Drone industry on fire after US blacklists DJI over Chinese government ties

The biggest talk of the drone industry this week: news that the U.S. government has added DJI to a list of companies on its restricted trade list. DJI is a Chinese drone manufacturer, and government officials have been weary of the companies potential Chinese government ties — feelings that have been exacerbated by the Trump administration.

Dozens of Chinese companies, including DJI, were put on a restricted trade list Friday. China’s top chipmaker, SMIC, was also placed on the list. While it’s not entirely clear why exactly DJI was added to the list, some have suggested that it was DJI’s reported work for the Chinese government, while others have suggested DJI is involved in potential human rights violations.

A history of anti-China sentiment in the drone industry

The U.S. government has long been worried about federal agencies using drones by foreign drone makers, notably Chinese-owned DJI.

Anti-China sentiment in the drone industry largely kicked off in 2017 when the U.S. Army prohibited its troops from using DJI drones because of cyber-security concerns.  Other private organizations or other government arms have suggested or implemented bans on drones made from anything other that American drone companies. Then, the Trump administration has explored an executive order that would ban all federal departments and agencies from buying or using foreign-made drones.

In response, people have been promoting drones made in America, specifically in response to backlash against drones made in China.

And adding to the anti-China controversy, a provision prohibiting federal agencies from using foreign-made UAS and UAS equipment was removed from the National Defense Authorization Act (NDAA).

Tensions have been increased further this week given the fact that these are Trump’s final weeks in office coupled with ongoing tensions around tariffs, the coronavirus, and China’s stance over Hong Kong.

Can you still buy DJI drones in the U.S.?

For now, yes. DJI says its products will still be sold in the U.S., despite being put on the restricted trade list. Being placed on the U.S. government’s restricted trade list designation does not completely bar a company from selling products in the U.S.

It simply means that placement on the list restricts companies from exporting US technology without a license. But that’s still bad news for DJI.

“DJI is disappointed in the U.S. Department of Commerce’s decision”, a representative of the company said in an emailed statement. “Customers in America can continue to buy and use DJI products normally.”

Related read: Drones made in the USA: the American drone companies you need to know

But it’s unclear for how long you can still pick up a DJI drone in the U.S. According to Engadget, DJI will have to turn to other companies for parts, and there are no guarantees American retailers will continue to carry DJI drones, action cameras, Osmo gimbals or other gear.

Engadget also outpointed that another big Chinese tech company, Huawei, dropped many of its plans following a U.S. ban (Huawei was added to the list in May 2019).

How is the drone industry responding to the ban?

The short answer: it’s on fire, with opinions ranging from loud support of the ban (largely from U.S.-based drone companies who see this as giving them a leg up against DJI), to concern among businesses that rely on DJI products (they’re wondering if they should stock up now).

Skydio’s response: Brendan Groves, Head of Regulatory and Policy Affairs at U.S. drone maker Skydio responded with fiery comments centered around allegations that DJI is involved in human rights violations.

“Based apparently on DJI’s support for abhorrent human rights violations, today’s addition of DJI to the entity list sends an unmistakable message: DJI does not share our values and cannot be trusted,” Groves said in a prepared statement. “DJI had already acknowledged its obligation to share sensitive information collected in the U.S. and around the world with the Chinese Communist Party–a serious security risk. Now we learn that DJI has profited for years by supporting the suppression of the Uighurs in Xinjiang province–the world’s most egregious example of human rights abuses. Today’s news also sends an unmistakable signal to the marketplace: companies should think twice about doing business with a known violator of human rights.” 

Skydio has long been critical of DJI, including issuing a statement last year saying that “the industry as a whole is not healthy” given DJI’s dominance (the company has an estimated market share over 70%).

Auterion’s response: Auterion, an open-source drone software platform with offices in California and Switzerland, is using the news as an opportunity to promote its open-source ecosystem.

“With DJI being added to the US Commerce Department ‘Entity list’ the whole industry is changing fundamentally: This move does not only bar DJI from being able to continue to source critical U.S. components, it also means that any enterprise wanting to do business with DJI (even just using the DJI SDK) has to now review whether that activity is in compliance with U.S. regulations,” according to a prepared statement from Auterion. “Every transaction becomes a legal risk.”

Auterion’s software provides enterprise and government users with an ecosystem of software-defined drones, payloads, and third party applications, designed for use within a single platform based on open-source standards.

“The open source ecosystem will prevail as the de facto industry standard in the battle for market share,” according to Auterion’s statement. “As customers move to sever dependence on Chinese drones…(they) need to move towards an alternative that offers flexibility, choice, and the ability to adapt their systems over time without being locked to a single vehicle or vendor. The drone industry has long relied on a single company, to the detriment of the whole industry.”

Responses from the community: Based on the social media reactions, the drone industry is not excited about the ban. For small business owners, it disrupts their ability to buy relatively low-cost, while still reliable equipment.

That said, some suggest that the DJI ban is largely driven by the anti-China sentiment of the Trump administration in particular, and concerns over the company’s alleged Chinese government ties will largely go away after Biden’s inauguration.

For some consumers, they’re scooping up drones now, out of concern that they might be harder to get your hands on in 2021. Maybe you want to add a drone to your Christmas list now.