DJI sues the US Department of Defense for labeling it a ‘Chinese Military Company’

DJI, the world's largest drone company, is suing to avoid being seen as a tool of the Chinese government. On Friday, the company sued the U.S. Department of Defense to remove its name from a list of “Chinese military contractors,” claiming the company has no such relationship with Chinese authorities and suffered unfairly as a result of the designation.

Since DJI was added to this list in 2022, the company claims it has “lost business, been stigmatized as a national security threat, and been excluded from contracts with multiple federal agencies,” and its employees “now suffer from frequent and pervasive stigma” and are “repeatedly harassed and insulted in public places.”

It also claims that the Defense Department did not provide the company with an explanation for its designation as a “Chinese military company” until DJI threatened a lawsuit this September, claiming that when the Defense Department eventually provided its justification, it was riddled with errors .

The U.S. Department of Defense did not immediately respond to a request for comment. You can read DJI's full argument that the company is not owned or controlled by the Chinese military in the complaint below:

Regardless of whether the Defense Department has enough evidence to label DJI in this way, it is far from the only U.S. government agency inclined to restrict and scrutinize the company for possible ties to the Chinese government. The US Army asked its units to stop using DJI drones in 2017. In 2019, the US Department of the Interior grounded its fleet of DJI drones due to espionage risks.

In 2020, the U.S. Department of Commerce added DJI to its entity list and banned U.S. companies from exporting technology to DJI after the company “enabled widespread human rights abuses in China through abusive genetic collection and analysis or high-tech surveillance.”

In 2021, the US Treasury Department added DJI to its list of non-SDN companies owned by Chinese military industrial complexes, writing that it had provided drones to the Chinese government so that it could monitor Uyghurs and suggested that DJI was involved in serious human rights abuses be as a result.

As a result of these various measures, some US government agencies have been banned from purchasing new DJI drones. And last week, DJI reported that some of its drones were blocked by US customs, citing the Uyghur Forced Labor Prevention Act as the reason.

In its defense, DJI has repeatedly claimed that it is not owned or controlled by the Chinese government, that it has “nothing to do with the treatment of Uighurs in Xinjiang” and that it merely sells drones that can be used for various purposes , which said it is not known that many of these causes have helped facilities (including first responders) in the United States and that independent reviews by consulting firms and U.S. government agencies (including the Department of Defense) have found no security threats.

While DJI admits in the complaint that two Chinese state-owned investment funds made minority investments in the company, it claims the Shanghai Free Trade Zone Equity Fund owns “less than 1% of DJI's shares and less than 0.1% of DJI's voting rights.” “. “ and that the Chengtong Fund terminated its investment in June 2023.

(DJI says only four people control 99 percent of DJI and own 87 percent of the shares – DJI founders and early employees Frank Wang, Henry Lu, Swift Xie and Li Zexiang.)

Congress is currently considering a complete ban on imports of new DJI drones and other equipment into the United States on the grounds that they pose an inherent security risk – although that ban is currently on hold. While the House of Representatives approved the bill after it was included in the mandatory National Defense Authorization Act, the Senate version of the bill does not currently include the ban (although it may be added again).

But until the U.S. Customs delay, which DJI said was just a misunderstanding, the U.S. government had taken no action that would stop businesses from importing drones, consumers from purchasing them, or individual pilots from to fly them in the United States. Even if Congress were to ban the sale of new DJI drones, the proposed text of these bills suggests that existing owners would still be able to fly their own drones.

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