Commerce department adds DJI to its economic blacklist

The U.S. Department of Commerce added Chinese drone giant SZ DJI Technology Co to its economic blacklist, a senior official told reporters on a conference call Friday morning, reports Reuters.

We received a response from DJI. See below for details.

Commerce department adds DJI to its economic blacklist

The world's largest drone maker DJI has been put on the economic blacklist, officially known as the ‘Entity List‘ by the U.S. Commerce Department. The News was made public during a conference call Friday morning.

With DJI, many other companies including chipmaker SMIC, have been added to the economic blacklist as well. The restrictions come into effect on Friday morning at 11:15 a.m. EST.

The action “stems from China's military-civil fusion (MCF) doctrine and evidence of activities between SMIC and entities of concern in the Chinese military-industrial complex,” according to the U.S. Commerce Department.

And that DJI and other companies were added to the list because of:

“wide-scale human rights abuses within China through abusive genetic collection and analysis or high-technology surveillance,”  according to the U.S. Commerce Department reports Reuters.

Now that DJI has been added to the U.S. Department of Commerce's Entity List, U.S. based companies will no longer be allowed to export technology to the drone maker without an appropriate license from the Bureau of Industry and Security. For instance, FLIR Systems would no longer be able to deliver thermal cameras to DJI. Note, that DJI's latest drone the Mavic 2 Enterprise Advanced does not have a FLIR thermal camera onboard.

Contrary to what many people might have expected DJI was not placed on the economic backlist because of Data Security concerns. While the Commerce Department did not provide an exact answer as to why DJI was included, it did say that other companies (more than 70) were added to the list “for actions deemed contrary to the national security or foreign policy interest of the United States.” This is possibly a reference to the alleged use by the Chinese government of DJI products to surveil the ‘re-education camps‘ in the Xinjiang province.

In response to the move, China's foreign ministry said that if true, the blacklisting would be evidence of U.S. oppression of Chinese companies and that Beijing would continue to take “necessary measures” to protect their rights, according to Reuters.

“We urge the U.S. to cease its mistaken behavior of unwarranted oppression of foreign companies,” ministry spokesman Wang Wenbin said on Friday.

In the past, companies such as Huawei Technologies Co, ZTE Corp, and surveillance camera maker Hikvision were also added to the economic blacklist.

Adding DJI to the Entity List comes in the final weeks of the Trump administration in an effort to ramp up the pressure on China before the new Biden Administration comes in.

We had asked DJI for a reaction and the company issued the following statement:

“DJI is disappointed in the U.S. Department of Commerce's decision. Customers in America can continue to buy and use DJI products normally. DJI remains committed to developing the industry's most innovative products that define our company and benefit the world.”

Can you still buy DJI drones going forward?

Yes, as far as we understand you will be able to buy DJI products going forward. The addition of DJI to the Entity List means that U.S.-based companies can not export any technology to DJI without a special license from the Bureau of Industry and Security.

“The Export Administration Regulations (EAR) contain a list of names of certain foreign persons – including businesses, research institutions, government and private organizations, individuals, and other types of Legal persons – that are subject to specific license requirements for the export, reexport and/or transfer (in-country) of specified items,” states the website from the Bureau of Industry and Security.

Presumingly, adding DJI to the Entity List does not mean that the Chinese drone maker cannot sell drones in the United States. For instance, Huawei's phones can still be bought in the States. 

Recently we have seen DJI move away from using thermal cameras from U.S.-based FLIR Systems. Processors from U.S.-based Ambarella will likely not be used by DJI in future products. We are not sure what other U.S. technology may be found in the various DJI drone models.

Is the fact that the U.S. Department of Commerce added DJI to its Entity List bad news for the Chinese drone maker? You bet. Does it mean that we will not be able to buy DJI drones going forward? Probably not.

Furthermore, we will have to see if the incoming Biden administration might have a different opinion on this matter, although that might be unlikely.

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