China drone giant DJI hit by US tensions

SHENZHEN, China — Chinese drone giant DJI Technology Co. Ltd. built up such a successful US business over the past decade that it almost drove all competitors out of the market.

Yet its North American operations have been hit by internal ructions in recent weeks and months, with a raft of staff cuts and departures, according to interviews with more than two dozen current and former employees.

The loss of key managers, some of whom have joined rivals, has compounded problems caused by US government restrictions on Chinese companies, and raised the once-remote prospect of DJI’s dominance being eroded, said four of the people, including two senior executives who were at the company until late 2020.

About a third of DJI’s 200-strong team in the region was laid off or resigned last year, from offices in Palo Alto, Burbank and New York, according to three former and one current employee.

In February this year, DJI’s head of US R&D left and the company laid off the remaining R&D staff, numbering roughly 10 people, at its flagship US research center in California’s Palo Alto, four people said.

DJI, founded and run by billionaire Frank Wang, said it made the difficult decision to reduce staffing in Palo Alto to reflect the company’s “evolving needs.”

It did not comment on the other US staff departures that current and ex-employees spoke of, although it told Reuters last year its global structure was becoming “unwieldy to manage.”

DJI, which has become a symbol of Chinese innovation since it was founded in 2006, is one of dozens of companies caught in the crossfire of trade and diplomatic hostilities between Washington and Beijing, like Huawei and Bytedance.

Staff sources and competitors say the company’s brand reach, technical know-how, manufacturing might and sales force mean it won’t lose its crown anytime soon in the multi-billion-dollar US and global markets for nonmilitary drones.

But a December order adding the company to the US Commerce Department’s “Entity List” along with the closure of its R&D operation in California could affect its ability to serve the needs of US customers, according to three former senior executives and two competitors.

The Commerce Department listing, enacted over allegations including DJI enabled “high-technology surveillance,” prohibits the company from buying or using US technology or components.

The same month, Romeo Durscher, DJI’s US-based head of public safety, who had played a central role in building the company’s business in providing drone technology to non-military US government departments and agencies, left his job.

Mr. Durscher, a former NASA project manager and an influential figure in the drone industry, now works at Swiss company Auterion, a competitor to DJI.

He said he left DJI because he was disheartened by the staff cuts and what he described as internal power struggles between the US team and its China headquarters. He added that the US reorganization complicated the task in dealing with the fallout from US-China tensions and winning government business. —