DJI, the world’s leading drone manufacturer, is suing the US Department of Defense (DoD) to have its name removed from a controversial list of “Chinese Military Companies.” The company argues that the designation is unfounded and has led to significant reputational harm and business losses.
Since its addition to the list in 2022, DJI claims to have faced unjust stigma as a national security threat, losing valuable contracts and enduring harassment directed at its employees. The company asserts that the DoD failed to provide a clear rationale for this classification until threatened with legal action in September, and when it finally did, the justification was riddled with inaccuracies.
While the DoD has not yet commented on the lawsuit, DJI’s situation highlights broader concerns about the scrutiny faced by companies with ties to China. The US Army initiated restrictions on DJI drones as early as 2017, citing security risks. In 2019, the US Interior Department grounded its DJI drone fleet, and in 2020, the Department of Commerce placed DJI on its Entity List, effectively banning US exports to the company due to allegations of human rights abuses linked to surveillance practices in China.
In 2021, the US Treasury further escalated its actions by adding DJI to its list of Non-SDN Chinese Military Industrial Complex Companies, alleging that the company provided drones to the Chinese government for monitoring the Uyghur population. This wave of governmental actions has resulted in restrictions on various US agencies from procuring DJI drones, while recent customs holds have further complicated the company’s import processes under the Uyghur Forced Labor Prevention Act.
In its defense, DJI has consistently denied any ownership or control by the Chinese government and maintains that it bears no responsibility for the treatment of Uyghurs in Xinjiang. The company emphasizes that its drones have been used positively, including in emergency response situations in the United States. Independent audits conducted by US agencies, including the DoD, have reportedly found no security threats associated with its products.
DJI does acknowledge that minority investments were made by two state-owned Chinese funds, yet insists that they hold less than 1% of its shares and voting rights. Control of the company remains in the hands of its founder and a small group of early employees.
As Congress deliberates on a potential import ban for new DJI drones over national security concerns, the future remains uncertain. While the House has approved such a ban in the National Defense Authorization Act, the Senate version currently does not include it. Until now, no significant actions have prevented consumers or pilots from using DJI drones already in the US market.
DJI’s lawsuit against the DoD not only aims to clear its name but also to safeguard its business interests amid ongoing tensions between the US and China. The outcome of this legal battle could have significant implications for the drone industry and international trade relations.