was selected as a test case for Beijing's latest attempt to reform some of its state-controlled companies.

It was a prime candidate for overhaul. China Unicom's former chairman, Chang Xiaobing, was found guilty of taking bribes and sentenced in May to six years in prison. And by some important financial measures, China Unicom's performance has been catatonic. Its return on equity -- a key indicator of overall efficiency as well as a yardstick of  how much net profit a company returns to shareholders -- has been below 1% in recent years, compared to a global industry average of about 19.5%, according to an analysis of QUICK-FactSet data on 47 telecom operators.

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