For some drone companies lately, the whirring of innovation can be drowned out by the roar of geopolitical tensions. For Chinese drone companies — which together are currently leading the global market — the operating environment has generated a complex mix of opportunity and uncertainty.
The outlook for Chinese drone companies in 2024
Chinese drone companies dominate the market
When it comes to Chinese drone companies, most people think of drone maker DJI. That’s not wild, as DJI is largely considered the global leader in drone making. It makes a range of drones, from the indoor, FPV Avata 2, to affordable camera drones to high-end enterprise drones for industrial inspections and mapping.
But it’s not just DJI. Three of the top 5 civil drone manufacturers are Chinese, based on an analysis by German-based analytics and consulting group Drone Industry Insights using data from its 2023 Global Drone Market survey.
Other big names in drones include JOUAV, Autel Robotics and XAG.
Chinese drone makers like DJI have carved a niche with high-quality, user-friendly drones at competitive prices. This not only enabled the consumer drone industry filled with photographers and FPV drone racers to proliferate, but it’s also largely credited with enabling the boom in the global commercial drone market.
With that, comes widespread applications in agriculture, construction, and disaster relief.
Beyond manufacturing
A majority of Chinese drone companies serve as manufacturers — a stark contrast to most other countries. Typically, it’s more common for a common to be a drone service provider (so they fly drones for you, such as gathering data to make maps, or for deliveries).
But in China, a majority of companies, 51% build either drone hardware (22%) or related components (29%). Just 17% of Chinese drone companies work as drone service providers. For context, 40% of drone companies in North America are drone service providers, and just 11% make drones or components.
How big are Chinese drone companies?
Chinese drone companies tend to be bigger than average. According to DII estimates, 61% of Chinese drone companies have more than 50 employees. What’s more, an estimated 16% have more than 500 employees.
Just look to DJI as one example of one of the biggest companies in China, period. The over-the-top, futuristic DJI headquarters in Shenzhen opened in September 2022 under the moniker “DJI Sky City.”
Contrast that with the small business-oriented North American landscape, where 59% of drone companies have 10 or fewer employees. Fewer than 10% of North American drone companies have 500 or more employees. The DACH region, which includes Germany, Austria, and Switzerland, is even more startup oriented. Only 8% of companies in that region have 500 or more employees.
The specter of security concerns
However, the very features that make Chinese drones attractive – affordability, ease of use, advanced technology – have also raised security concerns. Those concerns mirror security anxieties surrounding all sorts of Chinese tech giants, like TikTok. Big Chinese drone makers like DJI and other tech companies like TikTok have faced accusations of potential data collection and information sharing with the Chinese government.
Politicians seek to block Chinese companies
This has led to an uptick in legislation seeking to block Chinese drones in the U.S. For example, the American Security Drone Act of 2023 is a bipartisan bill that would prohibit federal agencies from purchasing drones made by Chinese government-linked countries.
And in May 2024, New York Republican Congresswoman Elise Stefanik introduced the Drones for First Responders (DFR) Act. The Act seeks to hinder growth of any Chinese drone company in the U.S. by way of a 30% tariff on drones made in China.
Stefanik has a major bone to pick with DJI specifically. Also in May 2024, Stefanik co-led a letter with Select Committee on the Chinese Communist Party (CCP) Chairman John Moolenaar (R-MI) to Department of Justice (DOJ) Attorney General Merrick Garland urging the DOJ to open an investigation into the Drone Advocacy Alliance. The Drone Advocacy Alliance is openly tied to DJI. Though, it has a wide range of partners including retailers like Drone Nerds and DSLR Pros, flight training company Pilot Institute and other drone companies such as drone mapping software company DroneDeploy. Stefanik has claimed that the Drone Advocacy Alliance potentially violated the Foreign Agents Registration Act (FARA).
Read more: What happens if Congress bans DJI drones?
Yet it’s not just drone companies. In late May, Stefanik, a senior member of the House Armed Services Committee, passed an amendment that prohibits the Department of Defense (DoD) from contracting with companies that retain lobbyists that also lobby for Chinese military companies.
What happens to Chinese drone companies if they’re blocked in the U.S.?
Whether banned completely or hindered through measures such as tariffs, Chinese drone companies have a lot to lose if they can’t sell in the U.S. After all, the U.S. far and away leads in GDP. It also sits in the top 20 amongst all countries based on GDP per capita.
But while the U.S.’s nominal GDP is an estimated $28.78 trillion in 2024, based on International Monetary Fund estimates, China comes in at No. 2 with a $18.53 trillion GDP. Coming in at spot No. 3 is Germany, which trails far behind at $4.59 trillion.
Losing the ability to operate in the U.S. would be a loss, but it wouldn’t be everything. China itself is a compelling place to test and grow a drone industry.
“China’s population of 1.41 billion, spread over a vast 9.8 million square kilometers…enable every type of drone application to take place at a much grander scale than anywhere in the world,” according to a statement from DII. “That is why the market potential of drones in China remains top-of-the-line.”
Just as there is no shortage of drone deliveries and drone light shows in the U.S., the same can be said in China.
How Chinese drone companies are planning ahead
DII sought to find out how Chinese drone companies are planning for the future, asking what the top priorities for Chinese drone companies were.
Based on survey responses in DII’s latest report, Chinese drone companies rated ‘marketing and sales’ as their top priority going forward.
DII also sought to find the similar challenges. The No. 1 challenge, they say? Logistics.
“Considering the sheer size of China’s population, geography, and economy, it is perhaps natural that logistics is perceived as the greatest challenge, especially for companies that export their products around the globe,” according to DII’s analysis. “Additionally, due to the current geopolitical situation, many Chinese drone manufacturers face very strict export requirements.”
Other concerns were related, with Chinese drone companies citing personnel and domestic politics (perhaps related to the export requirements) as top challenges.