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 US and the Chinese language Communist Social gathering
United States Home of Representatives
Washington, D.C. 20003

Rating Member Raja Krishnamoorthi
Choose Committee on Strategic Competitors between the US and the Chinese language Communist Social gathering
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 US and the Chinese language Communist Social gathering 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.”

Provided that you’ll hear straight from one in every of our opponents, we need to share some details which can be important to
this dialogue. We additionally encourage the Committee to hearken 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 the whole U.S. drone ecosystem. Members of that ecosystem need to be heard.

• DJI was based to develop drones that may 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. At present, DJI merchandise are redefining industries. Professionals in legislation enforcement, agriculture, conservation, search and rescue, power infrastructure, filmmaking and extra belief DJI. Our merchandise convey new views to their work and assist them accomplish feats extra safely, quicker, and with better 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. Due to this first-mover benefit and continued innovation, analysis, and improvement, world customers select DJI merchandise overwhelmingly for business and leisure functions.

• Impacts of proposed restrictions on DJI drones would go far past our firm and have an effect on
  the whole U.S. drone trade. Farmers use DJI drones to evaluate crop well being. First responders use
  them to search out lacking kids. Builders deploy them at building websites to maintain employees out of
  hurt’s method. There are numerous different functions. A current financial affect evaluation discovered that DJI
  permits 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.
  financial 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 may end result from such restrictions. A “rip and change” effort is dangerous coverage; even when present home producers might tackle 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 at the moment in use at the moment.

• DJI is a non-public 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 position in its administration. DJI’s remaining traders are from the personal
  sector, together with American funding corporations, excluding a 5% stake with 0.6% voting rights
  which can 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 non-public firm, no matter the place that firm is headquartered. They don’t play any lively position in firm administration, don’t advise the corporate, and haven’t influenced DJI’s product improvement.

• DJI has not been uniquely backed by the Chinese language authorities. Critics of DJI who accuse the corporate of receiving focused subsidies mischaracterize the details. DJI is handled like every other
  firm in China. Corporations world wide profit from pleasant macroeconomic insurance policies in theirhome international locations. For instance, the US has instituted tax credit for analysis & improvement (R&D) actions,1 small companies, 2 and hiring particular workers. 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 “backed” as nicely.

• DJI doesn’t interact 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 worth competitors, and continuous funding in analysis and improvement that permits DJI to fulfill finish person expectations. The U.S. District Courtroom for the District of Delaware5 in 2019 confirmed this. It concluded {that a} DJI competitor “did not allege a below-cost worth, or different details demonstrating that DJI bought prosumer drones in a predatory method.” Because the court docket decided, DJI’s practices “are absolutely in step with strong competitors in a rising market, together with allegedly declining costs, rising output, product innovation, and repeated new entry.”

• DJI doesn’t manufacture military-grade gear 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 listing, and now we have written to Protection Secretary Lloyd Austin to
  request a reconsideration of our place on the listing accordingly. We additionally oppose any outdoors makes an attempt to switch our merchandise for fight, reminiscent of 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 army 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 may
  make the world a greater place and profit society. Whereas we can not management how our merchandise are used as soon as they’re bought, we proudly take proactive steps to forestall the usage of 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 precise factor to do, so we did it. Neither DJI nor its subsidiaries have bought any merchandise no matter finish objective to Russian entities or distributors since then. We take any report of our resellers violating their obligations to DJI on prohibited gross sales critically 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 contains Chinese language entities on these lists – even when there may be 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 social gathering. Additional, DJI
  contains human rights compliance-related clauses in its provider agreements. Makes an attempt to quote a
  single 2017 memorandum of understanding as proof that DJI supplied gear 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 info they acquire and generate. DJI prospects
  should affirmatively opt-in in the event that they need 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 may also select to activate “Native Information Mode” to sever the connection between their flight app and the web, or use the drone with their cell’s “airplane mode” for additional peace of thoughts. When “Native Information Mode” is on, the app will shut all knowledge companies and won’t ship any community requests. Extra info may be present in DJI’s Belief Heart.

• Unbiased corporations 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 Degree
  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 by way of community
  safety and privateness safety. They’re additionally GDPR-compliant.

• DJI has by no means acquired any requests for knowledge below China’s Nationwide Safety Regulation. Like different
  world know-how firms, DJI routinely receives requests for info from governments
  world wide. Our coverage is simply to simply 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 below related legislation earlier than producing any buyer info. Crucially, DJI has no flight knowledge to supply if prospects don’t select to opt-in to share their knowledge, or use their drone in “Native Information Mode.”

DJI absolutely helps efforts to make sure that drone person knowledge stays protected 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, customers 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 trade. We might be glad to fulfill with you to display the info safety features on our drones or tackle any particular issues.

Adam Welsh
Head of International Coverage
DJI
CC: Members of the Choose Committee on Strategic Competitors between the US and the
Chinese language Communist Social gathering