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Apex Digital, David Ji, Chinese law

While not directly related to PVRs, I submit this news as I believe it to be of note.

Some of the longtime readers of PVRblog may remember news about the $30 DVD player or the ApeXtreme, a combination PVR and game system, both which were released by Apex Digital.  I was amazed at the growth of Apex Digital and wrote on this site back in March 2004,

It is incredible to think of a company less than 5 years old, with about 100 employees, selling over $1 billion, being second in marketshare to Sony (at least within the category of DVD players.) Apex seems to have converged at a point between the globalization of manufacturing and labor, the distribution of big-box retailers in America, and this "bargain culture," by providing product cheaper than any other competitor.

Well, it turns out it was too good to be true. 

The New York Times has a fascinating front-page article about David Ji, a naturalized Chinese-American electronics entrepreneur and co-founder of Apex Digital, who is currently being held in China in legal limbo and against his will.  Apex Digital did business with Sichuan Changhong Electric, a publically-traded entity that is majority owned by the city of Sichuan.  Changhong claims that Apex owes it $470 million whereas Apex claims that it owes Changhong less than $150. All of this is moot because Apex is close to bankruptcy.

China has attracted hundreds of billions of dollars in foreign investment and has become the world's third largest trading power. But its legal system, even when handling nonpolitical business cases, has progressed far more haltingly and still rarely backs investors or ordinary citizens against the state.
 
Difficulty enforcing contracts, rampant violations of copyrights and trademarks and protection of domestic industry champions have heightened trade tensions at a time when China is struggling to convince the outside world that its growing economic might poses no threat. Beijing is under heavy pressure to embrace global legal norms with the same fervor with which it has pursued foreign trade.
 
Courts and arbitration panels do resolve many business conflicts that arise from China's thriving market-oriented economy, and they can rule professionally and impartially. But when the fate of powerful companies like Changhong, which has 36,000 employees, lies in the balance, the judicial system does not act independently and offers no recourse for outsiders like Mr. Ji.
 
Ultimately, some legal scholars argue, China's legal system may not improve markedly until central and local government officials relinquish some control and stop putting short-term political goals, like protecting influential companies and suppressing dissent, above the law.

This reads like a primer on how not to do business in China, which is all the more interesting because the founders of Apex Digital are both natualized Chinese-Americans. 

Dispute Leaves U.S. Executive in Chinese Legal Netherworld - New York Times

by Gen Kanai November 1, 2005 in News

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