Chinese Maker of TVs Blames Loss on Apex Digital

Ontario-based electronics importer Apex Digital Inc. is being blamed by China’s second-largest television maker for its first annual loss.

Sichuan Changhong Electric Co. said Tuesday that it would post large losses in 2004 because it might be able to collect only $150 million of $467.5 million owed by Apex, its biggest customer. Shares of the Chinese company plunged to an eight-year low on the news.

Sichuan Changhong expects Apex to fail to make the payment because of losses incurred by Apex that were said to be caused by U.S. tariffs on imports of Chinese-made TVs.

The announcement came after a report Monday in a Chinese newspaper that Apex co-founder and Chairman David Ji was arrested in China on fraud charges.

“There’s some suggestion of massive improprieties in their fund collections from retailers,� said Richard Doherty, research director of Envisioneering Group, an electronics market research firm.

Apex has been a big seller of low-priced televisions, DVD players and other home entertainment products to retailers such as Wal-Mart Stores Inc. and Circuit City Stores Inc. The privately owned company employs 113 people in Ontario and had 2003 sales of $373 million, according to a January report by Dun and Bradstreet Inc.

Apex spokeswoman Marietta Schoenherz said in a statement Tuesday that the “pending business disagreement� between Apex and Sichuan Changhong “is being addressed through the proper channels.� Ji is expected to “return to the U.S. shortly,� she said.

Apex was founded in 1997 and started working with Sichuan Changhong in 2001, buying color TV sets from the Chinese manufacturer and labeling them under its own brand.

Sales of Apex’s DVD players overtook those of brands such as Sony and Panasonic in recent years, Schoenherz said, but Apex was suffering losses in the U.S., particularly on its televisions.

“Our business has been harmed due to anti-dumping, but I can’t comment further as litigation is ongoing,� she said.

A default by Apex, Sichuan Changhong’s biggest debtor, would be the latest blow for the Chinese company after the U.S. last spring imposed 24.5% punitive tariffs on its exports. The Commerce Department’s International Trade Administration ruled unanimously that TV imports from China had inflicted damage on U.S. television makers, resulting in the tariffs.