Pentagon can call DJI a Chinese Military Company, court rules

Last October, dronemaker DJI sued the US Department of Defense, arguing it should no longer face the stigma of being listed as a “Chinese Military Company” and continue to risk business as a result.

While US District Court judge Paul Friedman “cannot conclude” that DJI is “indirectly owned by the Chinese Communist Party,” he found that that DoD has broad discretion to decide which companies do and do not belong on the list of Chinese military companies.

Friedman concluded there was enough evidence that DJI is supported and recognized by the Chinese government to call it a “a military-civil fusion contributor,” and that state-sponsored entity Chengtong has “some unspecified ownership stake” in the company. Just being a “military-civil fusion contributor” is enough to label it a Chinese Military Company as well, according to the rules (section 1260H) for that designation.

He also rejected quite a few of the DoD’s other claims for insufficient evidence, and pointed out that it confused two of China’s different industrial development zones when trying to prove DJI’s factories were located in a special state-sponsored zone.

But the fact that China’s National Development and Reform Commission designates DJI as a “National Enterprise Technology Center,” which gives it large cash subsidies, “special financial support” and “a large number of tax benefits” was enough for this judge to agree that the DoD can call it a Chinese Military Company if it wants.

And though DJI argued that the Chinese arms of Volkswagen and Nokia aren’t being treated the same way despite their “similar attributes,” Friedman says the DoD has “broad discretion to decide to place X on
the list, while also deciding not to place Y on the list.”

But it is a decision that DJI could possibly appeal, and we’ve asked the company if it will. You can read the judge’s full opinion, including his overview of various kinds of evidence presented by the DoD and DJI, below.