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A prisoner of commerce

November 15, 2005

GOV. ARNOLD SCHWARZENEGGER is in China this week urging officials to open their borders to more California imports. But China isn't just keeping products out. It's also preventing one of the governor's constituents -- an entrepreneur embroiled in a financial dispute with a Chinese supplier -- from leaving the country.

The case of 53-year-old David Ji is a troubling reminder of the perils that U.S. companies face when they do business in China. If Chinese authorities value their relationship with the Golden State, they should give Ji back his passport and let him return home with Schwarzenegger.

A native of Jiangsu province in China, Ji is the co-founder and former chief executive of Apex Digital Inc. in Walnut. By partnering with low-cost Chinese manufacturers and slashing profit margins, Apex became a leading supplier in the United States of cheap DVD players and TV sets. Along the way, though, Apex ran into trouble with suppliers who complained that the company didn't pay its bills.

One particularly aggravated partner was Sichuan Changhong Electric Co., a giant manufacturer controlled by local and provincial governments in China. Changhong claims Apex owes it over $450 million. Apex says the figure is much lower, given Changhong's poor workmanship and other problems.

U.S. civil courts routinely resolve such disputes. In fact, Changhong sued Apex in Los Angeles County Superior Court last year to collect the amount it says it is owed. By that time, however, Ji had been detained without charge by Chinese authorities for nearly two months. According to Apex and others close to the company, he was forced to sign over his and his company's assets to settle the debt.

Changhong's U.S. attorney has said that Ji is being held because he wrote 37 bad checks to Changhong in 2003 for a total of $85 million. Apex argues that the checks were merely offered as collateral while the two companies worked out their differences.

Ji spent nearly 10 months in some form of detention, several times on Changhong property, illustrating how blurry the line is between the Chinese government and the factories in which it holds a stake. Released in August, he is still not allowed to leave China or even to travel out of Changhong's home base of Chengdu without permission. And he has still not been formally charged with a crime.

Apex and Ji's family have tried several times to get Schwarzenegger's attention, but have yet to receive a response. Now would be an opportune time for the governor to take action.

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