DJI suspends their business with Russia and Ukraine
DJI, the world’s largest drone maker, has declared that activities in Ukraine and Russia will be temporarily halted, marking a rare instance of a Chinese company suspending strategies for responding to the conflict in Ukraine.
On Wednesday, the Shenzhen-based firm announced that it would halt operations in the two countries while they internally reassessed compliance standards in various jurisdictions.
According to a business statement, DJI was formed in Hong Kong in 2006 and is not to be traded publicly. It is “working with consumers, including other partners, regarding the suspension in the interim. The head of DJI, Adam Lisberg, the executive of corporate communication for the Northern States of America, told the reporters that the firm was interested in passing the comments on their principles instead of commenting about the other country.
DJI opposes using our drones to cause harm, and we are suspending sales in these countries to make sure no one uses our drones, Lisberg said.
DJI’s statement came after the business denied in the last month that it had been providing Ukrainian military secrets to Russia, claiming that a German store had been “exposed to what looked to be a concerted campaign making false charges” after pulling its goods from the shelves.
DJI’s partners agreed to just not sell the products to “customers who are planning to use them for military reasons or help modify our goods for military use,” according to a statement released last week by the company.
“We will not tolerate the use of our products to cause harm, and we will continue to strive to improve the world through our work,” the company said in a statement.
During the conflict, Ukraine’s military has employed DJI drones frequently for reconnaissance, and battlefield images and footage reveal Russia has also used the company’s drones.
DJI’s action, according to Charles Rollet, a researcher at espionage research firm IPVM, reflects the consumer pressure the company has encountered in Europe over suspicions it has been supporting Moscow’s war effort.
“DJI is a Chinese state-backed company, but still it wants to see it as a neutral global manufacturer,” Rollet, who has studied DJI’s ties to many Chinese government investment bodies, told the reporters. “The invasion of Russia has prompted unprecedented scrutiny, and I believe DJI is extremely concerned about being seen as an agent of Beijing.”
However, they are doing so without concretely assisting Ukraine. In that sense, they are also in accord with the Chinese government’s position. So if you check their statement, you will notice that it’s pretty brief. Rather than using the words war or invasion, it used the term hostilities.
DJI’s announcement, according to Rollet, could provide an example for other Chinese companies concerned about the reputational costs of dealing with Russia.
“I believe more companies will follow suit instead of criticizing the invasion and withdrawing from Russia specifically. They will likely denounce ‘hostilities’ in general, although Russia is the apparent aggressor, and withdraw from both markets,” he said.
The move of DJI, according to James Char, an expert on Chinese civil-military ties at the establishment of Singapore the Rajaratnam Institute of Education, was a pragmatic decision influenced by commercial interests.
“By disassociating itself from Russia’s unjustified invasion of Ukraine and withdrawing from the Russian market, DJI is following in the footsteps of other western firms in ensuring that its reputation and financial interests in other areas of the world are not harmed,” Char told the reporters.
Hundreds of companies have discontinued or smaller portion operations in Russia as a result of Western-led sanctions and retaliation. However, Alibaba, Didi, Huawei, Lenovo, and Tencent have remained to do business there. According to a recent Investment Monitor investigation, the three China-based banks – the Bank of China, ICBC, and the Asian Infrastructure Investment Bank – have been the only Chinese businesses among the 466 firms which have withdrawn themself from the country since the 24th of February invasion.
Last week, the Russian news agency RBC reported that China’s UnionPay has stopped collaborating with large Russian banks for fear of being targeted by secondary sanctions.
Relations between China and Russia
Beijing has refused to condemn the act of aggression of Moscow explicitly, opposes sanctions against Russia and expresses sympathy for the security concerns that Russian President Putin believes, and calls for “maximum caution” and peace negotiations between the parties.
Despite the fact that Chinese President Xi Jinping and Russian President Vladimir Putin have developed strong connections and declared their friendship to have “no bounds,” observers say Beijing is leery of overtly breaching sanctions to help its strategic partner.
DJI’s decision to suspend business in Russia, according to Alicia Garcia Herrero, chief Asia Pacific economics expert at Natixis in Hong Kong, may reflect concerns about falling afoul of typically the responsibility of concentrating on the dual technology, which might conceivably encompass the use of elements including such semiconductor materials from South Korea or Taiwan or similar actions in US dollars.
DJI was sanctioned by the United States. He was accused of posing a national security risk by selling drones to surveil ethnic minority Uyghurs in China’s Xinjiang province.
There are all sorts of possibilities that make exporting drones to Russia a considerable risk, García Herrero told the reporters, adding that China cannot afford to violate the terms of restrictions at a moment when its economy is weakening. The foreign investors are fleeing in droves.
“And I would say that this is the most serious of the sanctions-related threats.” Exports of fusion military-civil technologies from China to Russia. That is the most straightforward method of catching them.”
A foreign legal counsel, Benjamin Kostrzewa, at Hogan Lovells in Hong Kong, said. However, he could not comment on DJI’s decision and noted that penalties and export controls are major worries for all Chinese corporations.
Mr. Kostrzewa told the reporters: “Secondary sanctions, which do not require involvement with the United States, are of particular concern.
“Due to the number of banned entities in Russia and also the amount of blacklisted Russian institutions,” he continued, “any company doing business there will find it more difficult.”
Edited by Prakriti Arora