A one-man startup believes it has the answer to the US government’s concerns about Chinese-made drones dominating commercial sales in the US market.
The CEO and founding partner of Anzu Robotics are both American and the company’s headquarters are located in Texas. The company’s drones, expected to be used by law enforcement agencies, power companies, architects and others, are assembled in Malaysia and run on Servers located in Virginia.
There’s just one problem: Anzu has many close ties to China and to DJI, the Shenzhen-based company being targeted by legislative and regulatory efforts to limit drone sales Chinese drones in the United States.
About half of Anzu’s parts come from China. Much of its software is sourced there. Anzu licensed the design for its drones from DJI, which receives payment for each drone Anzu orders from the manufacturer in Malaysia.
That crossover is raising questions about whether Anzu is truly independent of DJI, China’s leading drone maker, or simply a rebranded version of it.
According to a 2022 analysis report, despite accounting for 58% of commercial drones sold in the United States, DJI’s business activities have been under a cloud recently by federal and state regulations intended to protect against potential Chinese access to information collected by drones in the US.
The company now faces a major threat from a bipartisan bill in the House of Representatives that would significantly limit future access to the US communications infrastructure where its products run.
With its connection to DJI, Anzu is in some ways a test for Chinese companies facing an increasingly hostile regulatory environment in the United States.
If moving production out of China and distributing its products through a company with an American ZIP code could help avoid being blacklisted by federal agencies or outlawed by Congress law, the formula Anzu has established could work not only for DJI but also for other Chinese companies doing business. in the United States is under scrutiny.
If those efforts fail, it would be another setback for Chinese businesses trying to overcome growing suspicion and hostility toward China in Washington.
Randall Warnas, Anzu’s chief executive officer and sole employee, said in an interview that in exchange for granting Anzu a commercial license, DJI would receive a cut of every dollar Anzu paid. to the Malaysian manufacturer to build their drones.
However, he admitted that Anzu was essentially DJI’s idea.
Early last year, he recalled, a DJI representative, who said she was speaking on behalf of the company’s senior leadership, approached a group of US drone industry executives. United States with the question: “What would be interesting to try to do so that we could gain our advantage? technology — DJI technology — and make it suitable for long-term use in the United States?”
DJI’s idea — which Mr. Warnas said was also floated by several other DJI employees — was accepted by Anzu’s founders: he and three partners he said were US citizens.
Their goal, he said, “is to somehow sanitize the Chineseness of their technology so that it still has a way.”” for sale in the United States.
Mr. Warnas contacted the office of Representative Elise Stefanik, the New York Republican who has introduced new legislation that would effectively ban future operations of DJI drones in the US , to discuss Anzu’s efforts and how to comply with US regulations. But Ms. Stefanik seemed unmoved by a more than hour-long question-and-answer session that Mr. Warnas said he held with one of her employees on Thursday.
“The desperate attempt to evade tariffs and sanctions is futile,” Ms. Stefanik said in a statement Friday. “DJI and all of its shell companies will be held responsible.”
Regina Lin, a spokeswoman for DJI, said in a statement that her company’s licensing partnership with Anzu “was established with the goal of increasing the accessibility of drones capable of and cost-effective in the market”. She said that DJI has no other financial relationship with Anzu and called Anzu “a completely independent company.”
Some analysts say that while Anzu’s gamble may pay off in the short term, its business model could soon be threatened by stricter protections imposed by Congress and regulators. Regulators are considering enforcement around Chinese companies and their US affiliates.
“It’s a band-aid for a bullet wound,” said Craig Singleton, China program director at the nonpartisan Foundation for Defense of Democracies.
However, some lawyers and drone industry veterans say they admire Anzu’s innovative strategy and see no imminent legal risk to its business model.
“Anzu Robotics is doing what many in our industry have been begging for,” said Chris Fink, a drone dealer in Fayetteville, Ark. but can’t afford to buy drones made in the US.
Anzu officially launched in April, 4 months after receiving the device approve from the Federal Communications Commission in Washington. Mr. Warnas said Anzu has received thousands of inquiries about its drones. He estimates that those inquiries resulted in at least 400 orders, all of which went to third-party brokers in the United States like Mr. Fink.
The company moved out of the home office of Mr. Warnas, a longtime drone salesman who worked for DJI earlier in his career and served as chief executive of Autel, another Chinese drone company, in 2021. He resigned after just nine weeks, blame his lack of self-control for short time.
Mr. Warnas, an American citizen, lives in the suburbs of Salt Lake City, Utah. But Anzu collected mail at a corporate office complex in Austin, Texas and listed that address as the company’s official headquarters.
Mr. Warnas said Austin “will be where the long-term future of Anzu Robotics is, but right now there is no reason to jump in that deep.”
Anzu parts are manufactured in both China and Malaysia. According to Mr. Warnas and documents reviewed by The New York Times, they were assembled at a factory in Malaysia.
The product is assembled there – a green commercial drone called the Raptor that drone experts say Almost identical to some DJI Mavic 3 models — shipped to U.S. logistics centers. The drone is operated by flight control software and user applications sourced from DJI but modified by Anzu’s data security partner Aloft, a company in Syracuse, NY, has servers located in Virginia, to ensure that user data remains in the United States and is not collected by third parties without the user’s permission, according to Mr. Warnas.
Anzu’s founders felt this complex setup was necessary because of Washington’s opposition to China.
According to a bill passed by Congress in late April, that is quickly signed Under President Biden, social media network TikTok could be effectively banned in the United States unless it is sold to domestic owners soon.
Congress is considering multiple other bills aimed at restricting Chinese technologies and products, including the Anti-CCP Drone Act, a bill sponsored by Ms. Stefanik that essentially aims to reduce reduce DJI’s presence in the United States. And both Congress and Mr. Biden New tax rates are being applied on Chinese goods, continuing the effort to strengthen American manufacturing that began with the Trump administration.
The difficulties domestic drone manufacturers face in competing with DJI, combined with a range of national security concerns, have prompted steps to crack down on DJI, a trend that has also affecting other Chinese technology companies and leaving them scrambling to find a solution.
“Chinese companies are thinking creatively and using every tool in their arsenal to find those loopholes and exploit every legal and regulatory loophole,” Mr. Singleton said. Their hope, he added, is that “it will take Washington years to detect and close those loopholes.”
David Montgomery Contributed reporting from Austin. Tashny Sukumaran Contributed reporting from Kuala Lumpur, Malaysia.
