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Chinese giant DJI hit by U.S. tensions, staff defections

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By David Kirton

SHENZHEN, China (Reuters) – Chinese drone giant DJI Technology Co Ltd built up such a successful U.S. 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 who have joined rivals, has compounded problems caused by U.S. 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 U.S. R&D left and the company laid off the remaining R&D staff, numbering roughly 10 people, at its flagship U.S. research centre 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”.

“We thank the affected employees for their contributions and remain committed to our customers and partners,” it said, adding that its North American sales were growing strongly.

“Despite misleading claims from competitors, our enterprise customers understand how DJI products provide robust data security. Despite gossip from anonymous sources, DJI is committed to serving the North American market.”

It did not comment on the other U.S. 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 U.S. and global markets for non-military drones.

But a December order adding the company to the U.S. 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 U.S. 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 U.S. technology or components.

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

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 U.S. team and its China headquarters. He added that the U.S. reorganisation complicated the task in dealing with the fallout from U.S.-China tensions and winning government business.

“It’s not an easy decision to leave the market leader that’s really far ahead of everyone else,” said Durscher, who joined DJI in 2014. “But those internal battles were distracting from the real purpose and in 2020 it got worse … we lost tremendous talent at DJI and that’s very unfortunate.”

U.S. SECURITY CONCERNS

Privately held DJI doesn’t publish sales figures. The U.S. Department of Defense estimated the American non-military market was worth $4.2 billion last year. Consultancy DroneAnalyst said DJI controlled almost 90% of the consumer market in North America and over 70% of the industrial market.

The December listing by the Commerce Department, and the prohibition on buying U.S. parts, may impact the firm’s mobile apps, web servers and some battery and imaging products, said David Benowitz, head of research at DroneAnalyst and a senior figure with DJI’s enterprise team, which works with industrial customers, in Shenzhen before he left last summer.

DJI said in December that the ban would not affect U.S. customers’ ability to buy and use its products.

The listing followed other official blows. In October, the U.S. Department of the Interior said it would only buy drones from companies okayed by the Department of Defense, which last August published a list of five approved drone suppliers to the federal government – four American and one French.

DJI said there was no “broad-based U.S. government ban on purchasing DJI drones”.

“Congress considered that approach last year and rejected it, because … such a ban would be challenging for many companies and government bodies that rely on drones,” it added.

‘WE’RE STILL PRIMITIVE’

Benowitz said persisting U.S.-China tensions and the push by Washington to support DJI’s rivals could see the company’s North American market share decline. He added that, while the federal government comprised a relatively small part of DJI’s business, its restrictions could have a “chilling effect”, with other buyers worried about tougher measures in the future.

“We’re at a point where there are too many market opportunities for one player to dominate,” he said.

Yet he added alternatives to DJI were relative minnows, though both policy support and security concerns over Chinese drones had brought them growth in the last year. Competitors to DJI include France’s Parrot and California-based Skydio.

Chris Roberts, CEO of Parrot Inc, Americas, said 2020 had been a significant year for the company in the United States, having been named an approved supplier by the Defense Department and won business from emergency services and security agencies.

Skydio announced $170 million in D-round funding last week and said it had a valuation of over $1 billion.

“DJI makes good hardware but we are still very early in the market, and very primitive compared to what ultimately should exist,” Skydio CEO Adam Bry told Reuters.

PHANTOM DRONE FLEETS

When Durscher joined DJI back in 2014, the company’s Phantom series was transforming drones from a niche hobby to a mainstream gadget. He said he was particularly drawn by the chance to bring drones into the kit of fire and rescue departments.

He said the technological advances of smaller rivals in the last year were tempting for some public-safety agencies, who might say “let’s go with this drone now so we don’t have to deal with the data security”.

He added that change could come as government departments and companies looked to replace drone fleets that are nearing the end of their life cycles.

A fleet is typically expected to last three to four years, according to Benowitz.

Durscher and several other staff compared DJI’s internal rivalry over projects to “Game of Thrones”, the TV series where rival factions vie for power. He said this resulted in a rotating door of Shenzhen bosses, and that he reported to 12 different managers in his six years at the company.

Durscher’s departure from DJI followed those of other key executives in North America last year, including director of business development Cynthia Huang.

Huang, who now works with Durscher at Auterion, said she became increasingly frustrated because she felt DJI wasn’t able to meet all the growing demands of the enterprise market. Additionally, she said, job cuts over the past year added to the reasons she decided to leave. The losses in Palo Alto, Burbank and New York had followed cuts made to DJI’s global sales and marketing teams, which Reuters reported in August.

“Some of the people that we lost in those layoffs, it didn’t make sense,” said Huang, who was hired in 2018 to take the lead in building DJI’s enterprise business in North America. “The continued exodus of talent was discouraging.”

 

(Reporting by David Kirton; Additional reporting by Jane Lee in San Francisco, Alexandra Alper and David Shephardson in Washington; Editing by Pravin Char)

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Trudeau nominates first judge of colour to sit on Supreme Court

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Prime Minister Justin Trudeau on Thursday made history by nominating the first judge of color to sit on the country’s Supreme Court, which has only ever had white justices in its 146-year existence.

Mahmud Jamal, who has been a judge on Ontario‘s court of appeal since 2019, trained as a lawyer and appeared before the Supreme Court in 35 appeals addressing a range of civil, constitutional, criminal and regulatory issues.

“He’ll be a valuable asset to the Supreme Court – and that’s why, today, I’m announcing his historic nomination to our country’s highest court,” Trudeau said on Twitter.

Trudeau has frequently said there is a need to address systemic racism in Canada.

Jamal, born in Nairobi in 1967, emigrated with his family to Britain in 1969 where he said he was “taunted and harassed because of my name, religion, or the color of my skin.”

In 1981 the family moved to Canada, where his “experiences exposed me to some of the challenges and aspirations of immigrants, religious minorities, and racialized persons,” he said in a document submitted to support his candidacy.

Canada is a multicultural country, with more than 22% of the population comprised of minorities and another 5% aboriginal, according to the latest census.

“We know people are facing systemic discrimination, unconscious bias and anti-black racism every single day,” Trudeau said last year.

Jamal will replace Justice Rosalie Abella, who is due to retire from the nine-person court on July 1.

 

(Reporting by David Ljunggren in Ottawa; Editing by Matthew Lewis)

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Donors pledge $1.5 billion for Venezuelan migrants, humanitarian crisis

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More than 30 countries and two development banks on Thursday pledged more than $1.5 billion in grants and loans to aid Venezuelan migrants fleeing a humanitarian crisis, as well as their host countries and vulnerable people still in the country.

The $954 million in grants announced at a donors’ conference hosted by Canada – which included pledges of $407 million from the United States and C$115 million Canadian dollars ($93.12 million) from Canada – exceeded the $653 million announced at a similar event last year.

But that fell short of the needs of countries hosting the more than 5.6 million Venezuelans who have left their country since 2015, as the once-prosperous nation’s economy collapsed into a years-long hyperinflationary recession under socialist President Nicolas Maduro.

Most have resettled in developing countries in Latin America and the Caribbean who have themselves seen their budgets stretched thin due to the coronavirus pandemic.

“Does this cover all needs? Of course not,” Filippo Grandi, the U.N. High Commissioner for Refugees, told reporters. “We will have to continue to encourage donors to support the response.”

At the conference, Ecuadorean President Guillermo Lasso announced that the country – which hosts some 430,000 Venezuelans – would begin a new process to regularize migrants’ status. That came after Colombia in February gave 10-year protected status to the 1.8 million Venezuelans it hosts.

Karina Gould, Canada‘s minister for international development, said the amount pledged showed donors were eager to support such efforts.

“There is that recognition on behalf of the global community that there needs to be support to ensure that that generosity can continue, and can actually deepen, in host countries,” Gould said.

In addition, the World Bank and Inter-American Developmemt Bank pledged $600 million in loans to address the crisis, Gould said.

($1 = 1.2349 Canadian dollars)

(Reporting by Luc Cohen, Michelle Nichols and David Ljunggren; Editing by Cynthia Osterman and Aurora Ellis)

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Ecuador to start new ‘normalization process’ for Venezuelan migrants

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Ecuador will implement a new “normalization process” for the 430,000 Venezuelan migrants living in the South American country, President Guillermo Lasso said on Thursday, without providing further details of the plan.

Lasso’s announcement, at a conference hosted by Canada intended to raise money to support the more than 5.6 million Venezuelans who have fled an economic crisis in the South American country, came after Colombia in February gave 10-year protected status to the nearly 2 million Venezuelans it hosts.

“I am pleased to announce the beginning of a new regularization process, which in order to be an effective, lasting and permanent policy should be complemented by strategies for economic integration and labor market access,” Lasso said.

Ecuador in late 2019 launched a regularization process for Venezuelans who arrived before July of that year. That included two-year humanitarian visas meant to facilitate access to social services.

Lasso said Ecuador needed outside funding to continue caring for Venezuelan migrants, estimating that more than 100,000 additional migrants were expected to arrive before the end of the year.

“I call on our partners in the international community to be co-responsible and have solidarity with Venezuelan migrants and refugees, and with the countries that receive them,” he said.

 

(Reporting by Luc Cohen; editing by Barbara Lewis)

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