News

Drones: China’s growing dominance of the market is a worry

Black market drones have been used in military attacks for years. Drones have been heavily used in the Ukraine war too, prompting speculation that China was involved. Beijing has denied widespread reports that the country exported drones to aid Russia’s invasion of Ukraine. The speculation highlights China’s growing dominance in commercial drone manufacturing.

The government has regularly refuted reports that Chinese drones have been provided to Russia. Beijing says it has strict control of drone exports to prevent them from being used in conflicts and vowed to strengthen export controls for drones.

Still, China’s civilian models dominate global market share. The world’s biggest drone maker DJI — also known as Da Jiang Innovations — currently accounts for about 70 per cent of the global market alone. When combined with local peers such as Guangzhou EHang Intelligent Technology and Avic Xi’an Aircraft Industry Group that share goes up to well above 80 per cent.

So it is not surprising that DJI has been one of many companies that has found its products used in the war in Ukraine. These are controlled using modified drone firmware from a vast black market. One of the most popular models seems to be the Mavic 3, DJI’s $1,500 flagship camera drone, along with its drone-detection platform. DJI has said its drones are designed for civilian use, and do not meet military specifications.

Demand for drones, which are already used widely for filmmaking, firefighting, deliveries and agricultural seeding, is growing rapidly. The global commercial drone market is expected to double to about $60bn in the next three years. The growing use of drones for military purposes is adding a further boost to sales.

The Nasdaq-listed shares of Guangzhou EHang have tripled in the past six months. Its market value remains small at $649mn and has hardly changed in the past few years. Meanwhile, despite US efforts to blacklist the company, DJI’s private valuation is estimated to have surpassed the $15bn mark five years ago during a funding round then.

As the list of US and European sanctions on Russia grow, the latter has become increasingly dependent on Chinese technologies and companies. But when it comes to civilian drones, that reliance is just as big for the rest of the world. In the current environment that looks unsustainable.

Articles You May Like

Romania scraps presidential election after alleged Russian meddling
Russia uses civilians as ‘target practice’ for killer drones
Picking winners and losers in the budget battle
Landlord says Hunter Biden owes him $300K in rent, used Secret Service to keep him out
The road to $100,000 — What’s behind bitcoin’s storied 2024 run