Chinese drone maker lobbies to defeat US national security ban

China’s blacklisted DJI is battling to maintain its dominance of the US drone market by lobbying Congress to block a bill barring the federal government from buying its unmanned aircraft.

The Shenzhen-based company has hired two lobbying firms — Squire Patton Boggs and the Vogel Group — to persuade members of Congress not to back the American Security Drone Act, which forbids the government from buying drones from Chinese firms or others viewed as posing a risk to national security.

DJI is just one of many Chinese technology companies that have fallen into Washington’s crosshairs over security concerns.

The Trump administration in 2018 placed the group on the “entity list” — a blacklist that effectively prevents it from buying US technology. President Joe Biden last year added DJI to the “Chinese military-industrial complex companies” list, a group of entities in which Americans are prohibited from investing.

As DJI faces pressure from the administration, it is working to derail congressional efforts that would hit its business in America. The ADSA would also prohibit US local law enforcement, for example, from using federal grants to buy its drones. According to OpenSecrets, which tracks lobbying spending, DJI has spent almost $4mn since the start of 2018.

Underscoring the pressure on the group, David Benowitz, head of research at Drone Analyst, said DJI’s share of the US commercial market had fallen from 62 per cent in 2020 to 50 per cent last year. Over the same period, Autel, another Chinese drone maker that has come under less scrutiny, has seen its share of the US market share rise from 7 per cent to 9 per cent.

DJI hired Squire Patton Boggs, a lobbying powerhouse, in April after the House passed the almost 3,000-page America Competes Act, a bill aimed at boosting US competitiveness against China that included the ASDA.

But as lawmakers struggle to reconcile House and Senate versions of the big China bills due to a separate political dispute, the DJI battle has shifted to the annual defence spending bill working its way through Congress.

DJI appeared to win an early victory this week when the Democrat-controlled House rules committee opted not to include the drone language in the House version of the defence bill. That angered lawmakers such as Michael Gallagher, a Republican who sponsored the drone amendment.

“The language in this amendment hasn’t changed since it passed the House in the Competes Act earlier this year and neither has the threat posed by DJI drones, but for some reason it seems Congress’s appetite to debate this issue has,” Gallagher told the Financial Times.

“The US government has clearly outlined the threats these devices pose to our national security, and we have to work together to ensure these drones are nowhere near the federal government,” he added.

The House rules committee did not respond to a request for comment.

Michael McCaul, the top Republican on the House foreign affairs committee, criticised the move to exclude the ASDA from the National Defense Authorization bill. 

“If congressional Democrats can’t agree that ensuring a blacklisted Chinese drone company doesn’t receive American money is a valid amendment to NDAA, I’m concerned they don’t understand the basics of ‘national defence,’” McCaul told the FT. 

Adam Lisberg, North America head of communications for DJI, said the company did not know if its lobbying had contributed to the outcome. But he said the result in the House reflected “the growing bipartisan consensus that broad restrictions on drone technology would hurt the American first responders and small businesses who want to make their own choices”.

According to emails obtained from a congressional office, DJI’s lobbyists argue that its drones are critical for local law enforcement and first responders as they are more advanced and much cheaper than US rivals.

But Alexandra Seymour, a technology expert at CNAS, a think-tank, said the benefits of the technology were far outweighed by the national security risks.

“We are trying to protect our technology and innovation. We don’t want to create an opportunity for the competition to come in and steal information or surveil our critical infrastructure,” Seymour added.

In a letter to lawmakers in June, Adam Welsh, DJI’s global policy head, said DJI could not gain access to user data unless customers opted to share it with the group and denied that there was a security risk.

But critics counter that Chinese national security laws require companies in China to share data with the central government when compelled by Beijing.

Eric Sayers, a security expert at the American Enterprise Institute, said he was shocked at the move in the House given the bipartisan consensus on DJI, which he attributed to lobbying. He said it was now critical that the Senate, which is drafting its version of the defence bill that will later have to be reconciled with the House version, take up the cause against DJI.

“Congress has talked a good game about the People’s Republic of China in recent years but has repeatedly failed to take decisive steps against PRC drones for fear of the near-term but necessary costs it will create to rip them out of our government ecosystem,” said Sayers.

“This trend will only change if the Senate finds the courage to take bipartisan action to pass ASDA.”

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