In March, the Chinese design community read a piece of striking news that Figma, an American design software company, blocked DJI’s corporate account because DJI was on the U.S. sanctions list, and Figma could not provide software services to companies on that.
Figma is a U.I. design tool, and there are similar ones that can replace it at low cost. It is not a 3D design software for industrial designs, but many companies made quick responses to it and put Figma file import functions online as early as possible to reduce the impact.
After the incident, two points have been widely discussed. First, is the discontinuation of Figma just a beginning? How should companies respond if more common software is suspended for Chinese companies because of this “force majeure”? Second, is this a wave of “giving away” behavior for domestic software? How can local software companies seize the opportunity brought by the “ban” on foreign software?
There is another point worth exploring behind this incident: why is it DJI that is sanctioned “again”. We may have heard similar stories from Huawei and MATLAB, while DJI is also a frequent guest on the blacklist.
Founded in 2006 and headquartered in Shenzhen, DJI has accounted for 80% of the global drone market, making it the absolute king of the consumer drone industry, according to data in 2020 from the Qianzhan Industry Research Institute.
In the “Development Report of Global Top 500 Unicorns (2021)”, DJI ranked 28th with a valuation of $23.714 billion. Around 2013, DJI won a fierce competition with 3D Robotics, an American drone company in the U.S. market.
The United States is naturally well aware of this. In May 2017, the U.S. Army Research Lab issued a confidential report titled “Threats and Use Vulnerabilities of DJI.” Later, the U.S. blocked DJI for cybersecurity concerns, requiring a U.S. military-wide ban on DJI drones and the uninstallation of all DJI products. But then the ban was lifted during the trade war for unknown reasons.
In December 2020, DJI was placed on the “Entity List”. If a company is included on such a control list, it must get approval from the U.S. Department of Commerce to get products and technical services from U.S. companies.
Faced with the sanctions, DJI responded that they were disappointed with the U.S. Department of Commerce’s decision. Customers in the United States could continue purchasing and using DJI’s products as usual. Under the increased tariffs, DJI increased prices in the U.S. by 13% accordingly, shifting the tax burden to American consumers.
DJI seems to be doing ok now, which can be attributed to its good use, excellent cost performance, and patent barriers.
As a company that started as a civilian aerial photography technology, DJI has shown its products with solid functions.
Flight control is considered the core of drones, and its procedures and algorithms are top secrets. DJI has achieved high integration in this aspect of flight control compared to other manufacturers. Besides the flight control, its gimbal stabilization system is also a masterpiece, which ensures its superior performance to the greatest extent. And in terms of price, its cost control is also a ride to the top. For example, DJI’s high-end “Royal” series drones cost about $1,000–1,500, while their American counterparts offer 10 to 20 times more for the same technical parameters.
DJI has built a vast patent barrier. From 2008 to 2017, it is reported that DJI has applied for over 4,000 patents related to drones, including 916 public patents; 3,206 national patents; 49 software copyrights; and 46 work copyrights. Such a large patent system has brought DJI a horrendous control in the industry. It is difficult for any company in the drone industry to bypass DJI’s patents.
At the same time, DJI has achieved an ecological closed-loop with the help of a perfect domestic industrial supply chain. It remains to be seen what the impact will be.
