
June 25, 2024
Chairman John R. Moolenaar
Choose Committee on Strategic Competitors between america and the Chinese language Communist Get together
United States Home of Representatives
Washington, D.C. 20003
Rating Member Raja Krishnamoorthi
Choose Committee on Strategic Competitors between america and the Chinese language Communist Get together
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 america and the Chinese language Communist Get together 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 immediately from one among our rivals, we wish to share some details which can 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 all the U.S. drone ecosystem. Members of that ecosystem should 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 world firm with a world workforce. In the present day, DJI merchandise are redefining industries. Professionals in regulation enforcement, agriculture, conservation, search and rescue, power infrastructure, filmmaking and extra belief DJI. Our merchandise carry new views to their work and assist them accomplish feats extra safely, sooner, 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 international patents. Due to this first-mover benefit and continued innovation, analysis, and growth, international 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
all the 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 functions. A latest 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 change” effort is dangerous coverage; even when present home producers might deal with heightened demand, these different drones usually 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 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 personal
sector, together with American funding companies, 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 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 growth.
- 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. Firms around the globe profit from pleasant macroeconomic insurance policies in theirhome nations. For instance, america has instituted tax credit for analysis & growth (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 “backed” as properly.
- 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 satisfy demand in additional than 100 nations. Like several producer, it’s the mixture of mass manufacturing, provide chain integration, international value competitors, and continuous funding in analysis and growth that allows DJI to satisfy finish person expectations. The U.S. District Court docket for the District of Delaware5 in 2019 confirmed this. It concluded {that a} DJI competitor “did not allege a below-cost value, or different details demonstrating that DJI offered prosumer drones in a predatory method.” Because the court docket decided, DJI’s practices “are absolutely in step with 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 checklist, and now we have written to Protection Secretary Lloyd Austin to
request a reconsideration of our place on the checklist accordingly. We additionally oppose any exterior makes an attempt to change our merchandise for fight, comparable 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} accomplice 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 wherever 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 forestall 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 correct factor to do, so we did it. Neither DJI nor its subsidiaries have offered 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 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/recordsdata/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
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 in command of the information they accumulate and generate. DJI prospects
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 Knowledge 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 Knowledge Mode” is on, the app will shut all information companies and won’t ship any community requests. Extra info may be present in DJI’s Belief Heart.
- Unbiased companies and U.S. authorities businesses have repeatedly validated and confirmed
DJI’s safety. DJI information 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 when it comes to community
safety and privateness safety. They’re additionally GDPR-compliant.
- DJI has by no means acquired any requests for information underneath China’s Nationwide Safety Legislation. Like different
international know-how firms, DJI routinely receives requests for info from governments
around the globe. Our coverage is barely 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 regulation earlier than producing any buyer info. Crucially, DJI has no flight information to offer if prospects don’t select to opt-in to share their information, or use their drone in “Native Knowledge Mode.”
DJI absolutely helps efforts to make sure that drone person information stays secure and safe no matter the place these drones are manufactured. Nevertheless, 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 folks and organizations that use our drones—whether or not universities, companies, farmers, shoppers or first responders—from selecting for themselves which drones are greatest for his or her wants.
We welcome the chance to function a useful resource as Congress advances insurance policies that may guarantee the security, information safety, and continued progress of the American drone business. We might be comfortable to satisfy with you to exhibit the information security measures on our drones or deal with any particular considerations.
Adam Welsh
Head of International Coverage
DJI
CC: Members of the Choose Committee on Strategic Competitors between america and the
Chinese language Communist Get together
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