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SHANGHAI - Top Chinese TV maker Changhong said on Wednesday it had ended a tie-up with U.S. distributor Apex, a major supplier of cheap DVD players that owes it $467.5 million.

The plight of Sichuan Changhong Electric Appliance Co. Ltd. -- which said it severed ties with Apex Digital Inc. in April -- illustrates the dangers Chinese firms face as they bankroll aggressive global expansions, analysts say.

Complicating matters, local media said Apex's chairman and co-founder, David Ji, had been detained in China on suspicion of financial fraud, though Changhong said it was unaware of this and police declined to comment.

In Hong Kong, shares in another company controlled by Ji and partly owned by Apex, China Data Broadcasting Holdings , were suspended from trade for a second day pending an announcement. Last week, it said three directors had resigned.

Changhong's shares plunged their 10 percent limit for the second session running, wiping out 2 billion yuan ($241.7 million) in capitalisation since it revealed the Apex debts on Tuesday.

Changhong, a former military concern that traces its history back to 1958, undertook a rapid expansion in the 1990s that lifted it into the number two slot among TV makers after Samsung Electronics Co. Ltd. .

In past years, it redoubled efforts to sell TVs abroad to escape a debilitating price war in China, a strategy analysts said it pursued too aggressively.

Under a 2001 tie-up with Apex, the biggest suppliers of DVD players in the United States in 2003, its products reached U.S. retailers such as Wal-Mart Stores Inc..

EGOS BEFORE SHAREHOLDERS

This week, Changhong warned of a huge 2004 loss after making provisions for the Apex debts -- a blow to its esteem that analysts say it may never recover from.

"For some of the management at Chinese companies, their egos override the overall benefit to shareholders. They like to grab market share even at the expense of margins," said Deutsche Securities appliances analyst Victor Wong in Hong Kong.

An executive with Changhong's marketing department said the company intended to forge ahead in the key U.S. arena despite ending its relationship with California-based Apex.

"The company is sticking by its international strategy, which has not changed," the executive told Reuters.

Changhong's spokesman, Liu Haizhong, said Ji's fate had nothing to do with the company.

"Changhong has been in constant touch with Apex to try to clear its accounts," Liu said by telephone. "Our network in the United States is already very wide, so our sales in North America will continue."

Apex declined to comment on its relationship with Changhong, saying this "business disagreement" would be addressed through proper channels, and denied knowledge of Ji's reported detention.

GLOBAL AMBITIONS

Changhong had turned its attention overseas after waging a costly price war in a home market crowded by rivals such as Konka Group Co. and TCL International -- one of the country's top TV makers after its tie-up with RCA brand-owner Thomson SA .

"Changhong will not be able to recover from the shock if all the provisions are written off as losses eventually," said an appliances analyst at Tianxiang Investment Consulting Co., who declined to be named.

"New projects will not be able to yield enough money even over the next two to three years to be able to cover this loss." Its troubles come as Chinese companies step up overseas expansion, as illustrated best by Lenovo Group's purchase of IBM's personal computer business for $1.25 billion this month.

But some were in danger of falling into Changhong's trap: pursuing global ambitions without in-depth knowledge of global business or adequate risk management, analysts said.

"They are basically state-owned companies which in general are not that sophisticated in terms of corporate governance and internal controls," said Deutsche's Wong.

Shares in Ji's China Data, which were suspended on Tuesday pending a price-sensitive announcement, have plummeted 65 percent over the past 3 months in Hong Kong.

Apex owns 47 percent of the Bermuda-incorporated company, which manufactures data broadcasting equipment and trades consumer electric products.

China Data said last week in a statement that three directors had resigned for personal reasons. ($1=8.276 yuan) (Additional reporting by Joyce Li in Hong Kong, and Lu Jianxin and Victoria Bi in Shanghai)