DJI writes to the home – DJI Ban – sUAS Information – The Enterprise of Drones

June 25, 2024

Chairman John R. Moolenaar
Choose Committee on Strategic Competitors between the USA and the Chinese language Communist Occasion
United States Home of Representatives
Washington, D.C. 20003

Rating Member Raja Krishnamoorthi
Choose Committee on Strategic Competitors between the USA and the Chinese language Communist Occasion
United States Home of Representatives
Washington, D.C. 20003

Pricey Chairman Moolenaar and Rating Member Krishnamoorthi:

It’s our understanding that the Choose Committee on Strategic Competitors between the USA and the Chinese language Communist Occasion will hear testimony from a home drone producer on June 26 at a listening to titled, “Combatting the PRC’s Technique to Dominate Semiconductors, Shipbuilding, and Drones.”

On condition that you’ll hear immediately from certainly one of our opponents, we wish to share some info which might be important to
this dialogue. We additionally encourage the Committee to take heed to the People who use DJI drones and incorporate their voices in your panel. Limiting DJI drone imports or use would have a ripple impact
all through your entire U.S. drone ecosystem. Members of that ecosystem need to be heard.

• DJI was based to develop drones that might make the world a greater place and profit society.
  From our beginnings in a single Hong Kong college dorm room in 2006, now we have grown to a worldwide firm with a worldwide workforce. Right this moment, DJI merchandise are redefining industries. Professionals in legislation enforcement, agriculture, conservation, search and rescue, power infrastructure, filmmaking and extra belief DJI. Our merchandise deliver new views to their work and assist them accomplish feats extra safely, quicker, and with higher effectivity than ever earlier than. DJI has been credited with creating the small off-the-shelf drone class and holds or has pending greater than 5,000 world patents. Because of this first-mover benefit and continued innovation, analysis, and improvement, world shoppers select DJI merchandise overwhelmingly for industrial and leisure functions.

• Impacts of proposed restrictions on DJI drones would go far past our firm and have an effect on
  your entire U.S. drone business. Farmers use DJI drones to evaluate crop well being. First responders use
  them to seek out lacking kids. Builders deploy them at development websites to maintain staff out of
  hurt’s method. There are numerous different purposes. A current financial impression evaluation discovered that DJI
  allows greater than $116 billion in financial exercise throughout the U.S. and helps greater than 450,000
  American jobs. If restrictions on DJI drone use or imports go into impact, these advantages to the U.S.
  economic system could be in danger. It might additionally depart a vacuum within the U.S. drone ecosystem by eradicating the most important producer from the market. Different producers couldn’t meet the spike in demand that might outcome from such restrictions. A “rip and exchange” effort is unhealthy coverage; even when present home producers might deal with heightened demand, these various drones typically show to be far much less succesful, value considerably extra, and are much less dependable in comparison with DJI drones presently in use right now.

• DJI is a personal firm and has been since its 2006 founding. The founder, Frank Wang, maintains
  management over the corporate, with Frank and his private-sector co-founders holding 97% of the voting
  rights and 76% of the corporate shares. Importantly, no authorities entity or its representatives sit
  on DJI’s board or have any function in its administration. DJI’s remaining traders are from the non-public
  sector, together with American funding companies, except for a 5% stake with 0.6% voting rights
  which might be owned by six separate entities (three state-owned banks, one state-owned insurance coverage firm, and two municipal funding funds). These enterprises are the identical as any institutional investor that purchases inventory in a personal firm, no matter the place that firm is headquartered. They don’t play any lively function in firm administration, don’t advise the corporate, and haven’t influenced DJI’s product improvement.

• DJI has not been uniquely sponsored by the Chinese language authorities. Critics of DJI who accuse the corporate of receiving focused subsidies mischaracterize the info. DJI is handled like every other
  firm in China. Firms all over the world profit from pleasant macroeconomic insurance policies in theirhome international locations. For instance, the USA has instituted tax credit for analysis & improvement (R&D) actions,1 small companies, 2 and hiring particular staff. 3 On high of this, many states and municipalities additionally provide incentives to native companies of their space. 4 By so broadly defining subsidization, each firm making the most of any native insurance policies could be thought of “sponsored” as nicely.

• DJI doesn’t have interaction in “product dumping.” DJI is ready to provide its merchandise to the worldwide market at
  aggressive pricing as a result of it manufactures at scale to fulfill demand in additional than 100 international locations. Like several producer, it’s the mixture of mass manufacturing, provide chain integration, world value competitors, and continuous funding in analysis and improvement that permits DJI to fulfill finish consumer expectations. The U.S. District Courtroom for the District of Delaware5 in 2019 confirmed this. It concluded {that a} DJI competitor “didn’t allege a below-cost value, or different info demonstrating that DJI bought prosumer drones in a predatory method.” Because the court docket decided, DJI’s practices “are totally according to sturdy competitors in a rising market, together with allegedly declining costs, growing output, product innovation, and repeated new entry.”

• DJI doesn’t manufacture military-grade tools and doesn’t market or promote merchandise to be used
  in fight, in China or in any other case. To be clear, DJI doesn’t meet the statutory standards for inclusion on
  the Division of Protection’s 1260H record, and now we have written to Protection Secretary Lloyd Austin to
  request a reconsideration of our place on the record accordingly. We additionally oppose any outdoors makes an attempt to change our merchandise for fight, corresponding to attaching weapons. As such, we contractually forestall our resellers from knowingly distributing our merchandise to anybody that intends to make use of them in fight. If DJI finds {that a} companion is promoting DJI merchandise to a buyer who plans to make use of them for fight functions or helps modify merchandise for navy use, DJI terminates its enterprise relationship with them.

• DJI completely deplores and condemns any use of its merchandise to trigger hurt anyplace within the
  world. This can be a core perception of our firm. Once more, DJI was based to develop drones that might
  make the world a greater place and profit society. Whereas we can’t management how our merchandise are used as soon as they’re bought, we proudly take proactive steps to stop using our merchandise for hurt. For instance, with none authorities request or motion, DJI proactively suspended all enterprise actions in Russia and Ukraine in April 2022. It was the appropriate factor to do, so we did it. Neither DJI nor its subsidiaries have bought any merchandise no matter finish function to Russian entities or distributors since then. We take any report of our resellers violating their obligations to DJI on prohibited gross sales significantly and can examine to find out if a violation has occurred.

• DJI’s inner procedures dictate that the corporate doesn’t do enterprise with events on U.S.
  sanctions lists. This consists of Chinese language entities on these lists – even when there’s not a U.S. nexus to
  1 See https://www.irs.gov/companies/research-credit 2 See https://www.healthcare.gov/small-businesses/provide-shop-coverage/small-business-tax-credits/ 3 See https://www.irs.gov/companies/small-businesses-self-employed/work-opportunity-tax-credit 4 See the California Competes Tax Credit score, for instance: https://enterprise.ca.gov/california-competes-tax-credit/ 5 See C.A. No. 16-706-LPS: https://www.ded.uscourts.gov/websites/ded/information/opinions/16-706.pdf
  such transactions. DJI additionally requires distributors to signal export management agreements and
  dedication letters to keep away from any diversion of merchandise to restricted events. When a violation by a
  reseller is found, DJI ends its enterprise relationships with the offending celebration. Additional, DJI
  consists of human rights compliance-related clauses in its provider agreements. Makes an attempt to quote a
  single 2017 memorandum of understanding as proof that DJI offered tools to entities in
  Xinjiang is a misrepresentation of the reality. In that case, the contracting entity was not on U.S.
  sanctions lists on the time – and importantly, that contract was by no means fulfilled.

• Those that use DJI merchandise are answerable for the information they accumulate and generate. DJI clients
  should affirmatively opt-in in the event that they wish to share pictures or movies with DJI. Beginning this month, to additional improve our privateness insurance policies, DJI took the extra step of eradicating the choice for U.S.-based customers to sync flight logs with our servers. Operators also can select to activate “Native Information Mode” to sever the connection between their flight app and the web, or use the drone with their cellular’s “airplane mode” for additional peace of thoughts. When “Native Information Mode” is on, the app will shut all knowledge providers and won’t ship any community requests. Extra info will be present in DJI’s Belief Middle.

• Unbiased companies and U.S. authorities companies have repeatedly validated and confirmed
  DJI’s safety. DJI knowledge practices and merchandise have acquired safety certificationsfrom worldwide
  and U.S. authorities standard-setting our bodies, together with ISO 27001, NIST FIPS 140-2 CMVP Stage
  1, and the American Institute of Licensed Public Accountants SOC2 certification. Additional, a 2022 audit
  confirmed that DJI merchandise met NIST IR 8259 and ETSI EN 303645 requirements when it comes to community
  safety and privateness safety. They’re additionally GDPR-compliant.

• DJI has by no means acquired any requests for knowledge underneath China’s Nationwide Safety Legislation. Like different
  world expertise corporations, DJI routinely receives requests for info from governments
  all over the world. Our coverage is simply to just accept requests about customers working within the nation making
  the request. As well as, DJI requires all governments to supply a warrant, subpoena, or different formal authorized request, which we consider underneath related legislation earlier than producing any buyer info. Crucially, DJI has no flight knowledge to offer if clients don’t select to opt-in to share their knowledge, or use their drone in “Native Information Mode.”

DJI totally helps efforts to make sure that drone consumer knowledge stays secure and safe no matter the place these drones are manufactured. Nonetheless, we’re gravely involved by approaches that put nation of origin above all else, which might depart potential vulnerabilities in drones manufactured elsewhere unaddressed and forestall the individuals and organizations that use our drones—whether or not universities, companies, farmers, shoppers or first responders—from selecting for themselves which drones are finest for his or her wants.

We welcome the chance to function a useful resource as Congress advances insurance policies that can guarantee the security, knowledge safety, and continued progress of the American drone business. We might be completely happy to fulfill with you to reveal the information security measures on our drones or deal with any particular issues.

Adam Welsh
Head of World Coverage
DJI
CC: Members of the Choose Committee on Strategic Competitors between the USA and the
Chinese language Communist Occasion