Why is DJI still alive after being sanctioned by the United States for six years?

On the one hand, DJI, which was originally a consumer-grade aircraft, flew all over the battlefield in Ukraine and began to lead the industry to discuss whether cheap civilian drones are becoming a "guerrilla air force";

On the other hand, on March 12, Figma, an American design software company, announced that it would ban DJI's company account, even without giving any response time, saying that the design documents that could not be obtained due to the inability to log in would be sent to DJI by email within two weeks.

Figma is not a completely irreplaceable design software, but domestic similar software has its own emphasis for differentiated competition, and it is difficult for a single software to completely replace Figma.

DJI faces two main problems this time. First, it may disrupt the rhythm of R&D and design and affect the speed of product iteration; Second, it may be necessary to increase the cost to purchase multiple softwares to replace Figma.

During the six years from 20 16 to 2022, American restrictions and sanctions on DJI have been increasing. But the fact is that DJI has always maintained a market share of more than 70% in the consumer drone market, and even reached 85% in North America.

When the U.S. Department of Defense announced the military ban, the U.S. military "disobeyed" and spent hundreds of thousands of dollars on DJI drones, which also led to a wave of military purchases in Iran and Britain. When the United States imposes tariffs on DJI, DJI will increase the price of products sold in the United States in proportion to maintain the profit rate, and the market share will even rise instead of falling.

The U.S. government almost racked its brains to sanction DJI, but in the sixth year of sanctions, how can DJI live well?

The president changed three times, DJI or DJI?

654381October 26th, when the Secret Service was patrolling, it found a crashed quadrotor drone on the lawn south of the White House. The military and the Secret Service are nervous about this. Finally, it was found that this little thing came from American government intelligence personnel, and they were promiscuous after drinking. Because he was not skilled in the operation and drunk, he flew to the White House to sleep.

There was a lot of laughter at the dinner, but no one really took it as a joke, whether it was Obama speaking on the stage or Trump sitting under the stage.

To some extent, this photo of Biden waving a baseball bat at DJI in front of the White House is not a joke, but a gesture and even a prophecy.

In 20 16, American lawmakers began to put forward restrictions on DJI on the grounds of network data security; 20 17, the United States officially launched an investigation into DJI;

In May of 20 18, the U.S. Department of Defense and the War Department required all subordinate units to stop purchasing and using DJI, and banned all drone products of DJI.

However, all restrictive measures failed to prevent DJI's annual performance growth of 300%-500%. DJI still occupies about 75% of the consumer drone market in the United States. 3D Robotics was once highly anticipated by Americans, but it was defeated by DJI because of the mass production capacity of anti-shake pan/tilt and the connection error of GPS system.

The us military itself is very dissatisfied with this ban. In August this year, the US Air Force Special Forces made a procurement report, saying that we tried Tiny Whoop, Ebee and 3DR Solo in the United States, but all of them could not meet the demand. "Due to the urgent combat mission and the lack of substitutes in the local area, I hope to purchase 35 DJI drones Mavic Pro Platinum Edition in a special batch."

According to news such as purchase orders disclosed by CNN, within one year after the war department's ban was issued, the "disobedient" navy and air force spent nearly $6.5438+$0.9 million and $50,000 on drones made by DJI.

United States air force purchase order

The U.S. government, which failed to take effect before 20 19, began to increase sanctions. In the National Defense Authorization Act of FY 2020, the Ministry of National Defense explicitly prohibited federal funds from buying drones made in China, while the Ministry of Commerce announced that DJI was blacklisted for trade control and increased tariffs on its products in disguise.

DJI did not give up, but dealt with the "price increase" of the affected models in the United States backhand, with the largest increase of $230 and the least increase of $ 120, with an average increase of about 10% to 13%.

Ordinary American consumers and related companies are also voting with money. In order to buy a machine before the price increase, it brought a wave of centralized procurement, which once pushed DJI's market share to 85%.

As the US Air Force wants to buy some discontinued models, it even considers direct cooperation with DJI this year. However, DJI has never made military products. In fact, the armies of all countries, including the U.S. military, are purchased through public sales channels, and some even soldiers themselves buy them on Amazon.

The U.S. military wants to stop production of models, and DJI official spokesman Lisberg's response is: dealers may still have inventory, why don't you ask?

In June 5438 +2020 10, the US Secretary of the Interior ordered to stop further purchasing Chinese drones. Two months later, DJI "liked" the entity list of the US Department of Commerce.

However, the advantage of DJI in the consumer market is unstoppable. The only competitor that brought trouble to DJI, 3D Robotics, was directly knocked out, and the highest market share of other brands, including Microsoft, did not exceed 4%, while DJI's global market share in the civilian market remained at around 70%.

On the other hand, the U.S. government's siege of DJI and the fact that the U.S. military can't find a substitute and can only jump repeatedly make all countries' military begin to pay attention to the military application of civilian drones.

In July 2020, the Ukrainian State Border Service announced that through the bilateral cooperation framework between the Border Service and the British Embassy, 10 drones with a total price of about 44,600 US dollars were obtained from the British side to patrol the border in the air and defend the homeland security.

As a result, if you look at the picture, these ten UAVs are actually Mavic of DJI, and the most expensive professional version in the series is 12888 RMB. The total number of ten UAVs does not exceed130,000 RMB, which is about 20,000 USD.

From 20 15, the quadrotor drone crashed on the White House lawn under the leadership of Obama. By 2022, Figma, a design software company owned by Biden, announced that DJI's account was banned. In the past seven years, the American president has changed three times, but DJI is still the same DJI.

Yes, just stronger.

Technology is competitiveness.

In the story of DJI's sanctions and counter-measures, the most widely circulated part is the one that increases tariffs and raises prices, which seems to be particularly burning money, but in all fairness, this is actually a very rational business decision, with DJI's strong technical strength and competitive products behind it, which cannot be done with enthusiasm.

In the words of Xie Kun, the public relations director of DJI, "Every part that DJI UAV can dismantle is produced by itself, and the underlying code is its own. Whether it is a patent or a research method, it is difficult for any drone company to bypass the river. "

The accumulation of patents and technologies is not achieved overnight.

In addition to founder Wang Tao, there are two other people who are very important to DJI. One is Wang Tao, a graduate tutor of Hong Kong University of Science and Technology, and the other is Zhu, a professor of robotics at Harbin Institute of Technology Shenzhen Campus. When there was only one cashier left in DJI, they invested RMB 1 10,000 in Wang Tao together, just in time for the first graduates of Harbin Institute of Technology (Shenzhen) related majors, and solved the problems of money and people for DJI.

And Zhu are both academic, plus Wang Tao himself and the earliest technical team from Harbin Institute of Technology, the initial team has a very strong engineer atmosphere. Many DJI people even think that the R&D system established by Wang Tao may be the most efficient in China, and its technical documents can be used as textbooks. "It is hard for people with this R&D habit not to succeed."

And the facts are also verifying this sentence.

In March 2009, DJI manufactured the first helicopter flight control product XP 3. 1, which can be mass-produced, with leading technology and few competing products, and achieved business breakeven;

In 20 10, the second generation helicopter flight control Ace one was launched iteratively, and its weight dropped from 700-800g of XP3. 1 to about 100g, and its unit price also dropped from more than 20,000 yuan of XP 3. 1 to more than 20,000 yuan of 1000 yuan, which quickly increased the revenue level. Then on the basis of WooKong, we developed our own multi-rotor flight control WooKong-M.

With WooKong series, DJI has directly passed the threshold of annual income of 10 million yuan and single product income exceeding 10 million yuan, and entered the stage of no shortage of money. It takes less than three years to start a business.

Many people say that the advantage of DJI in the drone market is the first-Mover advantage, which is only half right.

Because DJI is not the only drone startup company in China at the same time, no one can have such a strong technology and talent pool as DJI, so no one can keep up with the rapid product iteration speed.

The advantage of DJI is essentially that the technical strength of R&D team is transformed into product iteration rate, and then snowballs a little.

More importantly, Wang Tao's understanding of the path of technological development has created his amazing keen insight into industrial trends. From the beginning, he judged that the three main technical difficulties of UAV were "flight control, pan/tilt and image transmission", and made three product research and development directions for this.

Among them, the demand for graphic communication has not yet arisen, which is difficult, so we choose to outsource first; Resources give priority to the technical research and development of flight control and pan/tilt.

The development of Yuntai has made the next round of DJI outbreak. This has also become an important technical advantage for DJI to block the impact of overseas startups.

A commercial war in Silicon Valley that made DJI mature.

On 20 1 1 year, Wang Tao met Colin Quinn, an American, at the radio-controlled helicopter conference held in Mansi, Indiana. Quinn was running an aerial photography startup, and he wanted to know if anyone's drone could shoot stable video, which was a key research direction of DJI.

A few months later, DJI released the "Zenith Z 15" with PTZ technology independently developed by DJI at the toy fair in Nuremberg, Germany. This is the world's first civilian high-precision PTZ, which detonated the industry almost overnight. Colin Quinn joined DJI and established DJI's North American branch in the United States. He holds 48% of the shares, and DJI holds the remaining 52%.

A year later, in June of 20 13, DJI released an epoch-making UAV product: DJI Phantom and DJI "Elf".

Now everyone is saying that the professional drone market is different from the consumer drone market, but there was no consumer drone market before the DJI Wizard appeared.

Just as Apple's second generation started the personal computer industry and Tesla started the electric vehicle industry, it was DJI who started the non-professional drone market with the product "Elf", which directly led to the financing tide of the entire 20 14 drone industry. Qualcomm, Lei Bai and Intel went to China to look for projects, and their hands were all at the level of $50 million.

Colin, who is in charge of the operation of American companies, is also a marketing wizard. He put forward the slogan of "the future is omnipotent", and used his star resources accumulated in variety shows such as "Extreme Challenge" to promote Phantom on social media such as Facebook, further breaking the cognitive barriers of ordinary consumers to drones.

At that time, Go Pro started to explode. The first two generations of products from Zen to DJI Elf were only Yuntai, and they didn't make their own cameras. By default, they were equipped with GoPro. Colin arranged for deep cooperation between DJI and GoPro. As a result, the other party demanded two-thirds of the profits in the negotiation. Colin agreed and touched Wang Tao's minefield.

This is also an open case in the history of drone development. Many media later reported that it was inaccurate to simply attribute the contradiction between Wang Tao and Colin to the distribution of interests.

Looking back on the first half of DJI's career, almost all its competitive advantages were suddenly established through technological evolution and R&D iteration. The component of R&D system in DJI has always been high. Nearly half of the more than 10,000 employees are engaged in engineering development, and the company's annual R&D investment accounts for about 65,438+05%.

Wang Tao once recalled that there was no particularly clear business logic at the beginning of the business, and he just wanted to make products. This slightly ignorant entrepreneurial way has brought many problems, but behind it is an engineer's almost instinctive pursuit of technology and products, which finally laid the corporate culture of DJI with technology and products as the core.

The biggest difference between DJI and Colin is that they have completely different judgments on the most important things of a company. For DJI and Wang Tao, a GoPro that can only play a marketing role is probably impossible to cut off two-thirds of the profits.

In their minds, perhaps only the R&D and technology that determine the direction of the product itself are worthy of a large share of profits, while marketing is not.

This contradiction became more obvious in the subsequent negotiations with Colin. Colin feels that he is the biggest hero in the North American market, and even feels that he has shaped the corporate image of DJI and is the second person in Xinjiang. However, Wang Tao positioned the other party as the head of regional marketing and sales, so that there was a huge valuation difference between them and the negotiations broke down.

At the end of 20 13, Wang Tao locked the mailboxes of all employees in the North American branch, dismissed most employees, and redirected all orders from North American customers to the China headquarters. DJI firmly took back the initiative to compete in the United States.

Colin took DJI to court backhand, and finally the two sides settled out of court. Colin got a settlement fee of $65,438+million. According to the valuation of $654.38+05 billion when Sequoia entered DJI, this price should be closer to DJI's psychological expectation.

Colin, who left his job, joined the American drone company 3D Robotics and threatened to let the world know about 3DR. However, Iris, the first product after joining the company, failed to meet the expectations. Solo, which was highly anticipated, also frequently had problems in GPS system connection, and even stable flight was difficult to guarantee. When the product went on the market, even the anti-shake pan/tilt did not achieve mass production, and it was not until several months later that the pan/tilt components were added.

In the end, solo lost in the confrontation with DJI's "Elf 3 Pro". 3D Robotics has an inventory of 65,438+10,000 units, and finally only 20,000 units were sold, which directly led the company to announce its withdrawal from the consumer drone market.

After talking to GoPro and kicking Colin out, DJI released Elf 3 soon, using a self-developed camera that had been laid out. In addition, the final "image transmission" in Flight Control, Pan/tilt and Image Transmission no longer uses the outsourced analog image transmission scheme, but uses the digital image transmission developed by ourselves. DJI has completely realized all-round autonomy from hardware to software.

20 15 when Obama made various remarks on the crashed drones on the lawn of the white house and reflected on whether it was time to restrict Chinese drones, the fiercest battle in the consumer market was actually over.

The technical strength accumulated by DJI has been transformed into a thick competitive barrier for the company. No matter who comes, it will be difficult to shake his foundation for a while.

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After 20 19, the National Defense Innovation Bureau under the US Department of Defense released the "Blue UAV" plan, claiming to provide "security options" for the US military and federal government departments to replace China products. At the same time of banning DJI, five other companies were whitelisted, claiming that the drones of these five companies were the "best drone technology" selected by the cooperation between the US Army and the National Defense Innovation Agency 18 months.

The US Department of the Interior also cooperated very well, quickly grounded about 800 Chinese drones, and kept looking for these five white-listed companies to purchase goods and rebuild the fleet. Later, the British media exposed an internal document, which showed that the average selling price of the Blue UAV project was as high as $2 100, which was 8- 14 times more expensive than similar domestic products, but its performance was obviously inferior to that of domestic UAVs, which could not meet the needs of the Ministry of the Interior.

In this document, the US Department of the Interior claims that if only UAVs approved by the United States are used, the situational awareness of the Ministry of the Interior will be reduced by 95% and only 20% of the mission requirements will be met, which will make it "almost impossible" for the US Department of the Interior to effectively carry out its work.

The US Federal Trade Commission also cooperated with the announcement to crack down on "fake American manufacturing", stipulating that real American manufacturing must meet three conditions: first, the final assembly and processing of products must be in the United States; Second, all important products are processed in the United States; Third, the vast majority of parts and components of the products are produced in the United States.

As a result, it turns out that there is actually no supply chain for drones in the United States. The camera, pan/tilt, fuselage and battery required by the UAV are all supplied by China. Of the five companies whitelisted by the United States, at least four companies rely on Chinese mainland to supply components such as circuit boards. In the field of small civil drones, the United States can't come up with an alternative product that can get rid of China's technology.

In the process of its rise, Industry-University-Research's combination model has been explored everywhere in Zhuhai, Hong Kong University of Science and Technology, Harbin Institute of Technology (Shenzhen) and Shenzhen.

At the beginning of the rise of this industry, perhaps no one expected that the decisive force of competition would be promoted to the industrial development and education and scientific research system of the whole country behind DJI.

In the sixth year of US sanctions, DJI, which is still alive, may be just a small achievement of China's industrial development in the past 50 years.

reference data

Zuo Lin Right Beaver "UAV Jianghu and Wang Tao's First Half Life"

Later LatePost "Dialogue with Li Zexiang: How to Cultivate More Technology Founders after Incubating DJI and Cloud Whales"