Chinese drone giant DJI suspends business in Russia, Ukraine

DJI, the world’s largest drone manufacturer, has announced it is temporarily halting operations in Russia and Ukraine, in a rare example of a Chinese firm suspending business in response to the war in Ukraine.

“DJI is internally reassessing compliance requirements in various jurisdictions,” the Shenzhen-headquartered firm said in a statement on Wednesday.

“Pending the current review, DJI will temporarily suspend all business activities in Russia and Ukraine.”

The company, founded in Hong Kong in 2006, added it was “engaging with customers, partners and other stakeholders regarding the temporary suspension of business operations in the affected territories”.

DJI’s announcement comes after the company last month denied claims it had been leaking Ukrainian military information to Russia, saying that a German retailer that pulled its products from the shelves had been “subject to what appeared to be a coordinated campaign making false allegations”.

Last week, DJI reiterated that its products were intended for purely civilian use, saying its partners agree not to sell its products to “customers who clearly plan to use them for military purposes, or help modify our products for military use”.

“We will never accept any use of our products to cause harm, and we will continue striving to improve the world with our work,” 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 deployed drones manufactured by the company.

Charles Rollet, an analyst at surveillance research group IPVM, said DJI’s move likely reflects the consumer pressure the firm has faced in Europe over claims it has been assisting Moscow’s war effort.

“DJI is a Chinese state-backed company but it wants to be seen as a neutral global manufacturer so the Russian invasion has brought unprecedented scrutiny against it and I think DJI is incredibly concerned about being perceived as an agent of Beijing,” Rollet told Al Jazeera.

“But they’re also doing this without concretely supporting Ukraine either. So in that way, they are in line with the Chinese government’s stance as well. And if you look at their statement, it’s very terse. It used the word ‘hostilities’ rather than war or invasion.”

Rollet said DJI’s announcement could provide an example to other Chinese companies concerned about the reputational cost of dealing with Russia.

“I think other firms 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’ generically despite Russia being the clear aggressor and pull out of both markets,” he said.

While hundreds of firms have suspended or scaled back operations in Russia 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 the only Chinese entities among the 466 firms that have distanced themselves from the country since the February 24 invasion, according to a recent analysis by Investment Monitor.

Last week, Russian media outlet RBC reported that China’s UnionPay had also stopped cooperating with major Russian banks out of concern it could be pinpointed by secondary sanctions.

China-Russia ties

Beijing has declined to explicitly condemn Moscow’s invasion and expressed sympathy for Russian President Vladimir Putin’s claimed security concerns while also calling for “maximum restraint” and peace talks between the sides.

While Chinese President Xi Jinping and Putin have forged close ties and declared their countries’ friendship to have “no limits”, analysts say Beijing remains wary of openly violating sanctions to assist its strategic partner.

Alicia García Herrero, chief Asia Pacific economist at Natixis in Hong Kong, said DJI’s decision to suspend business in Russia likely reflects concerns about falling afoul of secondary sanctions focusing on dual-use technology, which could cover the use of semiconductors from South Korea or Taiwan, or transactions carried out in US dollars.

“There are all these possibilities that make any export of drones to Russia a big risk,” García Herrero told Al Jazeera, adding that China “can’t afford” to run afoul of sanctions at a time when its economy is slowing down and foreign investors are pulling out in large numbers.

“And actually, out of the different sanctions-related risks, I would argue this is really the largest. Exports from China to Russia of fusion military-civil technology. That’s the easiest way to catch them.”