The world’s largest drone maker is suing the US Government to be removed from a list of “Chinese Military Companies.”
DJI is going after the US Department of Defense, claiming that its presence on the list since December 2021 has had a negative impact on its business.
It was added with eight other Chinese tech firms in a wider movement against Chinese firms – including Huawei and TikTok — accused of being too involved with the Chinese government and, in some cases, even being threats to US national security.
Stigmatized and Penalized
DJI is claiming that its designation on the list means it has “lost business deals, been stigmatized as a national security threat, and been banned from contracting with multiple federal government agencies.” It claims that some of its drones have been blocked by entering the US by Customs.
It also said that its employees have been targeted and “now suffer frequent and pervasive stigmatization” and are “repeatedly harassed and insulted in public places.”
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No Connection to the Chinese Government
Much like tech firms TikTok and Huawei, DJI insists that it is neither owned nor controlled by the Chinese government but acknowledges that two Chinese state-owned investment funds have made small investments in the company in the past. One has since ended its investment, however, and the other, the Shanghai Free Trade Zone Equity Fund, has “less than 1% of DJI’s shares and less than 0.1% of DJI’s voting rights.”
The company also fervently denies the accusation that it “actively support[s] the biometric surveillance and tracking of ethnic and religious minorities in China, particularly the predominantly Muslim Uyghur minority in Xinjiang”, the charge which saw it added to the blacklist in the first place.
“It’s very unfortunate. We’ve stated unequivocally that we have had nothing to do with treatment of Uighurs in Xinjiang.” – Adam Welsh, DJI’s Head of Global Policy to CNBC
In the lawsuit, DJI emphasizes that it “neither designs nor permits their use for combat purposes…[and] prohibits doing business with entities that intend to use DJI products for combat”. It does recognize, however, that it cannot control where its drones are used once bought.
Long-Running Concerns
The company has been in the sights of the US Government long before it was placed on this blacklist.
The Verge notes the US Army asked its units to stop using the company’s drones in 2017, for instance, while the US Interior Department followed suit just a few years later. In 2020, it was added to an economic blacklist by the US Department of Commerce, again for its alleged involvement in human rights abuses, with a US Treasury ban also coming into force shortly after.
National Security Risk
An act currently being considered by Congress could see DJI’s latest models completely banned from being imported into the country due to security risks.
This is the same argument that has resulted in TikTok facing a ban in the US and we are creeping ever closer to the deadline for Chinese-parent company, ByteDance, to either sell its US operations or face exiting the country in disgrace.
Huawei has been on a list of “Communist Chinese military companies operating in the United States” since June 2020. Placed there by The Pentagon, the list also includes China Telecommunications Corp. and China Aerospace Science and Industry Corp. When Huawei was added, The Pentagon signaled that more companies would be added. Republican Senator Marco Rubio said at the time of Huawei’s addition that the list was “woefully inadequate.”
It’s not just Chinese companies that have borne the brunt of the US government’s efforts to tighten its tech security in the past few years – antivirus software programs made by Russian-owned ventures like Kaspersky, for instance, can no longer be used by federal agencies and departments.
Chinese ventures with a US presence will be watching closely to see if DJI gets anywhere with its case or if is deemed a security risk. If the drone manufacturer is unable to prove its point in court, the episode is likely to make other Chinese companies think twice about expanding into the world’s most lucrative consumer tech market.
