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SCMP Reporter

Electronics retailer Apex says its chairman has been forced to sign over assets to a mainland supplier

United States electronics firm Apex Digital has claimed its chairman was forced to sign over assets to China's top television maker, the latest twist in a legal battle that has cast a cloud over fast-growing ties between US distributors and mainland electronics makers.

Apex also asserted in new court documents that it paid the Chinese television maker, Sichuan Changhong Electric Appliance, more than US$340 million in 2003. Changhong is demanding US$480 million for unpaid bills in the  dispute.

Apex, a California-based company that sells inexpensive electronics to retail outlets including Wal-Mart Stores, claimed its chairman was forced under the threat of physical harm in China to sign papers that transfer the company's assets to  Changhong in the event of a default.

Changhong spokesman Liu Haizhong  denied the company had strong-armed Apex chairman David Ji, saying: 'This is untrue; there's no such thing.'

At the same time, Changhong's US counsel said the company had started settlement talks with Apex.

'Both parties are trying to work out a sensible plan to resolve this matter,' said Charles Wang, a partner with Cadwalader, Wickersham & Taft, which represents Changhong. 'The company is open to all kinds of possibilities and alternatives.'

Built on inexpensive parts made in Asia, the Apex brand has shot up to become a big name for DVD players and televisions in the US.  Apex had become the biggest supplier of DVD players and the fifth-largest supplier of colour televisions there by 2003 and had more than US$1 billion in annual sales, according to newspaper reports and the company's website.

Apex sold DVD players for as little as US$60 apiece, selling 1.2 million through Wal-Mart on a single promotion day, Mr Ji told a Chinese magazine in 2003.

After racking up hundreds of millions of US dollars in bills from its Chinese television supplier, Apex agreed to pay the money, only to miss its first two payments, Changhong has alleged in a case filed with the Los Angeles County Superior Court.

It further said the repayment plan gave Changhong the rights to Apex's 200,000 square foot warehouse in  California in the event of default.

Apex has yet to formally respond to the charges but in court declarations, Apex officials insist that Apex made more than US$340 million in payments to Changhong in 2003 and that claims its cheques bounced are false.

Meanwhile, the fate of Mr Ji, a naturalised US citizen originally from China, remains unclear. All sides agree that Mr Ji was detained and placed under house arrest by Chinese authorities on suspicion of fraud.

An Apex spokeswoman said on Monday that Mr Ji was returning to the US this week to attend a trade show at which Apex is unveiling new products. But in a new declaration to a California court,  Apex senior counsel Jerry Huang stated that Mr Ji was in Shanghai and was not permitted to leave the country by Chinese authorities.

Mr Huang also said, in a  declaration from mid-December, that Mr Ji was required to sign documents 'that he had not agreed to and which had not been authorised by the  ... directors of Apex or its parent corporation, United Delta'.

'Changhong has apparently forced Mr Ji [assuming that the signatures on the pledge and security agreement are his] to sign documents under duress and the threat of physical harm,' Mr Huang said.

The agreement 'is very one sided in favour of Changhong and essentially transfers to that entity all of the assets of Apex based upon an alleged account payable' of around US$470 million, according to the declaration.



US company alleges coercion in China