### Countering DJI: U.S. Legislation and Drone Security Concerns

DJI drones dominate the market, raising significant national security concerns amid US-China tensions.

### Concerns and Innovations in the Drone Industry: The Case of DJI
* 🛩 The Countering CCP Drones Act aims to address **national security concerns** surrounding DJI, the world's largest civilian drone manufacturer.
* 🇨🇳 DJI's evolution from a private enterprise to a quasi-state entity raises alarms about its **ties to the Chinese Communist Party** and potential threats to **American sovereignty**.
* 🔍 The company, founded by Frank Wang in 2006, has become a **dominant force in the drone market**, producing a wide range of products from **consumer drones to agricultural applications**.
* ⚠ Concerns have been voiced about DJI drones being used to **gather intelligence on critical US infrastructure**, emphasizing the need for **protective legislation**.
* 💼 The significant reliance of US businesses and emergency services on DJI drones highlights the **potential economic impact** of restricting their use.
* 📉 The competitive landscape has shifted dramatically, with DJI's pricing strategies **undermining American drone manufacturers** and leading to a **decline in local production capabilities**.
* 🌐 Despite the challenges, DJI's innovation in technology continues to advance, with plans to **diversify into new markets** such as automotive and electric bikes, showcasing their **engineering prowess**.
* 🚀 As the drone industry evolves, the potential for **widespread deployment and integration into everyday life** remains vast, indicating that we are **only at the beginning of this technological revolution**.

The gentlelady from
New York is recognized. I rise today in support of
my bipartisan legislation, the Countering CCP Drones Act. If you want a drone
that's easy to fly, that's readily available,
that's affordable, 

and that's among the best drones
you can get, if not the best, then you'll end up with DJI. DJI is known as the world's
largest manufacturer of civilian drones. So that means everything
from a small consumer drone

that you might use
for home videos, all the way up to
products that are used in the agricultural sector. We're talking big, 55kg and
above products that are used for agricultural seed
spreading, spraying pesticides, and things along those lines.

These flying robots
obviously can be used for nefarious purposes. I remember thinking, as we
were building our drones and we were selling hundreds
of thousands of these drones, just thinking, like, man,
please don't let this stuff get

into the wrong hands. It became a very politicized
issue, particularly with US-China relations. And so what we've seen
almost every year since then have been attempts to pass
legislation to push DJI out of the US market.

DJI, over its
lifetime, has shifted from a genuinely
private company into a quasi-state, quasi-private
company with strong state links and with strong links
to the Communist Party. The Chinese Communist
Party is working to undermine
American sovereignty

by forcing Americans
to rely and depend on insecure communist
Chinese technology. Nowhere is this more evident
than in the drone industry. The trajectory of DJI is
a very interesting one. There is no doubt that
this is a company that

was set up by the
founder, Wang Tao, who was a student at that
time in the Hong Kong University of Science
and Technology. And he created the
first prototype drones in his dorm room. So at that point
it is very clear

that DJI was a
private enterprise. However, as Chinese
companies grow they agglomerate more
and more investors from different sources. And it is a truism
in China that you are going to find big
state investors wanting

to invest in you. And with size, and
importance, and prestige also comes control from
the Communist party. That is completely
unavoidable, particularly if you're making a militarily
sensitive technology. And so, what's happened
to DJI is that it

has got state investors. It is a state-affiliated company
with big state investments in it. We do have some state-owned
enterprises that are investors, but they own a really small
percentage, less than 6 percent, and they have less
than 3 percent voting rights.

And so, they have
no golden share. There is no board seat reserved
or any executive position reserved for anybody from
the Chinese government. Frank still has over 70 percent
of the stock and more than 96 percent of the voting
rights in the company.

So it's very much a
privately-held company. And that's how we
want to maintain it. DJI may claim that
these investors are no different from any
other private equity investor in the West, but
this is simply not true.

Big state investors in China
come with the state's baggage. In 2006, DJI was
founded by Frank Wang. In 2011, Wang met Colin
Guinn at a trade show, and they founded
DJI North America.

Hi, there. Colin Guinn here at DJI. In this video, we're
going to take a look at... Guinn featured in
many of DJI's videos explaining how their
early drones worked. The Frank that I know and
was very, very close friends

with for many years, is
a very kind individual, and we were close friends. I think he was very
soft-spoken, and humble, and is a brilliant
engineer, and really, really innovative thinker on how
to solve engineering problems.

At some point... In May 2013, DJI attempted
to buy out Guinn's share of DJI North America. By December, DJI's
head office in China locked all of DJI North
America's employees out of their emails and
redirected all customers

to China. Guinn sued DJI in 2014. They settled out of court
for an undisclosed sum. He joined rival US drone
company 3D Robotics. He now runs Guinn
Partners, a marketing and product development agency.

Yeah, well, this
was the one that we shot all the SpaceX
launches with, so we just kind of saved it. It's just an old S800 drone. It was the very first
DJI brushless gimbal.

This would have been 2012, 2011. In running Guinn Partners we've
taken all of our experience from being in the drone
space for the last close to 20 years now, and we develop
all kinds of high-tech products.

A lot of drones and robotics,
but also a lot of fun products like the kind of smart,
gel-blasting technology that we're launching into the
location-based entertainment market right now, as well as
other really cool products like the electric-powered
hydrofoil surfboards

for Lift Foils, one-man
flying drones that you sit inside of for urban air
mobility for Lift Aircraft. So we've gotten to work on some
really, really cool projects over the last decade
here at Guinn Partners.

The Frank that started DJI,
he created his first autopilot because he used
to go to the park and fly remote
control helicopters. And flying remote
control helicopters with no stabilization is
incredibly difficult, especially as the helicopter
starts to rotate

and your perspective is
not rotating with it. And he would crash
his helicopters. And it was kind of
embarrassing, right? He wanted to, like, hey,
check out my cool toy. And so as he was
taking I think it

He was a master in electrical
engineering or computer science and basically decided to make
a helicopter stabilization system so that he could go to
the park and fly his helicopter, and impress the pretty
girl, and not be crashing his helicopter all the time.

He's just a normal guy
that was like using his innovation, and
creativity, and brain power to create a way
to make it easier to fly a helicopter at the park. And then that led to the
first autopilot systems.

Obviously, one thing
led to another. We started doing camera
gimbals and full systems. And they have real
engineering chops, and they have real
innovation chops, and they can make things very
quickly and very inexpensively.

So they will be a force to
be reckoned with for sure. DJI drones are being used
to collect information on US critical infrastructure
and pose significant risks to US national security. I don't think it's
understandable necessarily

from a data security
perspective. I think they are
overplaying that card. Because if you're worried
about data security, you could argue,
well, why don't we then just define standards
for drones to live up to.

And then once your drone
meets these requirements, it doesn't matter if it's built
in France or the US or China, that drone is deemed to be safe. So you could easily solve that. You could also argue that, well,
if we're worried about drones,

then why aren't we
worried about cell phones, laptops, security cameras,
ring doorbell cameras? A lot of the issues
raised are really raised by people that don't
actually use our products or understand the
technology that well.

If you use our products
you would know that, one, you don't have to even
connect to the internet with our products to use them. So we have something called
local data mode, which essentially means that the drone
is able to operate hermetically

sealed off from the internet. So it's like an
air-gapped computer. Our drones are secure. And the people who use
them know that, right? I mean, some of this is actually
quite insulting to the police departments, the firefighters,
the search and rescue teams

that use our equipment. They are technically
capable individuals, and they know that their
data is secure with us. The number of jobs
in the United States and businesses that are
dependent on being able to use DJI drones is significant.

Like, if you take DJI drones
off the table right now, a lot of businesses
would go belly up. A lot of people would
lose their jobs. And then you get to the
point where, OK, so we're

also using DJI drones
to save people's lives. So if you think about
law enforcement, you think about fire
departments, search and rescue teams, they are all
using DJI drones to save people. They're also using these drones
to keep their own people safe.

So if you take that all off the table, I think you have a massive problem. And also, there's no alternative. I mean, you can say, yeah, get a BRINC drone, get a Skydio drone.

That's fine. But you can't get them in the thousands and thousands of drones that we need. Skydio started out as an autonomously flying consumer drone. They had built-in AI basically, with cameras, so that drone could avoid obstacles and fly itself.

They had their first model, then they came out with the Skydio 2, and then they abandoned the consumer drone market. I don't know if they've ever officially explained why, but the understanding in the drone industry

is that they couldn't make it because they can't compete in terms of capability and price points compared to DJI drones. Allowing artificially-cheap DJI drones to monopolize our skies has decimated American drone manufacturing.

America has been flooded with drones manufactured by CCP-controlled drone company DJI. When I started at 3D Robotics there was a desire to create a competing product to the Phantom. We created the 3DR Solo.

We were now competing against DJI, which was thousands of employees. And so, going into Christmas, DJI had the flexibility to be able to just say, OK, we're going to take our price from $1,200 to $499.

And that's a huge price drop. Now, it's $499 versus $1,500. So now we are triple
the price of the Phantom 3, which is also, as everyone
knows, a fantastic drone. We didn't have the ability
to pull on those levers

and try to chase them down
because we were already had very, very tight margins. And so, yeah, got
to see firsthand how the ability to drive
that price down and even take a loss for some amount
of time gave them

the ability to make it very,
very hard to compete with. What were those conversations
like when that was happening. Uh, slightly stressful. As an example, we were paying
about $9.80 per brushless motor, and there was probably at
least three or four companies

in the loop on all of
these different components, whereas DJI is winding copper
in their own owned factory. So they're buying raw materials
and manufacturing a motor at probably, I think
maybe at that time it was maybe $1.75
or $2 a motor at DJI.

So getting to just
see firsthand, when you're trying
to compete at retail and you're trying to compete
for consumer dollars, the cost of the
product really matters. It definitely showed me the
incredible speed and low cost at which DJI was able to
engineer and manufacture things.

Doing that with a company
based in Berkeley, California, and trying to grow really
quickly, it was a challenge. The next argument
is really about how America just needs to have
an industry in this space. And so, it seems
very, very clear

that this is more about
protectionism and about trying to build up
a US-based industry. Chinese companies use this
argument that a lot of US, and, more generally, Western
sanctions against them, including tariffs
against their companies,

are protectionist policies. It's a difficult
distinction to make. Because, in my mind, some of
these policies, particularly the tariffs, are protectionist. The US tariff on Chinese EVs,
which is now at 100 percent,

is certainly a protectionist
tariff in my view. Are the US sanctions on DJI
motivated by protectionism or by security concerns? Maybe a bit of both. But from where I'm
sitting, DJI's drones are a security-relevant
piece of equipment,

and therefore it is
justified in being concerned about DJI drones' capacity
to monitor all kinds of US activities, to monitor all kinds
of US critical infrastructure. So I feel that the US argument,
in this regard, holds water.

DJI is on the US
Department of Defense list of Chinese military companies
because it directly advances the modernization efforts of
the People's Liberation Army and given our greatest strategic
adversary eyes in our skies. I'm very much pro-drone.

So I'm not anti-DJI
or pro-DJI or I'm not anti-Skydio or
pro-Skydio necessarily. I am pro-drone. Because I think the benefits
that drones can offer to society are immense. I also think that the
threats that drones pose

are also considerate. I mean, you only need
to look at Ukraine to understand the dark
side of drones and of AI. DJI had taken a group
of their executives to a military training camp for
a bonding, team-building type

of exercise. There is a banner at the
bottom identifying this as a DJI marketing and
sales group undergoing special training. I don't think they thought
it through in terms of that somebody
might be taking photos and that might find
its way through WeChat

and different social
media platforms. DJI executives in
military fatigues at a Chinese military
training facility made for pretty good headlines. What I understand,
and what I've heard from people who work and
have worked within DJI,

is that they do have a military
management style, as in it's quite rigid and well organised. And I think maybe that's
why they, at the time, picked to go to a
military training facility to kind of reinforce that
way of working and managing

your company. And I know from people
working at DJI at the time that they weren't all that
happy that this news had made its way out. My understanding is that it was
like it was an outing and it may have been...

I don't know that
it's a tactical error. I think it was more a matter of
it was blown out of proportion. I mean, in terms of it
was an away day, right? So they were actually
doing an activity.

But it wasn't as
though there was some sort of military
co-operation taking place. We don't make products
for military purposes. We don't have any
linkages to the PLA. I mean, maybe we shouldn't
have done an away day

at a facility like that. But again, it was more of an
outing for people at the office. It was no signal of co-operation
or of anything else. It is known for
Chinese companies to undertake kind of military
away days, training away

days, in the same
way that you would have some kind of corporate
activity in the UK. I don't really know whether
this means anything more. That's the thing. I mean, it's... Does it surprise you? Yes, it does surprise me.

I mean, it clearly shows that
DJI has links with the military. What we don't know
is how substantive and broad-ranging
those links may be. So to the question that
do we have any connections to the Chinese military,
absolutely not.

So we are probably the only
drone company right now that has explicitly
said we don't want to be involved
in any combat purposes and put that in all of our
reseller agreements, right? So we've explicitly stated
that our products are

purely for civilian purposes. We don't have any linkages
or investment from the PLA and even from the Chinese
government writ large. There's a broader conversation
about the geopolitics around China-US relations. And in my own journey
of developing products,

before I connected with
DJI, I had actually met with some US
engineering firms to see if I could get a three-axis
brushless gimbal made in the US. Quite frankly, just
the cost of what it was going to take us to
develop our first prototype

was about 10 times what
I ended up ultimately paying DJI to develop
our first prototype. I was like $500k for starting
concept prototype versus $50k with DJI. I've developed products
in both places,

and there are definitely
some benefits, pros, and cons to both places with how
they develop products. In China, their ability to
rapidly develop, engineer, prototype, manufacture... they are very,
very good at that. And anyone that has
spent any time in China

and spent any time working
with factories out there know that is a core competency
that is in that culture. We, I think, here, are
very good at knowing what the customer
wants and knowing how to deliver a really
high-quality user

experience that has a really
clean workflow, and better UI, and pleasing to the eye, and
our graphics, and creativity, and marketing, and
things like that. It may have been the
case, a few years ago, that US companies
were generally better

at marketing and branding. But Chinese companies
are catching up in that domain quickly as
well, mainly because they've got the best tech. And this is certainly
true in the case of DJI. Only 10 years ago, most
people in the west,

particularly in Europe, and
to some extent in the US, were saying that China would
never catch up in technology, that the US had an
unassailable lead, that Europe had an unassailable lead. Now, it is certainly true
that China is ahead of the US

in technology and way ahead
of Europe in technology. I was there just a few
months ago in Shenzhen, looking at the extraordinary
Chinese technology companies there, and the
speed of innovation in Chinese technology, not
to mention the enormous size

of China's supply chain,
means that, in my view, China's not only ahead in
most areas of technology with the key exception
of computer chips, it's also in an unassailable
lead, in my view. So DJI drones are far ahead of
any other country in the world,

and people need to really
wake up and smell the coffee. Because this is a
huge global trend that is affecting
all of our economies and all of our
prospects going forward. I think, now, with all the
knowledge, and the tools,

and the software that DJI
has developed over the years, you see that they branch
out into the camera world. Years ago, DJI also
bought Hasselblad, which is a very well-known
camera manufacturer. They now are branching out
into electric mountain bikes,

where you would think
DJI mountain bikes, like, that doesn't
make any sense? But from a technical
point of view, in terms of software, battery
management, electrical motors, it makes a lot of sense. Automotive is another
one, by the way.

DJI has LiDAR
technology, so they've been working on a very small,
compact, and more cost-efficient LiDAR module that
you can mount on cars and then that can be
used for self-driving. I think it's just
natural for any company

to want to diversify
as much as possible. We've gone from drones to
handheld gimbals to even movie camera stabilizers. We got the Ronin
and other things that are used for
actual moviemaking, through to drones that
are actually specifically

for the movie industry,
like the Inspire 3, and then going to agriculture
and everything else. We've kind of done a
huge array of things already in the drone space. And so, it's natural for us to
start to say, OK, what's next?

What's over the horizon? I mean, I think Frank, he's
an electrical engineer, he loves playing
with technology. Literally, within the company,
the research and development team is at the
heart of everything. So if people come
up with good ideas,

there's room to explore them. I think it's very much the early
years of drone development, frankly. If you look at how drones
are being incorporated, it is still a worker,
like an operator, with their thumbs on the
sticks, looking at the drone.

This is still very,
very early days in terms of how the
technology is being used. But where we're
clearly moving towards is the pre-deployment of drones. We have basically a
drone-in-a-box solution, right? And what it means is essentially
you have a dock that you deploy.

The drone can land
there to recharge. You can put it out
in a remote area. We've had them used in Alaska
to monitor for avalanche risk. So this is something
that can literally be deployed hundreds
of miles away from where the actual person
who's controlling it is.

Even that's just a
baby step, right? So right now, it's
still a person in a control room
monitoring things. Eventually, you'll
get one person monitoring maybe 50 of these. And then, eventually, the person
will just become completely out

of the loop. It always feels like, oh,
we missed the curve, right? I remember, for 10 years, I
felt like, OK, the boom is over. And quite frankly,
I don't even think we're even close to the peak.

Until you can just look out the
window and see drones flying around like you see
airplanes flying around... almost any time you can look out
the window and see an airplane in the sky, especially if you
live in a decent-sized city,

right? If you look outside
right now, I don't see any drones
delivering tacos, or I don't see any drones
monitoring traffic patterns, which means we just
haven't even seen the beginning of
this industry yet.

And so, it's obviously going
to be a really exciting time to see where things progress.

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Financial Times

Concerns Regarding DJI's Dominance and CCP Links

Introduction of the Countering CCP Drones Act to address concerns about DJI's market dominance and potential national security risks.

DJI's position as the world's largest civilian drone manufacturer, producing a wide range of products from consumer drones to large agricultural drones.

Early concerns about the potential misuse of DJI drones for nefarious purposes.

Politicization of the issue due to US-China relations, leading to repeated attempts to restrict DJI's presence in the US market.

DJI's transformation from a private company to a quasi-state entity with strong ties to the Chinese Communist Party (CCP).

DJI's Founding and Evolution: Private Enterprise to State-Affiliated Company

DJI's humble beginnings as a private enterprise founded by Frank Wang.

The influence of state investors and the CCP's control over large Chinese companies.

DJI's acquisition of state investors, but maintaining significant private ownership and control by Frank Wang.

Clarification of the extent of state ownership in DJI, emphasizing the minimal influence of state-owned enterprises.

Reiteration that DJI remains largely a privately held company.

Colin Guinn's Experience with DJI and Subsequent Career

Founding of DJI North America by Frank Wang and Colin Guinn.

Colin Guinn's positive personal account of his early relationship with Frank Wang.

DJI's attempt to buy out Guinn's shares and subsequent legal dispute.

Guinn's departure from DJI and his current work with Guinn Partners.

Frank Wang's Innovation and DJI's Early Development

Frank Wang's motivation for creating the first autopilot system: to improve the stability of remote control helicopters.

Highlighting Frank Wang's engineering skills and the development of helicopter stabilization systems.

Expansion of DJI's product line to include camera gimbals and full systems.

Emphasis on DJI's engineering capabilities, innovation, speed, and cost-effectiveness.

Addressing Concerns about Data Security and Market Competition

Counterarguments to concerns about DJI drones' data security risks and potential threats to national security.

Suggestion to establish industry-wide data security standards for drones, regardless of origin.

Comparison with other technologies like cell phones and security cameras, questioning the selective focus on drones.

Highlighting DJI's local data mode for secure, offline operation.

Emphasizing the security features of DJI drones and the trust placed in them by various professional users.

Analysis of DJI's Market Dominance and Impact on US Drone Manufacturing

Discussion of Skydio's failed attempt to compete with DJI in the consumer drone market due to price and capability limitations.

The impact of DJI's low-cost strategy on American drone manufacturing.

A firsthand account of the challenges faced by 3D Robotics in competing against DJI.

DJI's aggressive pricing strategy, highlighting its ability to significantly reduce prices.

Comparison of component costs between DJI and other companies, emphasizing DJI's cost advantage through vertical integration.

Geopolitical Considerations and US Sanctions on DJI

Discussion of the debate surrounding protectionism versus security concerns in the context of US sanctions against DJI.

The argument that some US policies, such as tariffs, are protectionist.

Analysis of the US tariff on Chinese EVs as a protectionist measure.

Justification for security concerns regarding DJI drones' potential for monitoring US activities.

DJI's inclusion on the US Department of Defense list of Chinese military companies.