Shenzhen's best seller faces US ban again!

The US ban on DJI’s drones has caused another uproar!

1. DJI and DoTong Intelligent Drones Face Sales Ban

Recently, news came from the U.S. House of Representatives that it will vote on an annual military bill.

The bill states that the U.S. national security agencies must determine within one year whether drones from China's DJI and Autel Robotics pose an unacceptable national security risk to the United States, which also means that DJI and Autel Robotics may be banned from selling new drones in the U.S. market.

It is reported that the U.S. House of Representatives will review an 1,800-page annual draft law involving the military to assess whether China's two companies, DJI and Autel Robotics, pose a security threat to the United States.

If no organization completes the relevant research, DJI and Daotong will automatically be included in the "ban list" of the Federal Communications Commission (FCC), prohibiting the two companies from selling new products in the US market.

In response, DJI stated that if the United States does not give clear investigation results, its products may be included in the "controlled list" and it will lose the U.S. market.

DJI believes that Chinese drones have been subject to unfair scrutiny and has proactively submitted its products to regular independent security audits. It has also expanded the scope of built-in user privacy controls on its consumer and enterprise drones.

Shenzhen DJI Innovations Technology Co., Ltd. was founded in 2006. With its innovative products, it has become the world's largest consumer drone manufacturer, with customers in more than 100 countries around the world.

DJI currently controls more than 70% of the global drone market share and has a strong technological lead in this field.

In the field of drones, DJI has accumulated more than 5,000 core patents and has a great advantage in technology research and development.

In terms of the drone's core flight control system, DJI's self-developed flight control algorithm, real-time operating system, navigation algorithm and other technologies play a vital role in the stability, accuracy and safety of the drone.

In addition, DJI's flight control system integrates multiple sensors such as gyroscopes, accelerometers, magnetic compasses, barometers, GNSS modules, etc. These sensors can measure physical quantities related to the aircraft's motion state, and perform data processing and analysis to achieve precise control of the aircraft's attitude and position, such as automatic return, obstacle avoidance, following, gesture control, etc.

These diverse functions not only improve the user experience, but also enhance the application capabilities of drones in complex environments.

With its strong product power and unique advantages, DJI's sales performance has doubled.

From 2013 to 2017, in just four years, DJI's revenue soared from 820 million to 17.57 billion, and in 2020 it achieved revenue of 26 billion.

In 2022, DJI's revenue reached 30.14 billion yuan, and sales revenue continued to grow in 2023.

DJI drones are quite popular in the US market, and DJI has an absolute leading position in the US commercial drone market. It is reported that DJI drones have a 58% share of the US commercial drone market and are often used by US law enforcement agencies. According to AUVSI data, although they are often suppressed, Chinese drones still occupy about 92% of the US emergency response market, and police, fire departments and rescue personnel across the United States generally use DJI drones.

Moreover, the widespread use of DJI drones in the United States has penetrated into various fields, including infrastructure and public safety, as well as agriculture. In 2023, 50 crops on 3.7 million acres of farmland in 41 states in the United States were sprayed with pesticides by drones, most of which were manufactured by China's DJI. DJI previously stated that roughly estimated, four-fifths of the drones used by American farmers are DJI's Agras model drones.

However, the United States has been frequently suppressing DJI for a long time.

In 2016, some U.S. lawmakers submitted a proposal to Congress to restrict DJI on the grounds of "cyber data security."

In 2017, the United States officially launched an investigation into DJI, and the U.S. Department of Defense included it in the sanctions list.

In May 2018, the U.S. Department of Defense's Army Department required all subordinate units to stop purchasing and using DJI products and banned all DJI drone products.

In May 2019, the US government once again banned US federal agencies from purchasing drones made in countries identified as "security threats" and banned the use of federal funds to purchase DJI drones. The US Department of Commerce put DJI on the trade blacklist and imposed tariffs on DJI's imported products.

In December 2020, the U.S. Department of Commerce added 59 Chinese companies and individuals, including DJI, to the "Entity List" on the grounds of "endangering U.S. national security", prohibiting U.S. companies from exporting technology to them.

In December 2021, the U.S. Department of Commerce added DJI Innovations to the trade blacklist. Later, the United States again announced that it would add eight Chinese companies, including DJI Innovations, to the investment blacklist.

In 2022, the United States included DJI and other companies on the "chip export blacklist", but the 28nm chips needed by DJI are fully domestically produced. DJI's main CPU is also the self-developed P1, and the graphics processor is domestically produced.

By 2024, the United States' actions to suppress Chinese drones have become more frequent.

In March 2024, the U.S. House of Representatives' "Special Committee on U.S.-China Strategic Competition" called on the Biden administration to take actions such as raising tariffs on products of Chinese drone manufacturers entering the U.S. market. These lawmakers claimed that Chinese drone companies accounted for more than 77% of the U.S. consumer drone market and more than 90% of the commercial drone market. The current 25% additional tariff on Chinese drones is not enough to cope with the surge in imports. They also called for new incentives to promote the development of U.S. drone manufacturers.

In June 2024, the U.S. House of Representatives passed the National Defense Authorization Act for Fiscal Year 2025 (NDAA), which included the so-called "Countering China's Drone Act", but the U.S. Senate's draft National Defense Authorization Act for Fiscal Year 2025 deleted the drone bill.

In early August 2024, two U.S. senators introduced an amendment, hoping to reincorporate the drone bill into the bill. This amendment needs to be reviewed by the Senate.

On September 9, 2024, the U.S. House of Representatives once again initiated a new bill to prohibit DJI Innovations Technology Co., Ltd. from exporting, marketing or selling new drones to the United States, and prohibiting new drones sold by China's DJI from connecting to U.S. communications infrastructure.

Although the United States has repeatedly proposed to ban DJI, DJI still maintains a strong market position in certain key areas of the United States. However, this does not mean that DJI can sit back and relax in the future. DJI still needs to continue to innovate in technology to maintain its market leadership. In the current market environment, other competitors are also actively developing new technologies and new products to compete for market share.

2. Daotong Intelligent responded to relevant bills of the U.S. Congress

Daotong Intelligent also responded to the plan to be voted on by the U.S. House of Representatives.

Daotong Intelligent said that as a high-tech enterprise of civilian drones, Daotong Intelligent firmly opposes the use of drone products for military purposes, monitoring and surveillance, or other purposes that violate human rights. Daotong Intelligent's business development has always strictly abided by industry standards and strictly complied with relevant export control policies and laws and regulations in various places.

In the cross-border circle, Daotong Technology is better known for its auto parts business, but in fact, the drone business was also its development focus.

Since its establishment in 2004, Datong Technology has mainly been engaged in the intelligent diagnosis and testing of automobiles. Later, in May 2014, Datong Technology established a wholly-owned subsidiary, Shenzhen Datong Intelligent Aviation Technology Co., Ltd., which is responsible for expanding the drone business.

Daotong Intelligence focuses on the autonomy, clustering and digitization of drones, and continues to promote the application of AI, cloud, big data, Internet of Things and networking technologies in the drone field, providing users with cutting-edge, intelligent and efficient drone solutions.

(Picture source: Daotong Intelligent official website)

In July 2015, in the application materials for IPO on the SME Board submitted to the China Securities Regulatory Commission, Daotong Technology stated that 185 million yuan of the raised funds would be invested in the drone business company.

During the rapid development of the industry, Daotong Intelligent has achieved outstanding performance in the market with its product advantages.

In 2015, Daotong Intelligent launched the X-STAR series of drones, an all-in-one aerial photography machine that can be turned on and flown immediately.

In 2018, Daotong Intelligent launched the first generation of portable folding obstacle-avoiding aerial photography drone - EVO.

In January 2020, Daotong Intelligent launched the second-generation portable folding obstacle-avoiding aerial photography drone - the EVO II series. This is Daotong Intelligent's first 8K/6K portable aerial photography drone, which has a great advantage in image quality.

In April 2020, Daotong Intelligent returned to the domestic market and officially launched the EVO II series of foldable drones in the country.

On September 28, 2020, Daotong Intelligent released the EVO II RTK series, which is the world's first portable foldable industrial application drone series with RTK module.

In 2021, Daotong Intelligent successively launched the EVO Nano series of drones, EVO Lite series of drones, Daotong Arowana series of drones and Daotong small drone nest EVO NEST.

The EVO Nano series drone is the first mini drone launched by Daotong Intelligent. It focuses on smart selfies and weighs only 249g, making it very suitable for novices.

The EVO Lite series of drones includes two products: EVO Lite and EVO Lite+. EVO Lite uses an innovative four-axis gimbal design, which enables one-button switching between horizontal and vertical shooting. It is the only drone on the market that supports lossless vertical shooting. EVO Lite+ has a 1-inch CMOS image sensor that can shoot up to 6K/30fps video and 20-megapixel photos.

The Daotong Arowana series of drones adopt a unique tilt-wingtip design, which can effectively integrate the dual advantages of multi-rotor vertical take-off and landing and fixed-wing long-term endurance.

Daotong's small drone nest EVO NEST can realize automatic take-off, autonomous inspection, automatic charging and precise landing of drones.

It is worth mentioning that this year the EVO Nano series and EVO Lite+ series products have been recognized by consumers and the industry. The products have been compared with similar DJI drones by many review bloggers and won the International Unmanned System Little Giant Award at the 2022 6th World Drone Conference.

In terms of technology, Daotong Intelligent has already formed a certain differentiated competitiveness, which is inseparable from Daotong Intelligent's long-term investment in R&D.

In the first few years of the company's development, Daotong Intelligent has invested more than 1 billion yuan in research and development.

At present, Daotong Intelligent has established close industry-university-research cooperation with well-known overseas universities such as Carnegie Mellon University, MIT, and Technical University of Munich in Germany, and invited foreign scientists to join the R&D team. At the same time, Daotong Intelligent has established overseas branches and R&D bases in Seattle, USA, Munich, Germany, Italy, Singapore, Vietnam and other places. Among them, the R&D base covers a total area of ​​4297.62m², and R&D personnel account for 50.1% of non-production personnel, laying a solid foundation for technological innovation.

As of August 31, 2024, Daotong Intelligent has 2,959 patent applications, 1,752 authorized patents, and 656 authorized inventions worldwide.

Today, Daotong Intelligent has developed into one of the few companies in the world that can commercially mass-produce omnidirectional obstacle-avoiding multi-rotor civilian drones. It is also one of the few companies in the world that has tilt-rotor fixed-wing drones with intelligent obstacle avoidance capabilities.

The drones produced by Daotong Intelligent have been widely used in scenarios such as road traffic, forest fire prevention, maritime anti-smuggling, power grid inspection, agricultural inspection, etc., and the products are sold to more than 80 countries and regions around the world.

Currently, Daotong Intelligent has a leading market share in the U.S. industrial drone market and is one of the important players in the U.S. drone market.

Although its market share in the United States may not be as significant as DJI, Daotong Intelligent has unique competitive advantages in specific fields, such as industrial-grade drones.

3. Why does the United States target DJI and Datong?

One is the so-called “national security”.

The US government claims that drones from DJI and Datong could be used to collect confidential US information, posing a threat to national security. However, this claim has not been supported by solid evidence.

The second is to protect the domestic drone industry in the United States.

DJI is one of the world's largest commercial drone manufacturers, and its market share in the U.S. commercial drone market is absolutely number one. Daotong Intelligent is also one of the representative companies in China's drone industry, and it also has outstanding performance in overseas markets.

The rapid rise of these two companies has put competitive pressure on UAV manufacturers in the United States. Therefore, the United States tried to protect the development of its domestic UAV industry by restricting the import of Chinese UAVs.

Currently, local companies that have developed relatively well in the US drone market include Skydio and Zipline.

Skydio is one of the leading drone manufacturers in the United States, mainly developing high-performance drone products. Skydio's product line includes Skydio 2, Skydio Autonomy and other series, which are widely used in military, police, industrial and civilian fields. However, in recent years, Skydio has faced the dual pressure of supply chain problems and market competition, resulting in a decline in its market share. In order to cope with market challenges, Skydio is seeking new market opportunities and technological innovation paths.

Zipline is a company that uses electric drones to provide instant delivery services and has been providing aerial delivery services in the United States for many years. Zipline's drone logistics system includes autonomous electric drones, ground stations, and supporting cargo delivery equipment. The drones use advanced autonomous navigation technology and can fly safely in complex environments, ensuring that goods are delivered to their destinations accurately and quickly.

Although Zipline's drone delivery service has many advantages, it still faces some challenges. For example, drones still need to be improved in terms of endurance and load capacity.

Although local drone companies in the United States are actively expanding the local market and launching new products, these companies cannot compare with DJI in terms of market share, brand influence, technological strength, price and cost-effectiveness, industrial chain and supply chain, policy support and market environment.

Vic Moss, CEO of the American Drone Service Providers Alliance , once said that even five years later, it is unlikely that the United States will have products of comparable quality to DJI because the United States currently lacks the infrastructure and supply chain to design and manufacture such drones.

Several U.S. drone companies have already announced that they will stop their drone business. In 2018, GoPro, an American drone company, announced that it would stop its drone business. 3D Robotics, which claimed to challenge DJI, also stopped drone production.

The third aspect is technological competition.

In recent years, China's drone industry has emerged globally, winning the favor of many countries and companies with its advanced technology, high quality and competitive prices. The United States has felt the strong competitive pressure from China. In order to maintain its leading position in technology and market share, the United States has taken a series of measures against DJI and Docom.

The U.S. Congress proposed to include companies such as DJI and Daotong Intelligent in the "covered list" in an attempt to directly block these companies' channels to enter the U.S. market.

Because the competition between China and the United States is not limited to the field of science and technology, but also involves multiple aspects such as national security and economic interests. The United States wants to take an advantageous position in the science and technology competition by restricting the sales of Chinese drones in the United States, and restrict the development and influence of Chinese drones such as DJI and Daotong Intelligent in the US and even global markets.

How should DJI and Daotong respond?

1. DJI and Dotcom can further expand into international markets outside the United States to reduce their reliance on a single market and balance the risks brought by the continued suppression of the U.S. market. At the same time, they can increase their R&D investment and promote technological innovation to enhance their competitiveness in other markets.

2. DJI and Dotong Intelligent can safeguard their own rights and interests through legal channels, such as filing lawsuits or applying for administrative reconsideration.

3. The two companies should analyze market reactions and industry prospects and adjust their corporate strategies in a timely manner to cope with possible market changes and future challenges.

It can be predicted that the United States’ pressure on DJI and Daotong Intelligent will only become stronger in the future.

At present, the latest progress of the US annual military bill is that the US Senate voted to pass it on December 18. After the bill is passed by the House of Representatives, it will be submitted to US President Biden for signature.

The drone proposals in the bill will also have an important impact on the global drone market, China-US economic and trade relations, and the competition between the two countries in the field of science and technology.

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