Department of Commerce Places DJI On “Entity List”

On Friday, Chinese drone maker DJI was added to the Department of Commerce’s (DOC) “entity list” along with other entities, for a total of 77 additions to the list. As a result, DJI, which is the world’s largest drone manufacturer, is prohibited from purchasing technology from American companies without a license from the federal government. The ban focuses on barring the export of U.S. technology to DJI, which will probably impact the drone manufacturer’s supply chain. The Department noted that the additions include “entities in China that enable human rights abuses, entities that supported the militarization and unlawful maritime claims in the South China Sea, entities that acquired U.S.-origin items in support of the People’s Liberation Army’s programs, and entities and persons that engaged in the theft of U.S. trade secrets.”

“China’s corrupt and bullying behavior both inside and outside its borders harms U.S. national security interests, undermines the sovereignty of our allies and partners, and violates the human rights and dignity of ethnic and religious minority groups,” United States Secretary of Commerce Wilbur Ross said. “Commerce will act to ensure that America’s technology—developed and produced according to open and free-market principles—is not used for malign or abusive purposes.” 

In the filing, DJI was accused of “enabl(ing) wide-scale human rights abuses within China through abusive genetic collection and analysis or high-technology surveillance.” This is most likely referring to DJI’s purported involvement with Chinese government surveillance.

This action follows other government actions against DJI and other Chinese entities. For example, in January, the Department of the Interior (DOI) banned the use of drones manufactured abroad, which included those from DJI. This also comes after the DOI grounded 800 drones in November 2019, which were mostly made in China; including the 15 percent of drones that the department uses that are made by DJI.

Additionally, other Chinese companies, such as Huawei, have been placed on the Department of Commerce’s “entity list.” However, in June the Department of Commerce announced a new rule that would allow American companies to work with the DOC and Huawei to develop standards for the telecommunications sector.  Moreover, in May, U.S. regulators considered closing a “loophole” in a new rule that would stop chips and other hardware from being sold to Huawei. This comes after Huawei was banned, and the company appealed the decision.

While placing Huawei, the world’s largest telecommunication equipment maker, on the entity list affected both Huawei and the U.S. telecommunications industry, it is unclear the level of impact this will have on DJI, the drone industry, and the United States. In particular, as Ars Technica noted, DJI and other Chinese corporations play a significant role in the drone supply chain, so the company may not be impacted like Huawei was; instead, it may not have that much trouble sourcing necessary components from domestic supply chains. Nevertheless, the placement it will make it difficult for DJI to further establish its market share in the United States.