DJI’s US woes continue with report of state funding by China [Update]

DJI China

It doesn’t appear the US turbulence that the world’s largest maker of drones has faced for the past year is ending just yet, following a news report alleging DJI received direct funding from China’s state organizations despite its holding structure as a private, independent firm.

Claims of financial ties between DJI and Beijing were published by the Washington Post. The paper says it found references to such investments in “company reports and articles posted on the sites of state-owned and -controlled investors,” and in analyses by US video surveillance group IVPM. Those purported links would likely not generate more than passing interest if they hadn’t arisen amid enduring and increasingly worsening US-China relations. One consequence of those has been DJI, along with several other Chinese companies, having been added to blacklists under suspicions they represent data security threats.

In December, DJI was one of eight Chinese businesses inscribed on a US Treasury banned list of alleged “Chinese military-industrial complex companies.” That came nearly a year after the world’s top drone maker went on the US Department of Commerce’s Entity List, which prohibits businesses operating in the US from exporting technology to or investing in cited organizations. 

Between those developments, DJI was the target of accusation and attacks by lobbying groups for US competitors, and by American legislators joining the effort to keep the Shenzhen firm on federal agency proscription records indefinitely. 

The Post’s report says documents it reviewed show four investment entities owned or overseen by China’s government have invested in DJI in recent years. Those, it says, include a state assets manager described as having played “a key role in promoting partnerships between private enterprises and the Chinese military.” Inclusion of that detail will likely embolden accusation by US detractors that DJI tech has been used in China’s surveillance and repression of Muslim Uighurs in Xinjiang Province.

DJI is not publicly traded, and the Hong Kong-based ownership structure that it and many Chinese companies use make it difficult to ascertain the nature and provenance of third-party investors. 

IVPM, which the Post credits with having initially found evidence of direct financial links, says it identified investments by state organizations like China Chengtong Holdings Group. That entity, the report says, is directly administered by Beijing’s state-owned Assets Supervision and Administration Commission, which manages the country’s public enterprises. 

IVPM officials quoted are adamant that those and other financial connections represent direct links between DJI and the state – something company spokesman Adam Lisberg refuted as he stressed private and independent structure.


Update

“The Chinese government has not invested in DJI,” he told DroneDJ. “DJI is privately held. The company is solely managed by and majority-owned by the founder team. Shareholders other than the founders do not participate in the company’s management and operation, but act as financial investors whose sole aim is to earn financial return on the investment.”


Whether the report generates additional official reaction in the US remains to be seen. What does seem clear, by contrast, is that DJI can probably expect more unpleasant political headwind in the skies of its biggest market before they start to calm again.

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