DJI sues US department of defense over 'Chinese Military Company' label

DJI, the world’s largest drone manufacturer, has filed a lawsuit against the US Department of Defense (DoD) to remove its name from a list of "Chinese Military Companies." The company claims this designation is unfounded and has caused significant harm to its business and employees.

Added to the list in 2022, DJI argues it has faced substantial repercussions, including lost business deals, stigmatization as a national security threat, and bans from contracting with various federal agencies. The company also reports that its employees have experienced harassment and public insults due to the label.

DJI asserts that the DoD did not provide a rationale for the designation until the company threatened legal action in September. When an explanation was finally given, DJI claims it was riddled with inaccuracies.

The DoD has not yet commented on the lawsuit. DJI's full argument is detailed in the complaint linked below.

This is not the first instance of US government scrutiny over DJI's alleged ties to the Chinese government. Since 2017, various government bodies have restricted the use of DJI drones due to security concerns. In 2019, the US Interior Department grounded its fleet of DJI drones, citing spying risks. The US Department of Commerce added DJI to its Entity List in 2020, banning US companies from exporting technology to the company over accusations of involvement in human rights abuses in China.

In 2021, the US Treasury listed DJI as a Non-SDN Chinese Military Industrial Complex Company, alleging the company provided drones for surveillance of Uyghurs in Xinjiang, implicating DJI in serious human rights abuses.

In response, DJI has consistently denied any ownership or control by the Chinese government and refuted involvement in the treatment of Uyghurs. The company maintains that its drones serve various purposes, many of which benefit US entities, including first responders. Independent audits, including those by US government agencies, have reportedly found no security threats associated with DJI products.

DJI acknowledges that two Chinese state-owned funds previously held minority investments in the company. However, the Shanghai Free Trade Zone Equity Fund holds less than 1% of DJI’s shares and less than 0.1% of its voting rights, and the Chengtong Fund ended its investment in June 2023. The majority of DJI is controlled by four individuals: founder Frank Wang and early employees Henry Lu, Swift Xie, and Li Zexiang.

Currently, Congress is considering a complete ban on importing DJI drones, citing national security risks. Although the House approved this ban as part of the National Defense Authorization Act, the Senate's version of the bill does not include it. The proposed legislation would allow existing owners to continue using their drones even if a ban is implemented.

DJI has recently faced additional challenges, with some drones being blocked by US customs under the Uyghur Forced Labor Prevention Act. The company argues this is a misunderstanding and continues to defend its position against the DoD's designation.