Should the US ban Chinese drones?

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The gentlelady from New York is recognised.

I rise today in support of my bipartisan legislation, the Countering CCP Drones Act.

If you want a drone that's easy to fly, that's readily available, that's affordable, and that's among the best drones you can get, if not the best, then you'll end up with DJI.

DJI is known as the world's largest manufacturer of civilian drones. So that means everything from a small consumer drone that you might use for home videos, all the way up to products that are used in the agricultural sector. We're talking big, 55kg and above products that are used for agricultural seed spreading, spraying pesticides, and things along those lines.

These flying robots obviously can be used for nefarious purposes. I remember thinking, as we were building our drones and we were selling hundreds of thousands of these drones, just thinking, like, man, please don't let this stuff get into the wrong hands.

It became a very politicised issue, particularly with US-China relations. And so what we've seen almost every year since then have been attempts to pass legislation to push DJI out of the US market.

DJI, over its lifetime, has shifted from a genuinely private company into a quasi-state, quasi-private company with strong state links and with strong links to the Communist party.

The Chinese Communist party is working to undermine American sovereignty by forcing Americans to rely and depend on unsecure communist Chinese technology. Nowhere is this more evident than in the drone industry.

The trajectory of DJI is a very interesting one. There is no doubt that this is a company that was set up by the founder, Wang Tao, who was a student at that time in the Hong Kong University of Science and Technology. And he created the first prototype drones in his dorm room. So at that point it is very clear that DJI was a private enterprise.

However, as Chinese companies grow they agglomerate more and more investors from different sources. And it is a truism in China that you are going to find big state investors wanting to invest in you. And with size, and importance, and prestige also comes control from the Communist party. That is completely unavoidable, particularly if you're making a militarily sensitive technology. And so, what's happened to DJI is that it has got state investors. It is a state-affiliated company with big state investments in it.

We do have some state-owned enterprises that are investors, but they own a really small percentage, less than 6 per cent, and they have less than 3 per cent voting rights. And so, they have no golden share. There is no board seat reserved or any executive position reserved for anybody from the Chinese government.

Frank still has over 70 per cent of the stock and more than 96 per cent of the voting rights in the company. So it's very much a privately-held company. And that's how we want to maintain it.

DJI may claim that these investors are no different from any other private equity investor in the west, but this is simply not true. Big state investors in China come with the state's baggage.

In 2006, DJI was founded by Frank Wang. In 2011, Wang met Colin Guinn at a trade show, and they founded DJI North America.

Hi, there. Colin Guinn here at DJI. In this video, we're going to take a look at...

Guinn featured in many of DJI's videos explaining how their early drones worked.

The Frank that I know and was very, very close friends with for many years, is a very kind individual, and we were close friends. I think he was very soft spoken, and humble, and is a brilliant engineer, and really, really innovative thinker on how to solve engineering problems.

At some point...

In May 2013, DJI attempted to buy out Guinn's share of DJI North America. By December, DJI's head office in China locked all of DJI North America's employees out of their emails and redirected all customers to China. Guinn sued DJI in 2014. They settled out of court for an undisclosed sum. He joined rival US drone company 3D Robotics. He now runs Guinn Partners, a marketing and product development agency.

Yeah, well, this was the one that we shot all the SpaceX launches with, so we just kind of saved it. It's just an old S800 drone. It was the very first DJI brushless gimbal. This would have been 2012, 2011.

In running Guinn Partners we've taken all of our experience from being in the drone space for the last close to 20 years now, and we develop all kinds of high-tech products. A lot of drones and robotics, but also a lot of fun products like the kind of smart, gel-blasting technology that we're launching into the location-based entertainment market right now, as well as other really cool products like the electric-powered hydrofoil surfboards for Lift Foils, one-man flying drones that you sit inside of for urban air mobility for Lift Aircraft. So we've gotten to work on some really, really cool projects over the last decade here at Guinn Partners.

The Frank that started DJI, he created his first autopilot because he used to go to the park and fly remote control helicopters. And flying remote control helicopters with no stabilisation is incredibly difficult, especially as the helicopter starts to rotate and your perspective is not rotating with it. And he would crash his helicopters. And it was kind of embarrassing, right?

He wanted to, like, hey, check out my cool toy. And so as he was taking I think it was his masters in electrical engineering or computer science and basically decided to make a helicopter stabilisation system so that he could go to the park and fly his helicopter, and impress the pretty girl, and not be crashing his helicopter all the time. He's just a normal guy that was like using his innovation, and creativity, and brain power to create a way to make it easier to fly a helicopter at the park. And then that led to the first autopilot systems.

Obviously, one thing led to another. We started doing camera gimbals and full systems. And they have real engineering chops, and they have real innovation chops, and they can make things very quickly and very inexpensively. So they will be a force to be reckoned with for sure.

DJI drones are being used to collect information on US critical infrastructure and pose significant risks to US national security.

I don't think it's understandable necessarily from a data security perspective. I think they are overplaying that card. Because if you're worried about data security, you could argue, well, why don't we then just define standards for drones to live up to. And then once your drone meets these requirements, it doesn't matter if it's built in France or the US or China, that drone is deemed to be safe. So you could easily solve that. You could also argue that, well, if we're worried about drones, then why aren't we worried about cell phones, laptops, security cameras, ring doorbell cameras?

A lot of the issues raised are really raised by people that don't actually use our products or understand the technology that well. If you use our products you would know that, one, you don't have to even connect to the internet with our products to use them. So we have something called local data mode, which essentially means that the drone is able to operate hermetically sealed off from the internet. So it's like an air-gapped computer.

Our drones are secure. And the people who use them know that, right? I mean, some of this is actually quite insulting to the police departments, the firefighters, the search and rescue teams that use our equipment. They are technically capable individuals, and they know that their data is secure with us.

The number of jobs in the United States and businesses that are dependent on being able to use DJI drones is significant. Like, if you take DJI drones off the table right now, a lot of businesses would go belly up. A lot of people would lose their jobs.

And then you get to the point where, OK, so we're also using DJI drones to save people's lives. So if you think about law enforcement, you think about fire departments, search and rescue teams, they are all using DJI drones to save people. They're also using these drones to keep their own people safe. So if you take that all off the table, I think you have a massive problem.

And also, there's no alternative. I mean, you can say, yeah, get a BRINC drone, get a Skydio drone. That's fine. But you can't get them in the thousands and thousands of drones that we need. Skydio started out as a autonomously flying consumer drone. They had built-in AI basically, with cameras, so that drone could avoid obstacles and fly itself.

They had their first model, then they came out with the Skydio 2, and then they abandoned the consumer drone market. I don't know if they've ever officially explained why, but the understanding in the drone industry is that they couldn't make it because they can't compete in terms of capability and price points compared to DJI drones.

Allowing artificially-cheap DJI drones to monopolise our skies has decimated American drone manufacturing. America has been flooded with drones manufactured by CCP-controlled drone company DJI.

When I started at 3D Robotics there was a desire to create a competing product to the Phantom. We created the 3DR Solo. We were now competing against DJI, which was thousands of employees. And so, going into Christmas, DJI had the flexibility to be able to just say, OK, we're going to take our price from $1,200 to $499. And that's a huge price drop.

Now, it's $499 versus $1,500. So now we are triple the price of the Phantom 3, which is also, as everyone knows, a fantastic drone. We didn't have the ability to pull on those levers and try to chase them down because we were already had very, very tight margins. And so, yeah, got to see firsthand how the ability to drive that price down and even take a loss for some amount of time gave them the ability to make it very, very hard to compete with.

What were those conversations like when that was happening.

Uh, slightly stressful.

As an example, we were paying about $9.80 per brushless motor, and there was probably at least three or four companies in the loop on all of these different components, whereas DJI is winding copper in their own owned factory. So they're buying raw materials and manufacturing a motor at probably, I think maybe at that time it was maybe $1.75 or $2 a motor at DJI. So getting to just see firsthand, when you're trying to compete at retail and you're trying to compete for consumer dollars, the cost of the product really matters. It definitely showed me the incredible speed and low cost at which DJI was able to engineer and manufacture things. Doing that with a company based in Berkeley, California, and trying to grow really quickly, it was a challenge.

The next argument is really about how America just needs to have an industry in this space. And so, it seems very, very clear that this is more about protectionism and about trying to build up a US-based industry.

Chinese companies use this argument that a lot of US, and, more generally, western sanctions against them, including tariffs against their companies, are protectionist policies. It's a difficult distinction to make. Because, in my mind, some of these policies, particularly the tariffs, are protectionist. The US tariff on Chinese EVs, which is now at 100 per cent, is certainly a protectionist tariff in my view.

Are the US sanctions on DJI motivated by protectionism or by security concerns? Maybe a bit of both. But from where I'm sitting, DJI's drones are a security-relevant piece of equipment, and therefore it is justified in being concerned about DJI drones' capacity to monitor all kinds of US activities, to monitor all kinds of US critical infrastructure. So I feel that the US argument, in this regard, holds water.

DJI is on the US Department of Defense list of Chinese military companies because it directly advances the modernisation efforts of the People's Liberation Army and given our greatest strategic adversary eyes in our skies.

I'm very much pro-drone. So I'm not anti-DJI or pro-DJI or I'm not anti-Skydio or pro-Skydio necessarily. I am pro-drone. Because I think the benefits that drones can offer to society are immense. I also think that the threats that drones pose are also considerate. I mean, you only need to look at Ukraine to understand the dark side of drones and of AI.

DJI had taken a group of their executives to a military training camp for a bonding, team-building type of exercise.

There is a banner at the bottom identifying this as a DJI marketing and sales group undergoing special training.

I don't think they thought it through in terms of that somebody might be taking photos and that might find its way through WeChat and different social media platforms. DJI executives in military fatigues at a Chinese military training facility made for pretty good headlines. What I understand, and what I've heard from people who work and have worked within DJI, is that they do have a military management style, as in it's quite rigid and well organised. And I think maybe that's why they, at the time, picked to go to a military training facility to kind of reinforce that way of working and managing your company. And I know from people working at DJI at the time that they weren't all that happy that this news had made its way out.

My understanding is that it was like it was an outing and it may have been... I don't know that it's a tactical error. I think it was more a matter of it was blown out of proportion. I mean, in terms of it was an away day, right? So they were actually doing an activity. But it wasn't as though there was some sort of military co-operation taking place.

We don't make products for military purposes. We don't have any linkages to the PLA. I mean, maybe we shouldn't have done an away day at a facility like that. But again, it was more of an outing for people at the office. It was no signal of co-operation or of anything else.

It is known for Chinese companies to undertake kind of military away days, training away days, in the same way that you would have some kind of corporate activity in the UK. I don't really know whether this means anything more. That's the thing. I mean, it's...

Does it surprise

you? Yes, it does surprise me. I mean, it clearly shows that DJI has links with the military. What we don't know is how substantive and broad-ranging those links may be.

So to the question that do we have any connections to the Chinese military, absolutely not. So we are probably the only drone company right now that has explicitly said we don't want to be involved in any combat purposes and put that in all of our reseller agreements, right? So we've explicitly stated that our products are purely for civilian purposes. We don't have any linkages or investment from the PLA and even from the Chinese government writ large.

There's a broader conversation about the geopolitics around China-US relations. And in my own journey of developing products, before I connected with DJI I had actually met with some US engineering firms to see if I could get a three-axis brushless gimbal made in the US. Quite frankly, just the cost of what it was going to take us to develop our first prototype was about 10 times what I ended up ultimately paying DJI to develop our first prototype. I was like 500k for starting concept prototype versus 50k with DJI.

I've developed products in both places, and there are definitely some benefits, pros, and cons to both places with how they develop products. In China, their ability to rapidly develop, engineer, prototype, manufacture... they are very, very good at that. And anyone that has spent any time in China and spent any time working with factories out there know that is a core competency that is in that culture.

We, I think, here, are very good at knowing what the customer wants and knowing how to deliver a really high-quality user experience that has a really clean workflow, and better UI, and pleasing to the eye, and our graphics, and creativity, and marketing, and things like that.

It may have been the case, a few years ago, that US companies were generally better at marketing and branding. But Chinese companies are catching up in that domain quickly as well, mainly because they've got the best tech. And this is certainly true in the case of DJI. Only 10 years ago, most people in the west, particularly in Europe, and to some extent in the US, were saying that China would never catch up in technology, that the US had an unassailable lead, that Europe had an unassailable lead. Now, it is certainly true that China is ahead of the US in technology and way ahead of Europe in technology.

I was there just a few months ago in Shenzhen, looking at the extraordinary Chinese technology companies there, and the speed of innovation in Chinese technology, not to mention the enormous size of China's supply chain, means that, in my view, China's not only ahead in most areas of technology with the key exception of computer chips, it's also in an unassailable lead, in my view. So DJI drones are far ahead of any other country in the world, and people need to really wake up and smell the coffee. Because this is a huge global trend that is affecting all of our economies and all of our prospects going forward.

I think, now, with all the knowledge, and the tools, and the software that DJI has developed over the years, you see that they branch out into the camera world. Years ago, DJI also bought Hasselblad, which is a very well-known camera manufacturer. They now are branching out into electric mountain bikes, where you would think DJI mountain bikes, like, that doesn't make any sense? But from a technical point of view, in terms of software, battery management, electrical motors, it makes a lot of sense. Automotive is another one, by the way. DJI has Lidar technology, so they've been working on a very small, compact, and more cost-efficient Lidar module that you can mount on cars and then that can be used for self-driving.

I think it's just natural for any company to want to diversify as much as possible. We've gone from drone to handheld gimbal to even movie camera stabilisers. We got the Ronin and other things that are used for actual moviemaking, through to drones that are actually specifically for the movie industry, like the Inspire 3, and then going to agriculture and everything else.

We've kind of done a huge array of things already in the drone space. And so, it's natural for us to start to say, OK, what's next? What's over the horizon? I mean, I think Frank, he's an electrical engineer, he loves playing with technology. Literally, within the company, the research and development team is at the heart of everything. So if people come up with good ideas, there's room to explore them.

I think it's very much the early years of drone development, frankly. If you look at how drones are being incorporated, it is still a worker, like an operator, with their thumbs on the sticks, looking at the drone. This is still very, very early days in terms of how the technology is being used. But where we're clearly moving towards is the predeployment of drones.

We have basically a drone-in-a-box solution, right? And what it means is essentially you have a dock that you deploy. The drone can land there to recharge. You can put it out in a remote area. We've had them used in Alaska to monitor for avalanche risk. So this is something that can literally be deployed hundreds of miles away from where the actual person who's controlling it is.

Even that's just a baby step, right? So right now, it's still a person in a control room monitoring things. Eventually, you'll get one person monitoring maybe 50 of these. And then, eventually, the person will just become completely out of the loop.

It always feels like, oh, we missed the curve, right? I remember, for 10 years, I felt like, OK, the boom is over. And quite frankly, I don't even think we're even close to the peak. Until you can just look out the window and see drones flying around like you see airplanes flying around... almost any time you can look out the window and see an airplane in the sky, especially if you live in a decent sized city, right? If you look outside, right now, I don't see any drones delivering tacos, or I don't see any drones monitoring traffic patterns, which means we just haven't even seen the beginning of this industry yet. And so, it's obviously going to be a really exciting time to see where things progress.