DJI Gets Added To the “Entity List”

In more ways than one, this story will not drone on.

On Friday, Chinese-based drone manufacturer DJI was added to the U.S. Department of Commerce’s list of sanctioned companies over its role in facilitating human rights abuses.

No-Fly Zone

For the non-enthusiast – DJI is a dominant player in the global drone market. Its ability to manufacture high-end technology at affordable-ish prices has given it nearly 80% of the global market.

The commerce department said DJI had a “strategic co-operation” to provide drones to forces in the northwestern Chinese region of Xinjiang, home to a network of internment camps that hold people deemed to be a threat to the state.

Friday’s announcement prohibits U.S. companies from doing business with DJI.

Why It Matters: On top of DJI’s dominant market position and significant mindshare with consumers (with millions of units sold per year), DJI is tightly linked with U.S. industry and governmental organizations.

• The “Spark mini” drone, a popular consumer model, uses a processor made by Intel.
  DJI’s thermal camera accessory uses a camera built by the Californian company Flir
• While dividend-recaps have always been part of the private equity playbook, a subtle regulation change in 2017 has ignited the recent fervor.

The company’s drones are also popular among U.S. police organizations, fire departments, and have been used for touchless coronavirus applications.

Analysts say the move will make it far harder for the company to secure American supplies and threatens to scramble the global market for camera drones.

And even bigger threats for DJI loom. Earlier this year, the White House drew up a draft order that would have prevented federal agencies from using drones made with Chinese parts. The U.S. has also contemplated a ban of Chinese drones flying over federal lands, which account for 28% of the U.S.

The Takeaway

For now, DJI says it will be business as usual and “Customers in America can continue to buy and use DJI products normally.”