David Ji and Ancle Hsu

By Leslie Berestein/Ontario

There was a time, only about 15 years ago, when David Ji, co-founder of Apex Digital, the top-selling maker and importer of DVD players, couldn't rent a movie. When he was a graduate student and part-time house painter, Ji says, "I wanted a VCR, but I couldn't afford to buy one."

Until recently, many Americans felt the same way about a DVD player. The digital successor to the VCR was a luxury item, costing hundreds of dollars on average. But that was before Ji, 50, and his partner, Ancle Hsu, 41, burst into the home-electronics market. Since Apex introduced its first model in early 2000, for $179, the price of DVD players has plummeted. Apex, based in Ontario, Calif., remains a low-price leader, with its basic units now selling for about $59 at large retailers like Circuit City and Wal-Mart. The fledgling company has captured 15% of the market, making it No. 1 in units sold this year, surpassing Sony and Panasonic.

The meteoric rise of Apex Digital, expected to exceed $1 billion in sales in 2002, has stunned the industry. Says Richard Doherty, research director for the Envisioneering Group, a technology consultancy located in Seaford, N.Y.: "This is a true overnight success story."

In reality, the story of Ji and Hsu is more one of dogged, thrifty perseverance. The two became friends in the late 1980s working for a Los Angeles scrap-metal business that exported to China. Hsu was a Taiwanese immigrant who arrived in 1984. Ji came to Los Angeles as a graduate student in 1987, having recently earned his M.B.A., and was sending money home to his wife and daughter in Shanghai.

The two formed a scrap-metal business of their own, then started a side business importing speakers and amplifiers, and later DVD players, from China. The first units they imported and sold through Circuit City differed from others sold in the U.S. at the time in that they could play MP3 files. The players also sported a quirk Ji and Hsu say they were unaware of: a manufacturing error allowed users to copy DVDs to videotape and override coding that prevents DVDs of films from being viewed in countries where they have not been released.

Apex quickly fixed the problem, but by then the brand had developed a certain rogue hipness among illicit copiers of films on DVD. "We noticed on our website that a lot of people were searching for Apex," says Rick Souder, a Circuit City vice president. But the key to Apex's rapid growth was its rock-bottom prices, which were achieved by working closely with low-cost Chinese producers, accepting slim profit margins and skimping on advertising.

Ji and Hsu are expanding the Apex brand. They launched a television line earlier this year and are looking into digital cameras and air conditioners. Both men rack up loads of frequent-flyer miles across the Pacific. "I'm much busier than I want to be," says Hsu, the father of a girl, 8, and a boy, 4. He likes to spend his downtime watching cartoons with the kids and teaching his daughter to roller-skate.

Ji, a slight man who accompanies handshakes with a subtle bow, has yet to embrace the trappings of executive life. His daughter, Jean, 24, who with her mother joined Ji in 1994, says her father eschews luxury items. A Cartier watch, a gift from Hsu, sits ignored in a drawer while Ji continues wearing the same beat-up Swiss-made Cyma timepiece that he's been changing wristbands on for at least a decade. An employee was recently shocked to find Ji, ever practical, scrubbing the men's room at company headquarters. Such modesty fits nicely with Apex Digital's products, which, Ji and Hsu say, are "for the average American"--for people like themselves. --By Leslie Berestein/Ontario