Trade in the Sky

The Battle over Drones

National Press Foundation

Alex Capri
March 30, 2021

1
 Key Talking Points

Trade & Techno-Nationalism: An overview

The Commercial Drone Market

DJI – China’s Drone Giant

U.S. Non-Tariff Barriers, Restrictions and Actions

2
Techno-nationalism

Mercantilist behavior that links a nation’s technology prowess and capabilities with:

1. National security
2. Economic competitiveness
3. Social values and standards

Paradigm shift: US-China “hybrid” cold war

3
Techno-nationalism impact on trade

• Diversification of supply chains

• Localization and fragmentation of GVCs
• Re-shoring and Ring-fencing
• “Innovation-mercantilism”
• Linkage of values and Standards to Tech

4
Strategic Decoupling
• Key Value Chains:
- Strategic “dual use” technologies (Semiconductors, AI, Robotics, Drones etc.)
- Pharma/Medical
- Rare Earths
- Batteries
- Innovation (R&D, Academic)
- Internet/Cloud/Apps/Platforms
- Monetary Systems (Digital Currencies)

5
Non-State Actors Caught in the Middle

• MNEs viewed as strategic assets, targets, government proxies

• Weaponization of value Chains: export controls, sanctions, restricted entities
• Public-private partnerships, tech alliances will increase (SpaceX, Tencent, Microsoft
etc.)

6
Linkage of Ideology to Technology

Technology Applications: Standards and Values

• Data privacy
• Free Speech/Censorship
• Surveillance and Citizen Monitoring
• Rule Frameworks
• The New “Techno-diplomacy”

Existential Crisis for Chinese Companies competing internationally

7
 Projected global commercial drone market size in 2024, by region (in billion U.S. dollars)
Commercial drones: global market size by region 2024

Market size in billion U.S. dollars

0 2 4 6 8 10 12 14 16 18 20

Asia 18.4

North America 11.9

Europe 9.7

Oceania 1.2

South America 1

Middle East & Africa 0.9

5 Source: Statista
Venture capital investments in the commercial drone industry worldwide from 2010
to 2nd quarter 2020 (in million U.S. dollars)
Global VC investments on commercial drones 2010-Q2 2020

1,200

1,067

1,000
886
Investment in million U.S. dollars

800
682
603
600
487
453

400

200 177

79
14 31
3
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*

Source: Statista
Businesses' investment plan in innovative technologies worldwide for 2019 and 2020
Global business investments in different technologies 2019

2019 2020
60%
50%
50% 46% 45% 44%
39%
40% 37%
35% 34% 34% 33% 33% 32%
31% 31% 31%
29%
30% 27%
25%
22%
Share of respondents

20%
20% 17%
14% 13%
10%
10%

0%
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11 Source: Statista
Distribution of drone based service worldwide in 2020, by activity
Global share of drone based service 2020, by activity

Drone service provider Business internal services

40%

35%
35% 33%

30%

25%
Share of respondents

25%

20% 19%
18%
16% 16%
15%
15%

10%
7%
5%
5% 4% 4%
3%
2%
1% 1%
0%
Inspection/maintenance Mapping Photography/filming Surveying Spraying/seeding Others* Monitoring Localization/detection

Source: Statista
Internet of Things (IoT) enterprise drone endpoint shipments worldwide from 2019 to
2023, by use cases (in 1,000s)*
IoT enterprise drone shipments worldwide 2019-2023, by use case

Construction monitoring Fire services monitoring Insurance investigation Police evidence gathering Retail fulfillment Other use cases

1,400

1,200
356.5
Endpoint shipments in thousands

1,000

275.3 122
800
80.7
75.1 135.8
206.5
600 72
67
44.4 96.3
150.8 60.4 63.7
400 67.2
24.9
45.1 58.2
106.2 46.4
12.9 48.5 509.5
200 26.8 394.3
31.8
32.7 294.2
209.8
141.1
0
2019 2020 2021 2022 2023

Source: Statista
In 2019, Americans and Australians spent the most on Drones

Source: Statista
In China, the Drones segment will grow by 68.1% from
2019 to 2025

Source: Statista
U.S. commercial unmanned aerial vehicle (UAV) market volume between 2016 and 2020
(in 1,000 units)
UAVs: estimated U.S. market volume 2016-2020

3,000
2,700

2,500
Market volume in thousand units

2,000

1,500

1,000

600
500

0
2016 2020*

20 Source: Statista
Share of supply chain leaders who are planning to invest in drones worldwide from 2017 to
2019
Supply chain investments in drones worldwide 2017-2019

25%

22%

20%
Share of respondents

15%
13%

10%
8%

5%

0%
2017 2018 2019

Source: Statista
 Da-Jiang Innovations (DJI)

• Chinese maker of civilian drones. Founded in 2006 by Frank Wang, a mainland Chinese student
who studied at the Hong Kong University of Science and Technology 
• DJI now dominates 72% of the world’s drone market. 
• Initial Partners: 3D Robotics and GoPro, both American companies
• DJI: Government funding initiatives such as the Made in China 2025 plan
• Shenzhen: cluster of R&D, manufacturing, tech start-ups and incubators
• cheap government-backed credit and grants. 
• Received funding from foreign investors and venture capitalists including Sequoia, a large US
venture capital firms

Source: https://www.hinrichfoundation.com/research/wp/tech/us-china-decoupling-tech/
Image Source: Wikipedia
 5 Factors of Success (1)

• Relentless innovation at scale

• DJI has 1,500 engineers working on new designs, features and improvements for consumer drones. DJI’s
engineers have pioneered drone technologies including advanced GPS applications, wireless transmission, self-
diagnosing software, stabilization and gimbal design. 

• Steady stream of new products

• By releasing new products at a blistering pace, including the Mavic and Phantom series of consumer models, DJI
has stayed ahead of the marketplace

• Localized end-to-end value chain

• Going from the ideation-to-creation stages of a product in one single location has conferred an enormous
advantage to DJI. Its engineers can literally walk next door, on the company’s Shenzhen campus, as they create,
design, test and then mass-produce the product. This is an advantage, writ large, that Shenzhen – one of China’s
tech hot beds – has over Silicon Valley, where less manufacturing actually occurs. 

Source: https://www.hinrichfoundation.com/research/wp/tech/us-china-decoupling-tech/
Image Source: Wikipedia
 5 Factors of Success (2)

• Partnerships
• DJI’s massive market share has made it a lucrative partner for some of the world’s best brands
including Hasselblad, the Swedish camera maker and Sony. This dynamic has produced a
virtuous cycle for DJI. 

• Manufacturing at scale
• The scale of production of DJI’s drones allows the company to sell them at a price point that
is simply out of reach for other, smaller manufacturers. 

Source: https://www.hinrichfoundation.com/research/wp/tech/us-china-decoupling-tech/
Image Source: Wikipedia
 The power of data captured by DJI

• Nearly eight out of every 10 drones sold in the United States

Sales of Drones in USA
are made by the Chinese-based company DJI.
20%
DJI
Non-DJI
• The firm’s drone video cameras offer a total magnification of 80%
180x and capture vivid images with 1080-pixel definition.
• Marks their precise location and can transmit real-time video
feeds directly to the internet.
• Chinese National Security and Cyber Laws: Chinese companies Total magnification of 180x
must turn over data to the CCP. 1080-pixel definition.

Transmits real-time video feeds

directly to the internet

The system marks the precise

location
https://www.heritage.org/technology/commentary/the-nefarious-nature-chinese-drones
DJI on Entity List

• US government places Da-Jiang Innovations (DJI), the

world’s largest maker of unmanned aerial systems, on the 
Entity List.

• Chinese tech companies viewed as de facto proxies of CCP.

• Data privacy and Security

• US Gov: “DJI facilitating human rights abuses”

https://petapixel.com/2019/05/21/us-warns-that-
chinese-made-drones-could-steal-data-for-china/

https://www.heritage.org/cybersecurity/commentary/dji-placed-the-entity-list-human-rights-
abuses-concerns-about-data
 U.S. Autonomous Drone Maker Skydio Announces
$170 Million In Series D Funding

• Led by Andreessen Horowitz’s Growth Fund.

• This brings total funding raised to over $340 million with a current
valuation of over $1 billion.
• Skydio to accelerate product development and global sales
expansion
• Skydio's drones chosen for the the U.S. Army's Short Range
Reconnaissance Program

https://www.businesswire.com/news/home/20210301005209/en/U.S.-Autonomous-Drone-Maker-Skydio-Announces-170-Million-In-Series-D-Funding-Led-by-Andreessen-Horowitz’s-Growth-Fund
https://www.bizjournals.com/sanjose/news/2021/03/01/skydio-hits-unicorn-valuation-with-171m-funding.html
Image Source: Wikipedia
Thank You
Alex Capri
acapri@nus.edu.sg

23
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