Chinese drones made in America: DJI's plan to win over Trump

Chinese drone-maker DJI is trying to get on US officials' good side by building some products in the United States. PHOTO: AFP

WASHINGTON (NYTIMES) - DJI, the large Chinese drone-maker, is facing mounting security concerns within the Trump administration that its flying machines could send sensitive surveillance data back to China. Now, the company is trying to get on US officials' good side by building some products in the United States.

The company, which is privately held, said on Monday (June 24) that it would repurpose a warehouse in Cerritos, California, to assemble a new version of a drone that has been popular among federal and local government agencies. The assembly of its flying devices in the United States will represent a small percentage of DJI's overall global production. But it could help the company meet some necessary federal requirements.

In addition, the company will build some machines with a newly available set of features, known as Government Edition. The system saves data collected by the machine only on the drone itself, and the information can be taken off the machine only after it lands. Those drones cannot transfer any of the information wirelessly online.

The new production facility and the new data features, the company hopes, will be enough to continue to sell the products in the United States. About 70 per cent of all drones in the country are supplied by DJI, according to one estimate. The company makes small drones for hobbyists as well as the higher-end industrial grade drones used to survey remote areas and forest fires, among other uses.

The announcement comes as President Donald Trump prepares to meet with President Xi Jinping of China this week for trade talks that have put Chinese and American tech companies in the crosshairs of a prolonged and punishing battle over trade and a race for technology leadership.

The White House has said that the telecommunications giant Huawei and other Chinese technology companies have the ability to spy and steal commercial and government secrets, posing a security threat to the United States. Those concerns have bled into the trade and economic war with China, sending chills across the global technology industry.

Shenzhen-based DJI, or Da Jiang Innovations Science and Technology, is the latest Chinese technology company scrambling to retain its ability to sell to the United States.

Huawei was put on an exports blacklist in May. Last week, the Commerce Department put five more Chinese businesses on its "entity list," which restricts the companies from purchasing American goods. Getting on the list can be a crippling blow for many makers of products like smartphones and wireless networks because they use global supply chains to gather all the necessary parts.

DJI has not been put on the administration's export blacklist. But starting in late 2017, it became the focus of government scrutiny after US customs and immigration officials raised concerns that the drones, with cameras, mapping technology and infrared scanners, could be used to collect sensitive data and send it back to the Chinese government. In May, the Department of Homeland Security issued a warning expressing those same concerns about Chinese-made drones.

DJI executives reject the claims that its products post security vulnerabilities.

"We are getting caught up in geopolitical issues of the day," Mario Rebello, vice president of DJI's North American operations, said in an interview. "There is a lot of fear and hype, and a lot of it is not true and misleading."

By assembling the drones in the United States, DJI said it would be able to file for certification that its devices meet requirements of the Trade Agreement Act. The law requires that government agencies can purchase some products only if they are made in the United States.

DJI's government customers have largely been using waivers to circumvent the trade law. Rebello said the company believed that it was now more likely to be blocked from selling to government agencies without certification that its products complied with the law.

DJI's compliance with the law should give its customers greater comfort with security and safety of the machine, Rebello said. The drones assembled in California, meant for emergency responders and industrial inspections, are capable of carrying more powerful cameras and other payload.

The Cerritos plant was previously used by DJI to store drones for distribution. The assembly operations will bring in some highly skilled workers to put the drones together but is not expected to have a major effect on jobs.

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