DJI, the world’s largest manufacturer of commercial drones, is taking legal action against the U.S. Department of Defense (DoD) after being added to a list of companies allegedly linked to China’s military. The Chinese-based company filed a lawsuit in a U.S. District Court in Washington on Friday, claiming that its designation as a “Chinese military company” is not only unfounded but has also caused severe financial harm. DJI’s legal move marks another flashpoint in the ongoing tech and trade conflict between the world’s two largest economies, with significant implications for U.S.-China relations, the global tech industry, and national security.
In 2021, the U.S. Department of Defense added DJI to a growing list of companies alleged to be aiding or working with the Chinese military. According to the Pentagon, firms on this list present potential risks to U.S. national security by supporting Beijing’s defense sector. This designation is part of a broader strategy by Washington to curb Chinese influence in critical industries, including technology, telecommunications, and defense.
DJI, known globally for its drones used in commercial, recreational, and industrial applications, controls more than half of the U.S. drone market. The company vehemently denies any affiliation with the Chinese military. In its lawsuit, DJI contends that it “is neither owned nor controlled by the Chinese military” and that the U.S. Department of Defense’s decision is “unlawful and misguided.” The company is seeking removal from the Pentagon’s blacklist, stating that its inclusion has severely damaged its business prospects in the U.S. and abroad.
Being placed on the Pentagon’s blacklist has had immediate and devastating consequences for DJI. In its lawsuit, the company claims it has “lost business deals, been stigmatized as a national security threat, and been banned from contracting with multiple federal government agencies.” These losses are not limited to government contracts—many private and international clients have also pulled out of existing agreements or refused to enter new partnerships due to concerns about doing business with a company labeled as a security risk.
DJI asserts that the impact of the Pentagon’s decision extends far beyond financial loss. The company has been battling reputational damage as it grapples with the perception that it poses a threat to U.S. national security. “U.S. and international customers have terminated existing contracts with DJI and refuse to enter into new ones,” the company states in its complaint. The lawsuit also mentions that this issue has lingered unresolved for more than 16 months, with DJI attempting but failing to engage with the Department of Defense to correct the designation.
The legal battle could serve as a litmus test for the broader tension between U.S. regulatory action and the business interests of major Chinese tech firms operating internationally. As DJI faces mounting obstacles, including the threat of a near-total ban on its products in the U.S., the stakes are higher than ever for the Chinese company, which must now rely on the U.S. judicial system to protect its American market share.
The legal challenge comes at a time of heightened scrutiny of Chinese technology companies by U.S. lawmakers and federal agencies. DJI has long been under fire from U.S. officials who claim that its drones could pose security risks by transmitting sensitive data to Chinese authorities. While DJI has repeatedly denied such allegations, the company’s struggles reflect broader concerns in Washington about China’s growing technological influence.
In recent years, several Chinese firms—spanning industries from telecommunications to artificial intelligence—have been targeted by U.S. sanctions or restrictions under similar national security concerns. Major names like Huawei and TikTok have been scrutinized over their potential to funnel user data or technology to Beijing. DJI, despite its focus on commercial drones, has not escaped similar accusations. U.S. lawmakers have repeatedly raised concerns about the possibility that DJI drones could be used for surveillance or data collection on American soil.
The lawsuit comes at a critical juncture for DJI in the U.S. market. On multiple fronts, the company is facing significant pressure from both the legislative and executive branches of the U.S. government. Last month, the U.S. House of Representatives voted to ban DJI drones from operating in the U.S., and the legislation is now awaiting Senate action. Should the bill pass, it would be a severe blow to DJI, potentially barring new DJI products from being imported, sold, or used across the United States.
The U.S. Department of Commerce has also indicated it is considering restrictions on Chinese drones that could have a substantial impact on DJI’s ability to do business in the country. The Commerce Department’s proposed measures echo recent moves to restrict the sale of Chinese-manufactured vehicles in the U.S., highlighting the intensifying regulatory environment for Chinese companies in key sectors of the economy.
In addition, DJI’s products have come under fire from U.S. Customs and Border Protection (CBP), which recently stopped some DJI drones from entering the country, citing the Uyghur Forced Labor Prevention Act. The act, passed in 2021, aims to prevent goods manufactured using forced labor in China’s Xinjiang region from being imported into the U.S. DJI has denied any involvement in forced labor at any stage of its manufacturing process, but the CBP’s actions have added another layer of complexity to the company’s operations in the U.S.
DJI is not the first company to challenge its inclusion on the Pentagon’s list of Chinese military companies. In May 2023, lidar manufacturer Hesai Group filed a similar lawsuit contesting the Pentagon’s designation. Hesai’s lawsuit yielded a partial victory when the Department of Defense agreed to remove the company from the list, only to relist it almost immediately on national security grounds.
The precedent set by Hesai’s case could offer some hope for DJI. However, Hesai’s experience also highlights the unpredictability of these designations and the difficulty Chinese firms face in navigating U.S. regulatory environments. Even if DJI were to succeed in getting removed from the list, it could still face further scrutiny or restrictions on national security grounds, making its future in the U.S. market highly uncertain.
DJI’s legal battle cannot be viewed in isolation from the broader context of U.S.-China relations. The two global superpowers have seen their relationship deteriorate in recent years, particularly in the realm of trade and technology. The U.S. government’s concerns about China’s military ambitions and potential for espionage have led to an increasingly restrictive approach toward Chinese companies operating in sectors like telecommunications, semiconductors, and artificial intelligence.
Technology has become a key battleground in this geopolitical struggle, and companies like DJI find themselves caught in the crossfire. The U.S. government is intent on limiting China’s access to sensitive technologies that could enhance its military capabilities, while China seeks to build its own tech ecosystem independent of U.S. influence.
In the meantime, U.S. and Chinese tech companies are facing growing barriers to cooperation, with the flow of investment and innovation between the two countries becoming increasingly restricted. DJI’s struggle to maintain its foothold in the U.S. market is emblematic of the broader challenges Chinese firms face as they navigate an increasingly hostile global landscape.
DJI’s lawsuit against the U.S. Department of Defense is just one chapter in what promises to be a protracted struggle for the company as it seeks to defend its reputation and maintain its business in the U.S. market. As tensions between Washington and Beijing continue to simmer, Chinese companies like DJI will likely face growing obstacles and scrutiny.
While the outcome of DJI’s legal battle is uncertain, its broader significance cannot be ignored. The lawsuit highlights the increasing challenges Chinese tech firms face as they operate in international markets that are becoming more wary of China’s rise as a technological and military power. It also underscores the delicate balance that the U.S. must strike between safeguarding national security and maintaining open trade and technological cooperation.
For DJI, the stakes are high, and the outcome of this lawsuit could determine not only its future in the U.S. market but also set a precedent for other Chinese companies facing similar challenges. As U.S.-China relations continue to evolve, DJI’s case serves as a reminder of the complexities of conducting business in a world where geopolitics and technology are increasingly intertwined.
