June 25, 2024
Chairman John R. Moolenaar
Choose Committee on Strategic Competitors between the US 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 US 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 US 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.”
Provided that you’ll hear straight from certainly one of our opponents, we wish to share some information 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 complete 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, we’ve got grown to a world firm with a world workforce. At present, DJI merchandise are redefining industries. Professionals in legislation enforcement, agriculture, conservation, search and rescue, vitality infrastructure, filmmaking and extra belief DJI. Our merchandise carry new views to their work and assist them accomplish feats extra safely, quicker, and with larger 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 business and leisure functions.
- Impacts of proposed restrictions on DJI drones would go far past our firm and have an effect on
your complete U.S. drone business. Farmers use DJI drones to evaluate crop well being. First responders use
them to search out lacking youngsters. Builders deploy them at development websites to maintain employees out of
hurt’s means. There are numerous different purposes. A current financial influence 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 can be in danger. It could 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 outcome from such restrictions. A “rip and exchange” effort is unhealthy coverage; even when present home producers might handle heightened demand, these different drones typically show to be far much less succesful, price considerably extra, and are much less dependable in comparison with DJI drones at the moment in use at present.
- 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 corporations, aside from 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 energetic function 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 information. DJI is handled like some other
firm in China. Firms all over the world 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 benefiting from any native insurance policies can be thought-about “backed” 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 every producer, it’s the mixture of mass manufacturing, provide chain integration, world value competitors, and continuous funding in analysis and improvement that allows 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 value, or different information 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, growing 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 we’ve got 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 change our merchandise for fight, similar to attaching weapons. As such, we contractually stop our resellers from knowingly distributing our merchandise to anybody that intends to make use of them in fight. If DJI finds {that a} associate 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 wherever within the
world. It is 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’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 goal 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 inside 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’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
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 in command of the information they gather 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 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 data will be present in DJI’s Belief Middle.
- Impartial corporations and U.S. authorities businesses have repeatedly validated and confirmed
DJI’s safety. DJI knowledge practices and merchandise have obtained 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 by way of community
safety and privateness safety. They’re additionally GDPR-compliant.
- DJI has by no means obtained any requests for knowledge beneath China’s Nationwide Safety Regulation. Like different
world expertise firms, DJI routinely receives requests for data from governments
all over the world. 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 beneath related legislation earlier than producing any buyer data. Crucially, DJI has no flight knowledge to offer 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 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 greatest 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 development of the American drone business. We’d be pleased to fulfill with you to reveal the information security measures on our drones or handle any particular considerations.
Adam Welsh
Head of International Coverage
DJI
CC: Members of the Choose Committee on Strategic Competitors between the US and the
Chinese language Communist Occasion
Uncover extra from sUAS Information – The Enterprise of Drones
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