Chinese drone company DJI was funded by Chinese government investors, despite previous claims

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Chinese drone maker DJI, a major supplier of drones to US law enforcement agencies, has obscured the Chinese government’s funds, claiming that Beijing had not invested in the company. Analysis by a controlled investor and IPVM, a video surveillance research group.

According to the document, four investment institutions owned or controlled by Beijing have become popular in recent years, including national asset management companies that have promised to play an important role in promoting partnerships between private companies and the Chinese military. We are investing in a drone brand.

Brendan Carr, a senior Republican member of the Federal Communications Commission that permits the use of DJI’s equipment on US telecommunications networks, labeled Link’s report “deeply concerned” in an interview. Last year, the FCC proposed a change that could significantly limit access to the US market for companies that are considered a national security risk.

DJI’s scrutiny arises because the company is already facing action by US regulatory agencies over its relationship with Beijing’s security equipment. DJI was added to sell drone equipment to police in the Xinjiang Uygur Autonomous Region, out of eight Chinese companies that were added to the US investment blacklist by the Ministry of Finance in December. In 2020, the company was added to the Department of Commerce’s Entity List, limiting access to US components.

The Pentagon revealed last year that the 2017 DJI drone purchase ban continues to be enforced, except in very limited circumstances. The Pentagon has previously stated that Chinese drones pose a national security threat because of the “increasing awareness of cyber vulnerabilities” in aircraft.

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DJI still makes up the majority of consumer drones used in the United States. As of 2020, DJI accounted for 77% of the American hobby drone market, but according to a Bard College study, DJI drones are a database used by US public security agencies, including state and local police. It accounted for about 90% of drones. , As well as firefighting and emergency services.

The company is not listed and Hong Kong’s ownership structure means that a complete list of investors has not been published. According to Bethlehem, PA, it highlights the wide range of challenges investors and governments face in unraveling the link between Chinese private tech companies and Beijing. The base IPVM first revealed some of the funding links between DJI and China’s national investment fund.

DJI did not comment on the question of whether the Chinese government-controlled funders were investors in the company, but claimed that it had not received “direct” investment from the Chinese government.

“DJI is a privately held company. The company is exclusively controlled by the founder team and owns a majority. No shareholders other than the founder participate in the management and operation of the company,” said a DJI spokesman. Adam Lisberg says.

Funds that list DJI as an investment are directly managed by the State-owned Assets Supervisory Board (SASAC) in Beijing, a ministerial-level organization under the mission of the State Council of China to manage Chinese state-owned enterprises. Includes China Chengtong Holdings Group. ..

“If SASAC is not China [People’s Republic of China] Government, I don’t know what it is. If SASAC invests in you, it means that the Chinese government has invested in you, “said Charles Rollet, an IPVM analyst who revealed the relationship between DJI and China Chengtong, which invested in DJI through the Emerging Technology Fund. increase.

“It is in direct contradiction with what [DJI spokespeople] We’ve been promoting to alleviate concerns over the Chinese government, “Loretto said. “DJI has said there is no investment by the Chinese government. This evidence is in direct conflict with it.”

Other funds that list DJI as an investment include the Shanghai Venture Capital Guidance Fund, which operates under the Shanghai Municipal Government. China’s Guidance Fund combines national assets with private funds to promote Beijing’s industrial development goals in emerging industries.

According to a Chinese S & P Global Report released in March 2021, state-owned Guangdong Hengken Investment Holding invested in DJI with SenseTime and was put on the sanctions list by the Biden administration in December on suspicion of infringement in the Xinjiang Uygur Autonomous Region. Added.

SDIC Unity Capital, a fund run by the State Development and Investment Corporation (SDIC), a state-owned investment holding company approved by the Chinese State Council, also lists DJI as an investment on its website.

Funds in the four states did not respond to requests for comment.

Americans and most federal and local agencies are not restricted in purchasing DJI drones, but further regulatory measures could threaten the company’s solid dominance in the US market.

“One of the independent foundations we have to take action at the FCC is the lack of candidness, and therefore the lack of candidness that contributes to the assessment of whether we are eligible for FCC approval. If so, apart from national security concerns, the FCC license “says FCC Commissioner Carr.

Carr asked to add DJI to the FCC’s target list. This bans access to the Federal Communications Commission’s (USF) calming that companies can use to maintain their telecommunications infrastructure. Current companies on the list include Chinese telecommunications giants Huawei and ZTE.

According to Kerr, DJI is not a telecommunications provider and is not eligible for USF subsidies or funding, but last year the FCC proposed a change banning device certification for companies on the target list. .. If a company is added to the list, it will not be legally operated on the US communications infrastructure.

In November, President Biden signed the Safety Equipment Act. This requires the FCC to adopt such a ban on companies on the target list by the end of the year.

The FCC suggests taking a stricter stance in regulating national security threats, but spokespersons do not comment directly on DJI.

“The FCC has also asked its national security and law enforcement partners to determine if they need to update their list of targets in the light of new evidence of cyber threats,” the FCC said. Spokeswoman Paloma Perez said.

Founded by CEO Frank Wang in 2006 as a student at Hong Kong University of Science and Technology, DJI is one of the few Chinese technology brands to claim its global advantage in high-end consumer hardware over the last decade. is.

According to the information posted on the fund’s website, its success has also attracted state-owned and managed investors.

According to the 2018 Corporate Report, China Chengtong has invested in DJI through a government fund worth $ 55.3 billion. It is not clear how much the fund has invested. The fund was approved by the State Council of China and SASAC in 2016 and is headed by Zhu Bixin, the head of the State Council of China.

An October 2019 article posted on the China Chengtong website is an image of the fund’s deputy secretary visiting a DJI facility in Shenzhen with the team to confirm funding and “perform a special investigation” on investment. Is shown.

“DJI adheres to Xi Jinping’s guidance on socialism with the characteristics of a new era of China,” the article said, referring to the Chinese president.

Documents show that China is collecting a large amount of data on Western targets

The tour took place almost exactly a year before DJI posted a “myth-killing” blog on an English website and was not funded by the Chinese government amid rising pressure from U.S. regulators. Said.

“DJI has not received any investment from the Chinese government, but American venture capital firms have invested more than $ 100 million,” the blog said.

China Chengtong did not respond to email requests for comment, but its goal was “mainly to contribute to the innovation and development of central enterprises and to increase capital support for major national strategies such as the Belt and Road Project and the military. There is. ” -Private fusion. “

The fusion of the military and civilians is a Chinese policy raised to a national-level strategy in 2015, designed to remove the barrier between the country’s private high-tech enterprises and the PLA.

DJI’s ongoing sales of Xinjiang Uygur Autonomous Region

National security concerns landed DJI on the U.S. Department of Commerce’s Entity List in 2020, but it’s the relationship with the security operations of the Xinjiang Uygur Autonomous Region that has been closely monitored over the past year. ..

Cooperation between DJI and the Public Security Bureau of the Xinjiang Uygur Autonomous Region was previously disclosed in a 2017 agreement reported by Bloomberg News. Recent contracts revealed by research firm IPVM show that police and other local governments in Xinjiang Uygur Autonomous Region continue to purchase DJI technology.

The post reviewed a document collected by IPVM outlining seven procurement orders for DJI technology by the Xinjiang Uygur Autonomous Region Police Public Security Department since 2019, with a total value of approximately $ 300,000.

This includes a procurement document issued in December by police in the Aksu area of ​​Xinjiang Uygur Autonomous Region, requesting a DJI drone worth $ 132,000 capable of performing advanced 3D mapping according to product specifications. In September, in northern Xinjiang Uygur Autonomous Region of Karamay, police ordered some advanced DJI drones worth $ 75,000.

This purchase highlights the continued use of DJI’s technology in the Xinjiang Uygur Autonomous Region. Experts say more than one million Uighurs have been detained in recent years as part of a large-scale crackdown backed by China’s private surveillance industry.

The other four documents outline a $ 47,000 worth of bids placed on DJI drones by units of the Xinjiang Production Construction Corps. XPCC, a state paramilitary organization that oversees the administration of several cities and regions in the Xinjiang Uygur Autonomous Region, was added to the list of US government sanctions for human rights violations in 2020.

Christian Shepherd and Pei Lin Wu in Taipei, Taiwan, and Lyric Li in Seoul contributed to this report.

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