DJI Troubles Continue: U.S. Blacklists Drone Company
On Dec. 16, the United States government added eight companies to its Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC).
The world’s largest consumer drone manufacturer, Shenzhen Da Jiang Innovations (DJI), was among the those added to the list.
This list is an Executive Order addressing “the threat from securities investments that finance certain companies of the People’s Republic of China.”
Though it doesn’t ban the buying or selling of any particular DJI drones, it does prohibit U.S. citizens from buying or selling publicly traded securities connected with the company, as well as other companies on the list.
Essentially, the U.S. government wants to ensure that investment money isn’t being placed into certain Chinese companies, for various reasons
Why Was DJI Placed on the List?
According to the Department of the Treasury, DJI operates in the surveillance technology sector of the economy.
Further, they provide drones to the Xinjiang Public Security Bureau, which maintains surveillance on the minority Uyghur population in Xinjiang. The Xinjiang Public Security Bureau was previously designated in July 2020, as being “responsible for, complicit in, or directly or indirectly engaged in, serious human rights abuse.”
This isn’t the first time DJI has faced the scrutiny of the United States Government.
In 2018, the U.S. Department of Defense (DoD) began a ban all off-the-shelf commercial drones. Although the ban wasn’t explicitly aimed at DJI, the company, given their share of the market, manufactured the vast majority of drones being used by defense personnel.
As other government agencies followed suit with the DoD, the U.S. Government’s position solidified…it now specifically calls out DJI.
For example, in a statement released in July 2021, the DoD said, “The Department of Defense (DoD) position is that systems produced by Da Jiang Innovations (DJI) pose potential threats to national security.
“Existing DoD policy and practices associated with the use of these systems by U.S. government entities and forces working with U.S. military services remain unchanged.”
Will the DJI Ban Affect Consumers?
While it’s too early to tell how this will impact DJI’s exposure to the consumer drone market in the United States, UAV pilots, particularly those flying drones for commercial use, might may want to consider other options.
DJI rejected claims over the data leaks. In fact, while DJI spokesperson Adam Lisberg did not comment on the most recent developments, he did refer to the company’s response to the 2020 sanctions in his response.
“DJI has done nothing to justify being placed on the Entity List,” Lisberg said.
“We have always focused on building products that save lives and benefit society. DJI and its employees remain committed to providing our customers with the industry’s most innovative technology. We are evaluating options to ensure our customers, partners, and suppliers are treated fairly.”
Additionally, China continues to deny claims that it is mistreating or committing genocide against ethnic minorities.
Meanwhile, consumers are left to decide on whether or not purchasing DJI drones remains their best option, given the current political climate.
Other U.S. Manufacturers Could Benefit
For U.S. drone manufacturers, the Department of the Treasury’s move to add DJI to the NS-CMIC may serve as an unexpected blessing.
Shortly after the DoD banned off-the-shelf drones in 2018 for military use, the Defense Innovation Unit (DIU) initiated the Blue sUAS program.
Thanks to the DIU, several drone manufacturers based in the United States and other “friendly” nations were given a chance to produce drones for government use.
The program selected five companies: Skydio, Altavian, Vantage Robotics, Parrot, and Teal. In many ways, the funds issued through this program helped these companies grow faster than if DJI had maintained its market dominance.
Again, the addition of DJI to the NS-CMIC doesn’t prevent consumers from purchasing or using DJI drones. But, it certainly doesn’t help the company’s business.
Recent estimates showed that DJI already suffered significant losses in market share, due, in part, to the bans that began in 2018.
In 2020, the company maintained an estimated 69 percent of the consumer drone market. Just a year later, that number decreased to 54 percent.
The Takeaways
Human rights violations remain a major point of contention between China and the rest of the world.
In fact, for that reason, several countries — including the United States and United Kingdom — recently announced that they’re boycotting the 2022 Beijing Olympics. The DJI ban is just another brick in the wall, so to speak.
Being placed on the NS-CMIC list is a major blow to the drone manufacturer. One that may lead to an even greater loss of market share.
Will U.S. domestic drone manufacturers, such as those selected for the Blue sUAS program, become more significant players in 2022? There’s a good possibility.
If that’s the case, expect to see more innovation in design, and a leveling of the playing field as the quality and capabilities of DJI’s competitors strengthen.
David Daly - Contributing Author
David Daly, is an award-winning photographer/writer and licensed (FAA) Commercial sUAS pilot. A graduate of the United States Naval Academy, David is a former Marine Corps officer with a BS in Oceanography and has earned his MBA from the University of Redlands. David has worked for Fortune 100 companies and has a background in aerospace, construction, military/defense, real estate, and technology.
