This Chinese Drone Company Found a Workaround to Congress's Ban on Doing Business in the US—Before the Ban Is Even Passed

Congress intended the upcoming 2025 NDAA—the annual defense funding package—to seal off the country from DJI, the sanctioned Chinese drone company deemed a national security threat by the U.S. intelligence community that sells nearly 80 percent of unmanned aircraft flying in American airspace today.

But business records reviewed by the Washington Free Beacon show that DJI has already set up a workaround to a measure in the defense package that will ban the Chinese company and its affiliates from selling any new drones in the United States. The records show that DJI has already positioned itself to continue selling its drones in the United States through a startup Texas company called Anzu Robotics, which claims to have no business relationship with DJI. Those revelations have congressional China hawks concerned that the law won't go far enough.

Federal authorities have long harbored concerns that DJI drones flying in American airspace surreptitiously transmit sensitive surveillance data back to the Chinese Communist Party. After all, Beijing's national security laws require Chinese companies to provide "mandatory access to devices and programs through backdoors" to the CCP. At least seven states have in recent years grounded their fleets of DJI drones amid the concerns. The company was sanctioned in 2021 for its involvement in surveilling Uyghur Muslims, and the Department of Defense classified DJI a "Chinese Military Company" in 2022.

As pressure reached a fever pitch against DJI, so entered Anzu Robotics. Launched in April this year, the firm sells drones that bear remarkable similarities to DJI's. They share the same hardware and run the same software, with the only notable difference being Anzu's drones are green whereas DJI's are gray.

That's because Anzu's products are rebranded DJI drones, a fact that Anzu's CEO, former DJI employee Randall Warnas, didn't hide during a May interview with the New York Times. Warnas told the Times that DJI approached him in early 2023 with an offer to Americanize its drones and "somehow cleanse the Chinese-ness from their technology" to bypass pending congressional scrutiny. Warnas in subsequent podcast interviews touted Anzu's "first of its kind" licensing agreement with DJI to manufacture drones in Malaysia for sale in the United States.

But Anzu is singing a different tune after the U.S. House Select Committee on the Chinese Communist Party opened an investigation into the Texas firm in August. Now, Anzu says it has no business relationship with DJI.

Business records provided to the China Select Committee and reviewed by the Free Beacon show that Anzu contracted with another Chinese firm in an apparent effort to create distance between itself and DJI. Anzu signed a contract with a Malaysian affiliate of BYD, another CCP-linked firm, to manufacture drones "built to the specifications of the DJI Mavic 3 Enterprise and Mavic 3 Thermal," Anzu's attorney told the committee in a September 17 letter.

BYD, in turn, has a licensing agreement with DJI to build its drones in Malaysia on behalf of Anzu, of whose details Anzu claims to have no knowledge.

"There are no contracts between Anzu and DJI or any affiliates of DJI," Anzu's attorney told the China Select Committee. "BYD entered into a licensing agreement with DJI. Anzu is not a party to this agreement."

"Though Anzu presumes that this licensing agreement is a fairly standard agreement under which BYD pays DJI a commercially reasonable amount for access to its intellectual property, it does not know this for certain," the attorney added.

China Select Committee chairman John Moolenaar (R., Mich.) said he didn't buy Anzu’s spin.

"These documents expose how Anzu repackages DJI drones through another CCP-aligned company, BYD, as a way to get around the national security restrictions that Congress and multiple states have put in place to protect Americans from CCP surveillance technologies," Moolenaar told the Free Beacon. "We must remain vigilant against the CCP's efforts to circumvent these and other national security restrictions."

This isn't the first time the CCP has leveraged BYD to launder scrutinized Chinese products into the United States. The Commerce Department reported in 2022 that BYD circumvented 2012 solar tariffs by shipping products to Southeast Asia for final assembly before delivery into the United States, the Free Beacon reported.

The business records that Anzu provided to the China Select Committee also call into question Warnas's claims during interviews over the summer that his company had painstakingly modified DJI's software to ensure Anzu drones send no data to Chinese servers. Warnas said the modifications were made to placate concerns that China could have built a backdoor into the drones his company sells.

But Anzu's attorney revealed to the China Select Committee that BYD installs unmodified DJI firmware onto Anzu's drones, firmware provided by DJI that DJI retains full control over.

"The root cryptographic key is what allows the hardware to communicate with the firmware," Anzu's attorney told the select committee. "At this point in time, Anzu's products have hardware that is identical to that found in DJI drones—as would be expected for a product that is manufactured through a license between BYD and DJI. The key is thus the same, and DJI controls that key."

"In theory, this means that DJI could overwrite the firmware and install its own firmware on an Anzu drone," Anzu's attorney added.

Top Democratic members of Congress are also spooked over Anzu's business model, with China Select Committee ranking member Raja Krishnamoorthi (D., Ill.) calling the arrangement "exceptionally risky."

"The Select Committee launched this inquiry to better understand Anzu and its relationship with DJI," Krishnamoorthi told the Free Beacon. "But far too many questions remain for Americans to take comfort in this relationship. I appreciate Anzu's cooperation with the Committee, but partnerships with companies like DJI and other similar PRC firms are exceptionally risky and put our security and privacy at risk."

Warnas did not return a request for comment.

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