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Apex Digital Inc. head being investigated for fraud

ONTARIO - 01/04/05 - The US Embassy in Beijing has confirmed the arrest of David Longfen Ji, the chairman of California-based electronics importer and distributor Apex Digital Inc., following media accounts that he is under investigation by Chinese authorities on charges of fraud.

Prior to the announcement, Chinese newspapers had reported that Ji - a naturalized US citizen who was born in China - had been detained in the southern city of Shenzhen, possibly as long ago as last October.

Ji's arrest, authorities said, followed an investigation by police in the western province of Sichuan - the home base of Sichuan Changhong Electric Corp. (SCEC), Apex's primary supplier, said press reports.

The Chinese company recently said it would post large losses in 2004 because it might be able to collect only $150 million of the $468 million it claims it's owed by Apex Digital.

SCEC is "trying through legal channels to reduce the economic losses," said a company spokesman." 

In the first half of last year, Sichuan Changhong exported $200 million in television sets, compared to $600 million for all of last year.
 
Over the last several years, SCEC manufactured about 90% of the television sets China exports to the US with Apex selling nine-out-of-ten of all the Chinese-made televisions sold on the US market.
 
Apex Digital has also been accused of ignoring royalty payments for patented DVD technology.

The company - based in Ontario, California - generated some $373 million sales in 2003 to such big-ticket consumer electronics retailers as Circuit City, Fry's Electronics, Best Buy, and Wal-Mart.  

Apex - founded in 1999 by Ji and Taiwanese partner Ancle Hsu - is SCEC's largest customer and, according to several sources, its biggest debtor.

SCEC has said it expects Apex to fail to make good on the debt because of the recent losses incurred by Apex "caused by US tariffs on imports of Chinese-made TV sets."

Apex spokesman Marietta Schoenherz told the media that the "pending business disagreement" between Apex and Sichuan Changhong "is being addressed through the proper channels."

Ji, she said, is expected to "return to the US shortly."

Apex, which employs about 116 people at its 36,000 square-foot headquarters, started working with Sichuan Changhong in 2001, buying color TV sets from the Chinese supplier and selling them in the US under its own brand-name.

The company's DVD sales have outstripped those of other major players such as Sony and Panasonic over the past several years, but the company has seen its US sales slip dramatically over the past year.

"Our business has been harmed due to anti-dumping [rulings], but I can't comment further as litigation is ongoing," said Schoenherz.

Last spring, Washington imposed 24.5% punitive tariffs on TVs manufactured by Sichuan Changhong after the US Commerce Department ruled unanimously that its US-bound shipments inflicted "damage" on US-based television makers such as Motorola and Zenith.

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