Chinese drone maker DJI faces a sudden obstacle

August 16, 2017 13:04
Shenzhen-based DJI was the first to successfully turn drones into mass-market products. Photo: DJI

Chinese drone maker SZ DJI Technology Co. is the undisputable leader in the field, having captured 60 percent of the global market.

The Shenzhen-based firm's founder is Wang Tao, also known as Frank Wang. Born in 1980, Wang came to Hong Kong in 2003 after enrolling for a course at the city's University of Science and Technology. He later pursued a Master's degree.

Recognizing his R&D talent, the university granted him HK$18,000 funding in 2005 to help him conduct research and develop a drone.

After graduating in 2006, Wang went to Shenzhen to start his business. He decided on the location due to the easier access to engineers and contract manufacturing partners in the southern Chinese city that is just across the border from Hong Kong.

DJI created its first workable product in 2008, and since then it has successfully created substantial demand for drones by turning them into gadgets an average family can afford.

Having conquered the western markets with competitive pricing and frequent optimization of hardware and software, DJI leveraged its brand and repeated the success at home.

Valued at US$13.7 billion, the company is now the fifth most valuable startup in China.

But recently the company met an unexpected obstacle, as the US Army has ordered its members to stop using DJI drones because of "cyber vulnerabilities".

It's believed that the ban imposed by the US Army has resulted from an alleged "backdoor" design, which could interfere with drone operations in some critical moments.

With the high speed, long flying range and versatility that some of the latest drone models can achieve, it would be a nightmare if the products are vulnerable to backdoor manipulation or hacking.

There's a real risk that drones can be turned into weapons that can be used for attacks on strategic facilities. This explains the growing safety concerns about the industry.

Given this situation, DJI's business growth prospects may hinge on whether it can successfully clear political hurdles, with drones likely to be viewed as strategically-sensitive products.

This article appeared in the Hong Kong Economic Journal on Aug 15

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist