DJI is the largest drone manufacturer in Russia and Ukraine, offering a rare example of a Chinese firm suspending business in response to the war in Ukraine.
The Shenzhen-headquartered company said on Wednesday it will suspend its business in two countries with “internally reassessing compliance requirements in various jurisdictions.”
DJI, which was founded in Hong Kong in 2006 and is not publicly listed, added that “temporary suspension of engaging customers, partners and other stakeholders,” according to a company statement.
Adam Lisberg, DJI’s director of corporate communications for North America, told Al Jazeera the company had taken action “not to make a statement about any country, but to make a statement about our principles”.
“DJI abhors are harmful to any use of our drones, and we are temporarily suspending sales in these countries to ensure that no one uses our drones in combat,” Lisberg said.
DJI’s announcement comes after the company announced last month that it has been leaking Ukrainian military information to Russia, saying that a German retailer has taken shelves from its products.
DJI had last week reiterated that its products were intended for purely civilian use, saying that its partners would not agree to sell their products to “customers who plan to use them for military purposes, or to help modify our products.”
“We will never accept any harm to our products, and we will continue to strive to improve our work with the world,” the company said in a statement.
Ukraine’s military has used DJI drones extensively for reconnaissance during the conflict, while battlefield pictures and footage suggest Russia has also manufactured deployed drones.
Charles Rollett, an analyst at the surveillance research group IPVM, said DJI’s move likely reflects consumer pressure on Europe over claims it has been asserting Moscow’s war effort.
“DJI is a Chinese state-backed company but it wants to be seen as a negative global manufacturer. The Russian invasion has brought against unprecedented scrutiny. DJI’s links to several Chinese state investment bodies, told Al Jazeera.
“But they’re also doing this without concretely supporting Ukraine. So in that way, they are in line with the Chinese government’s stance. And if you look at their statement, it’s very terse. It used the word ‘hostilities’ rather than war or invasion. ”
Rollett said the DJI’s announcement could provide an example of what other Chinese companies are facing with the reputational cost of Russia.
“I think other companies may follow and they will probably use this template, instead of condemning the invasion and pulling out of Russia only, they will probably condemn ‘hostilities’,” he said. said.
James Char, an expert in Chinese civil-military relations at the S. Rajaratnam School of International Studies in Singapore, described the DJI’s move as a “pragmatic decision” driven by commercial concerns.
“Russia’s illegitimate invasion of Ukraine and the pulling-out of the Russian market by DJI is not the only thing that other western companies are making sure that its reputation and commercial interests in other parts of the world will suffer blowback,” Char told Al Jazeera .
While many of the companies have suspended or scaled back operations, Russia’s amid Western-led sanctions and censure, leading Chinese companies including Alibaba, Didi, Huawei, Lenovo and Tencent have continued to do business in the country. Three China-based banks – The Bank of China, ICBC and the Asian Infrastructure Investment Bank – are among the only Chinese entities with 466 firms that have distanced themselves from the country’s February 24 invasion, according to a recent analysis by the Investment Monitor.
Last week, the Russian media outlet RBC reported that China’s UnionPay had also stopped cooperating with major Russian banks out of concern that it could be pinpointed by secondary sanctions.
Beijing has declined to explicitly condemn Moscow’s invasion, against sanctions against Russia, and Russian President Vladimir Putin’s stated security concerns for expressions of sympathy, while also calling for “maximum restraint” and peace talks.
While Chinese President Xi Jinping and Putin have forged close ties and declared their countries’ friendship to be “no limits”, analysts say Beijing remains a strategic partner in openly violating sanctions.
Alicia García Herrero, chief Asia Pacific economist at Natixis in Hong Kong, said that the dual-use technology of focusing on the secondary sanctions of falling afoul of the DJI’s decision to suspend business could be covered by semiconductors. South Korea or Taiwan, or transactions carried out in US dollars.
The DJI is itself under US sanctions, after the Washington-based firm’s posing national security risks and supplying drones to monitor ethnic minority Uyghurs in China’s Xinjiang region.
“There are all these possibilities that make Russia a big risk,” García Herrero told Al Jazeera. Investors are pulling out big numbers.
“And, of course, the different sanctions-related risks, I would argue, are really the biggest. Exports from China to Russia’s fusion military-civil technology. That’s the easiest way to catch them. ”
Benjamin Kostrzewa, a foreign legal consultant at Hogan Lovells in Hong Kong, said that while DJI’s decision, sanctions and export controls are a significant concern for all Chinese companies.
“Of particular concern are secondary sanctions, which do not require a US nexus,” Kostrzewa told Al Jazeera.
“Given the number of sanctioned parties in Russia, as well as the number of Russian banks that are sanctioned, it makes it more difficult for any company to do business there,” he added.