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This story first appeared in China Report, MIT Technology Review’s newsletter about technology in China. Sign up to receive it in your inbox every Tuesday.
Whether you’ve flown a drone before or not, you’ve probably heard of DJI, or at least seen its logo. With more than a 90% share of the global consumer market, this Shenzhen-based company’s drones are used by hobbyists and businesses alike for photography and surveillance, as well as for spraying pesticides, moving parcels, and many other purposes around the world.
But on June 14, the US House of Representatives passed a bill that would completely ban DJI’s drones from being sold in the US. The bill is now being discussed in the Senate as part of the annual defense budget negotiations.
The reason? While its market dominance has attracted scrutiny for years, it’s increasingly clear that DJI’s commercial products are so good and affordable they are also being used on active battlefields to scout out the enemy or carry bombs. As the US worries about the potential for conflict between China and Taiwan, the military implications of DJI’s commercial drones are becoming a top policy concern.
DJI has managed to set the gold standard for commercial drones because it is built on decades of electronic manufacturing prowess and policy support in Shenzhen. It is an example of how China’s manufacturing advantage can turn into a technological one.
“I’ve been to the DJI factory many times … and mainly, China’s industrial base is so deep that every component ends up being a fraction of the cost,” Sam Schmitz, the mechanical engineering lead at Neuralink, wrote on X. Shenzhen and surrounding towns have had a robust factory scene for decades, providing an indispensable supply chain for a hardware industry like drones. “This factory made almost everything, and it’s surrounded by thousands of factories that make everything else … nowhere else in the world can you run out of some weird screw and just walk down the street until you find someone selling thousands of them,” he wrote.
But Shenzhen’s municipal government has also significantly contributed to the industry. For example, it has granted companies more permission for potentially risky experiments and set up subsidies and policy support. Last year, I visited Shenzhen to experience how it’s already incorporating drones in everyday food delivery, but the city is also working with companies to use drones for bigger and bigger jobs—carrying everything from packages to passengers. All of these go into a plan to build up the “low-altitude economy” in Shenzhen that keeps the city on the leading edge of drone technology.
As a result, the supply chain in Shenzhen has become so competitive that the world can’t really use drones without it. Chinese drones are simply the most accessible and affordable out there.
Most recently, DJI’s drones have been used by both sides in the Ukraine-Russia conflict for reconnaissance and bombing. Some American companies tried to replace DJI’s role, but their drones were more expensive and their performance unsatisfactory. And even as DJI publicly suspended its businesses in Russia and Ukraine and said it would terminate any reseller relationship if its products were found to be used for military purposes, the Ukrainian army is still assembling its own drones with parts sourced from China.
This reliance on one Chinese company and the supply chain behind it is what worries US politicians, but the danger would be more pronounced in any conflict between China and Taiwan, a prospect that is a huge security concern in the US and globally.
Last week, my colleague James O’Donnell wrote about a report by the think tank Center for a New American Security (CNAS) that analyzed the role of drones in a potential war in the Taiwan Strait. Right now, both Ukraine and Russia are still finding ways to source drones or drone parts from Chinese companies, but it’d be much harder for Taiwan to do so, since it would be in China’s interest to block its opponent’s supply. “So Taiwan is effectively cut off from the world’s foremost commercial drone supplier and must either make its own drones or find alternative manufacturers, likely in the US,” James wrote.
If the ban on DJI sales in the US is eventually passed, it will hit the company hard for sure, as the US drone market is currently worth an estimated $6 billion, the majority of which is going to DJI. But undercutting DJI’s advantage won’t magically grow an alternative drone industry outside China.
“The actions taken against DJI suggest protectionism and undermine the principles of fair competition and an open market. The Countering CCP Drones Act risks setting a dangerous precedent, where unfounded allegations dictate public policy, potentially jeopardizing the economic well-being of the US,” DJI told MIT Technology Review in an emailed statement.
The Taiwanese government is aware of the risks of relying too much on China’s drone industry, and it’s looking to change. In March, Taiwan’s newly elected president, Lai Ching-te, said that Taiwan wants to become the “Asian center for the democratic drone supply chain.”
Already the hub of global semiconductor production, Taiwan seems well positioned to grow another hardware industry like drones, but it will probably still take years or even decades to build the economies of scale seen in Shenzhen. With support from the US, can Taiwanese companies really grow fast enough to meaningfully sway China’s control of the industry? That’s a very open question.
A housekeeping note: I’m currently visiting London, and the newsletter will take a break next week. If you are based in the UK and would like to meet up, let me know by writing to [email protected].
Catch up with China
1. ByteDance is working with the US chip design company Broadcom to develop a five-nanometer AI chip. This US-China collaboration, which should be compliant with US export restrictions, is rare these days given the political climate. (Reuters $)
2. After both the European Union and China announced new tariffs against each other, the two sides agreed to chat about how to resolve the dispute. (New York Times $)
Canada is preparing to announce its own tariffs on Chinese-made electric vehicles. (Bloomberg $)
3. A NASA leader says the US is “on schedule” to send astronauts to the moon within a few years. There’s currently a heated race between the US and China on moon exploration. (Washington Post $)
4. A new cybersecurity report says RedJuliett, a China-backed hacker group, has intensified attacks on Taiwanese organizations this year. (Al Jazeera $)
5. The Canadian government is blocking a rare earth mine from being sold to a Chinese company. Instead, the government will buy the stockpiled rare earth materials for $2.2 million. (Bloomberg $)
6. Economic hardship at home has pushed some Chinese small investors to enter the US marijuana industry. They have been buying lands in the States, setting up marijuana farms, and hiring other new Chinese immigrants. (NPR)
Lost in translation
In the past week, the most talked-about person in China has been a 17-year-old girl named Jiang Ping, according to the Chinese publication Southern Metropolis Daily. Every year since 2018, the Chinese company Alibaba has been hosting a global mathematics contest that attracts students from prestigious universities around the world to compete for a generous prize. But to everyone’s surprise, Jiang, who’s studying fashion design at a vocational high school in a poor town in eastern China, ended up ranking 12th in the qualifying round this year, beating scores of college undergraduate or even master’s students. Other than reading college mathematics textbooks under her math teacher’s guidance, Jiang has received no professional training, as many of her competitors have.
Jiang’s story, highlighted by Alibaba following the announcement of the first-round results, immediately went viral in China. While some saw it as a tale of buried talents and how personal endeavor can overcome unfavorable circumstances, others questioned the legitimacy of her results. She became so famous that people, including social media influencers, kept visiting her home, turning her hometown into an unlikely tourist destination. The town had to hide Jiang from public attention while she prepared for the final round of the competition.
One more thing
After I wrote about the new Chinese generative video model Kling last week, the AI tool added a new feature that can turn a static photo into a short video clip. Well, what better way to test its performance than feeding it the iconic “distracted boyfriend” meme and watching what the model predicts will happen after that moment?
Update: The story has been updated to include a statement from DJI.
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