Apex Digital

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Apex Digital, Inc. is an American electronics trading company based in Walnut, California founded in 1997. It distributed high definition and LCD panel televisions, DVD recorders and players, and other digital items including photo frames and bookshelf audio systems. It also has an office in Ontario, California.<ref name="bloomberg">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> In 2010, Apex filed for Chapter 11 bankruptcy, which finally closed in 2018.

History

1997-2003

Apex Digital, Inc. was co-founded in 1997 by David Ji (President), Wasim (CEO), and Ancle Hsu (Chief Operating Officer).<ref>"Leading Chinese TV Exporter Has Huge Loss", The Gainesville Sun.</ref><ref name=dispute>Joseph Kahn (November 1, 2005). "Dispute Leaves U.S. Executive in Chinese Legal Netherworld," The New York Times.</ref><ref>"US company alleges coercion in China," South Chine Morning Post.</ref> In 2000, it introduced its first DVD players – the AD-600A – to the US market, which became successful due to their ability to play MP3 files; used to download music files off the internet during the height of the Napster controversy. By the end of 2001, Apex was the second leading marketer of DVD players in the US after Sony.<ref name="Funding Universe">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

In 2001, Apex became the first company certified to produce DVD players compatible with Eastman Kodak’s picture CDs and its ViDVD player enabled users to connect to the internet.<ref name="Funding Universe">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

In 2001, Ji reached an agreement on behalf of Apex with the Chinese company Sichuan Changhong Electric (Changhong).<ref name=dispute/> Changhong was China's largest television manufacturer, a supplier majority-owned by the company-town city of Mianyang and the province of Sichuan.<ref name=dispute/> The company provided two-thirds of the city of Mianyang's revenue, and Changhong's chairman and managing director Zhao Yong was until late 2004 the city's deputy mayor.<ref>"Efforts Continue to Win Release of American in China," The New York Times.</ref> Changhong became Apex's largest supplier of DVD players.<ref name=dispute/>

In 2002, Apex became the top brand of DVD player in the United States.<ref name=dispute/> Apex also began selling Changhong-made television sets.<ref name=dispute/> Apex introduced new products in 2002, including a DVD player with a built-in hard drive for downloading TV programs and a range of television sets. In 2003, the company held 17% of the US DVD player market and began selling 42-inch HD plasma screen TVs and LCD monitors. Stephen Brothers, who originally led sales and marketing efforts, was named president in September of that year.<ref name="Funding Universe">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> Apex sales rose to almost $2 billion in 2003.<ref name=dispute/>

2004-05

In 2004, Apex had $1 billion in sales.<ref name=wrong>Template:Cite news</ref> In January 2004, Apex introduced the "ApeXtreme" console for playing PC video games on a television screen.<ref name="Funding Universe">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> The system was cancelled in December that year.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> During this period, Ji was arrested in China on fraud charges against Changhong.<ref>Template:Cite news</ref>

On October 23, 2004, as Apex was in a business dispute with Changhong in which the two companies argued over hundreds of millions of dollars, as Ji was in China on a business trip he was arrested by Mianyang police in his hotel room in Shenzhen, China, near Hong Kong, 500 miles away from Shenzhen.<ref name=forb/><ref name=dispute/><ref>Template:Cite news</ref><ref>Template:Cite news</ref><ref>Template:Cite news</ref> Changhong accused Ji of defrauding them through bad checks.<ref name=wrong>Template:Cite news</ref> He was held in China by Changhong for months without charges.<ref name=dispute/><ref name=forb/> Ji was taken to Sichuan, where he was handed over to Changhong, which kept him in a makeshift jail.<ref name=dispute/>

On his fifth day there, he was placed on the phone with a Washington D.C. lawyer named Charlie Wang (Wang Xiaoling, in Chinese), of the American law firm Cadwalader, Wickersham & Taft, who accused Ji of committing fraud and said that Ji's only way out was to sign documents that Wang would deliver to him that would help Changhong recover missing funds.<ref name=dispute/> Ji was then presented with legal documents for his signature that pledged all of Apex's assets as well as Ji's personal assets to Changhong to settle a claimed $470 million debt.<ref name=dispute/> Ji initially refused.<ref name=dispute/> A guard then asked Ji, "Do you want this pen, or do you want your hand?", as the guard made a motion of chopping off his hand.<ref name=dispute/> Ji signed the papers.<ref name=dispute/> On December 14, 2004, Changhong sued Apex in Los Angeles County Superior Court, alleging breach of contract and citing the documents Ji had signed.<ref name=dispute/> Apex contested the suit, stating that Ji had been abducted and that the documents had been signed under coercion.<ref name=dispute/>

In order to create an argument that Ji was not in fact a hostage, Charlie Wang, the Cadwalader lawyer for Changhong, deposed Ji on videotape.<ref name=dispute/><ref name=forb/> Ji did not have a lawyer; Apex later argued that that raised questions as to whether the tape would have any value in American courts.<ref name=dispute/> At the deposition, Ji disputed Changhong's version of events; this led to a heated argument between Ji and Charlie Wang, according to people who saw the deposition.<ref name=dispute/> The following day, Ji was taken to meet Mr. Zhao, Changhong's head.<ref name=dispute/> Zhao warned Ji that Changhong controlled the Mianyang courts, that Ji would be tried in those courts, and that Changhong would decide if he lived or died.<ref name=dispute/><ref name=forb>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> Charlie Wang then conducted a second taped deposition of Ji.<ref name=dispute/> In response to everything Wang asked Ji, Ji muttered agreement, including that Changhong had "invited" him to stay at its apartment in Shanghai.<ref name=dispute/>

Apex then complained that Cadwalader lawyer Charlie Wang had acted improperly and unethically by being a party to Ji' detention.<ref name=dispute/><ref name=forb/> Cadwalader subsequently withdrew from the case.<ref name=dispute/> Charlie Wang, who had been made a Cadwalader partner just a few months earlier, left the firm.<ref name=dispute/><ref name=forb/>

On May 28, 2005, seven months after Ji was first detained, he was handed over to the Mianyang police for formal arrest on charges of "financial instrument fraud."<ref name=dispute/> In June 2015, Apex acknowledged a $150 million debt, but the debt remained unpaid as Apex said it did not have any money.<ref name=dispute/> In August 2015, the police released Ji on restricted bail, without him being indicted.<ref name=dispute/>

2006-present

In 2010, Apex filed for Chapter 11 bankruptcy, which finally closed in January 2018.<ref>"Details emerge in winning Brookstone bid; fate of Merrimack employees unclear," NH Business Review, October 3, 2018.</ref>

In 2019, Apex Digital entered a partnership with Bluestar Alliance, a private equity firm, to purchase Brookstone's online and wholesale businesses. Brookstone is a retail chain that filed for Chapter 11 bankruptcy in 2018.<ref>Template:Cite news</ref>

Controversies

A programming loophole in Apex's first DVD player model meant that users could circumvent regional lockout and Macrovision's copyright protection, meaning they could play DVDs from any region globally and record them onto videocassettes. Apex quickly discontinued the model, and this problem was resolved in subsequent manufacturing.<ref name="Funding Universe">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Apex agreed to pay Philips, Sony and Pioneer a $7 patent royalty fee for every DVD player it produced, following a copyright infringement suit in 2002.<ref name="Funding Universe">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Acquisitions and partnerships

From 2002 Apex developed its range of televisions in partnership with Sichuan Changhong Electric Co. Ltd, China's largest manufacturer of colour televisions.<ref name="Funding Universe">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>