Chinese Drone Manufacturer DJI Files Lawsuit Against US Department of Defense Over Military Designation
DJI's Legal Action Against the DOD
Chinese drone behemoth DJI has initiated legal proceedings against the US Department of Defense (DOD) on October 18, challenging its inclusion in the DOD's list of Chinese military companies. DJI, which dominates over half of the US commercial drone market, maintains that it is not owned or controlled by the Chinese military. The company has also refuted any involvement in China's military-civil fusion strategy or its military modernization efforts.
Claims of Arbitrary and Capricious Designation
The China-based firm contends that the DOD's designation is arbitrary and capricious, and has requested a district court in Washington to mandate its removal from the list. In 2021, the US Congress passed a law requiring the Pentagon to compile a list of Chinese military companies operating in the US. DJI was included in this list in October 2022. Despite DJI's 16-month effort to be removed from the list, the Pentagon reaffirmed the designation in January of this year.
Impact of the Designation on DJI
DJI argues that the designation has resulted in significant and ongoing damage, as evidenced by terminated contracts and widespread stigmatization of the company and its employees. The DOD had not commented on DJI's lawsuit at the time of publication.
DJI's Popularity and Controversies in the US
DJI's cost-effective and robust products enjoy widespread popularity in the US among enthusiasts and in industries such as agriculture and search and rescue. However, the company has also been identified by several US government agencies, including Homeland Security, the Pentagon, the FBI, and the Treasury, as a national security risk and an alleged contributor to human rights abuses in Xinjiang by the Chinese communist regime.
DJI's Response to Allegations
DJI has refuted all allegations, asserting that users have control over their data and that the company does not dictate how its commercial products are utilized by customers.
Similar Cases Against DOD's Listing
DJI's lawsuit against the DOD's listing follows similar cases, including those initiated by Chinese lidar manufacturer Hesai in May and Chinese chipmaking tool producer Advanced Micro-Fabrication Equipment (AMEC) in August. Last week, the DOD informed a district court in Washington that it had delisted Hesai as a Chinese military company but relisted the company based on the latest available information.
Successful Challenges Against DOD's Listing
In 2021, Chinese phone manufacturer Xiaomi and big data firm Luokung Technology Corp successfully contested their inclusion on the DOD's Communist Chinese Military Companies (CCMC) list. The CCMC list has been replaced by a broader Chinese Military-Industrial Complex Companies list, and the Treasury has assumed the role of primary authority to oversee the list.
China's Military-Civil Fusion Strategy
According to the US Department of State, China's military-civil fusion strategy eliminates barriers between China's civilian research and commercial sectors and its military and defense industrial sectors. In addition to leveraging China's talent pool, the department alleges that the Chinese Communist Party is also acquiring foreign technologies through various legal and illicit methods, including investment, research collaboration, espionage, and theft.
Bottom Line
The ongoing legal battles between Chinese companies and the US Department of Defense highlight the complex and evolving nature of international trade and national security concerns. DJI's lawsuit raises questions about the fairness and transparency of the DOD's designation process. It also underscores the potential economic and reputational impact of such designations on companies. What are your thoughts on this issue? Share this article with your friends and sign up for the Daily Briefing, delivered every day at 6pm.
