Despite being one of the most successful businesses operating in the US in the last ten years, Chinese drone hegemon DJI Technology is struggling in the market that it once dominated. In addition to rumors of a possible downsizing of its North American operations, DJI Technology is also facing pressure from the U.S. government as part of its latest restrictions on Chinese companies.
Citing more than two dozen current and former employees, including two former senior executives, Reuters reported that DJI let go one-third of its 200-people team in 2020. In February 2021, the company’s head of research and development also left. The firm then laid off the remaining research and development crew working in Palo Alto, California.
DJI did not directly respond to questions on its significant staff changes in the U.S. One source from the company said that North America remains to be the company’s largest market. The corporate source further cited that DJI recorded a 30% increase in its global sales revenue, indicating that the results are within expectations.
According to reports from Chinese media cis.cn, DJI has approximately 70% of the market share in the global drone business. The company’s revenue has grown exponentially due to the significantly increasing popularity of drones. From 2014 to 2017, DJI’s global sales revenue doubled for three consecutive years.
The company currently employs approximately 14,000 people worldwide and claims that the COVID-19 global pandemic significantly impacted its business operations. At one point in 2020, about 50% of its employees were working from home.
Founded in 2006 by Frank Wang, the company is one of the Chinese innovation champions and one of the companies suffering from the trade and diplomatic tensions between the United States and China. Despite its earlier dominance in the US market, DJI may be significantly affected by an order from the Department of Commerce in December. DJI is currently on the departmental entity list designating it as a national security concern, with a government order banning US-based companies from providing technologies to it.
According to reports from The Verge, the government order will make it difficult for DJI to maintain its supply chains, which heavily rely on parts and components from U.S. businesses.
The U.S. government further argues that DJI “enabled wide-scale human rights abuses within China through abusive genetic collection and analysis or high-technology surveillance.”
In addition to U.S. government restrictions, internal struggles within DJI also dealt a hard blow to the company’s North American operations. Romeo Durscher, DJI’s former head of public safety, left his job in December 2020. The former NASA project manager and renowned drone expert now work for Swiss company Auterion, a major competitor to DJI.
Durscher attributed his decision to internal power struggles between the U.S. team and the company’s China headquarters. He claimed that in 2020 those struggles got worse and the battles distracted the team from the real business and led to a significant loss of talent at DJI.
In addition to experiencing geopolitical struggles and economic downturns, DJI is also struggling with security concerns. In July 2020, the New York Times reported that cybersecurity researchers discovered vulnerabilities in DJI’s Android app. Further researches suggest that the China-based company collects a large amount of personal information that could be abused by the authorities.
In May 2019, the U.S. Department of Homeland Security warned that Chinese-made drones might send sensitive flight data to their manufacturers and are a “potential risk to an organization’s information.
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The federal government department did not name any specific drone manufacturers. However, experts indicate that the warning targeted DJI, the dominant firm that controls 80% of the drones used in North America.