A one-man startup thinks it can offer a solution to the U.S. government’s concerns about Chinese-made drones dominating the American market.
Anzu Robotics, whose chief executive and founding partners are both Americans and the company is based in Texas, is expected to be used by law enforcement, utilities, architects and others, and its drones are assembled in Malaysia and run on servers in Virginia.
There’s just one problem: Anzu has close ties to China and Shenzhen-based DJI, which is becoming a target of U.S. legislation and regulators seeking to limit sales of Chinese drones in the U.S.
Anzu, which sources about half of its components and much of its software from China, licenses its drone designs from DJI, which receives a fee for each drone it orders from the Malaysian manufacturer.
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The relationship raises questions about whether Anzu is truly independent from DJI, China’s leading drone maker, or is simply a rebranded version of DJI.
Although DJI accounts for 58% of commercial drones sold in the United States, according to a 2022 analyst report, its business has recently been affected by federal and state regulations aimed at preventing China from accessing information collected by drones in the United States.
The company now faces a major threat from a bipartisan bill in the House of Representatives that would significantly restrict DJI’s future access to the U.S. communications infrastructure that its products rely on.
Given Anzu’s relationship with DJI, the company has become, in some ways, a litmus test for Chinese companies in the increasingly hostile regulatory environment in the United States.
If moving manufacturing out of China and distributing products through a company with U.S. ZIP codes can keep products from being blacklisted by federal agencies or de facto outlawed by Congress, then the model established by Anzu could work not only for DJI but also for other Chinese companies whose operations in the U.S. are under scrutiny.
If those efforts fail, it would be another setback for Chinese companies trying to defuse Washington’s growing suspicion and hostility toward China.
In exchange for a commercial license to Anzu, DJI takes a cut of every dollar Anzu pays the Malaysian manufacturer to build its drones, Randall Werners, Anzu’s chief executive and sole employee, said in an interview.
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But he admitted that the idea of founding Anzu was actually proposed by DJI.
He recalled that early last year, a DJI representative who claimed to be speaking on behalf of the company’s top management asked a group of American drone industry executives this question: “Are you interested in allowing us to make our technology – DJI’s technology – suitable for long-term use in the United States?”
Werners said several other DJI employees had proposed the idea, and Anzu’s founders, including himself and three partners, had expressed support, all of whom he said were U.S. citizens.
The goal, he said, is to “clean the Chinese influence out of the technology in a way that makes it marketable in the United States.”
Werners has been in contact with the office of Rep. Elise Stefanik, R-N.Y., to discuss Anzu’s efforts and how to comply with U.S. regulations. Stefanik has led the effort to craft new legislation that would essentially ban future DJI drone operations in the U.S. Werners said he had a more than hour-long Q&A session with one of her staffers on Thursday, but Stefanik was visibly unmoved.
“This desperate attempt to evade tariffs and sanctions is futile,” Stefanik said in a statement on Friday. “DJI and all of its shell companies will be held accountable.”
Regina Lin, a DJI spokeswoman, said in a statement that her company’s licensing partnership with Anzu “is designed to increase the availability of high-performance, cost-effective drones in the market.” She said DJI has no other financial relationship with Anzu, calling Anzu “a completely independent company.”
Some analysts say that while Anzu’s strategy may succeed in the short term, its business model may soon be threatened as U.S. Congress and regulators consider placing stricter red tape on Chinese companies and their U.S. subsidiaries.
“It’s putting a Band-Aid on a gunshot wound,” said Craig Singleton, director of the China program at the nonpartisan Foundation for Defense of Democracies.
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Still, some lawyers and drone industry veterans said they admired Anzu’s unique strategy and believed its business model would not face regulatory risks in the short term.
“Anzu Robotics is doing what many in our industry have been praying for,” said Chris Fink, a drone dealer in Fayetteville, Ark. He has received inquiries about Anzu drones from customers who are skeptical about buying Chinese products in the current regulatory environment but can’t afford American-made drones.
Obtaining equipment from the Federal Communications Commission in WashingtonapproveFour months later,Anzu officially launched in April. Werners said the company has received thousands of inquiries about its drones. He estimated that those inquiries have led to at least 400 orders, all of which have been referred to American middlemen like Fink.
Werners, a long-time drone salesman who worked at DJI early in his career, briefly served as CEO of another Chinese drone maker, DOTAN, in 2021. He resigned after just nine weeks.The reason is the lack of autonomy.
Werners is a U.S. citizen who lives outside Salt Lake City, Utah. But Anzu receives his mail at a company office building in Austin, Texas, and calls that address its official headquarters.
Austin “will be where Anzu Robotics’ long-term future is, but there’s no reason to go that deep right now,” Werners said.
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Anzu components are made in China and Malaysia. They are assembled at a factory in Malaysia, according to Mr. Werners and documents reviewed by The New York Times.
The product assembled there is a forest green commercial drone called the Raptor – drone experts sayIt’s very similar to some of DJI’s Mavic 3 models.— are shipped to logistics centers in the United States. The drones are operated by flight control software and a user app that Werners said originated from DJI but is not part of the company’s software.The changes were made by Anzu’s data security partner, Syracuse, New York-based Aloft, to ensure that user data remains in the United States and is not collected by third parties without user permission. Aloft’s servers are located in Virginia.
This complex arrangement was necessary for Anzu’s founders because of Washington’s hostility toward China.
Under a bill passed by Congress in late April and quickly signed by President Biden, the social media network TikTok could be effectively banned in the United States unless it is quickly sold to a domestic owner.
Congress is considering various other bills aimed at restricting Chinese technology and products, including the Countering CCP Drones Act, sponsored by Stefanik, which would seek to radically undermine DJI’s presence in the U.S. Congress and Biden both support new tariffs on Chinese goods, continuing efforts that began under the Trump administration to support U.S. manufacturing.
The difficulties domestic drone makers face in competing with DJI, as well as a host of national security concerns, have prompted the government to take steps to crack down on DJI, a trend that has also affected other Chinese tech companies, leaving them desperately looking for workarounds.
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“Chinese companies are thinking creatively, using every tool at their disposal to find cracks, to exploit every legal and regulatory loophole,” Singleton said, adding that they hope “it will take years for Washington to find and close these loopholes.”