Hong Kong Baptist University

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Hong Kong Baptist

University

BUSI4005 BBA Project

Lecturer：

Ms LEUNG Roy L Y

Ms CHOW Stella H S

Dr WONG Yik Man

A success story of DJI

Group members:

Tang Ngai Man Zoe 18205925

Huang Qiyuan Joanne 18205909

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Table of Contents

Abstract ........................................................................................................................... 3

Introduction ..................................................................................................................... 4

Drone market ................................................................................................................... 5

The current status of drone market ........................................................................................ 5

PEST analysis of drone market ............................................................................................... 8

Market share of drone companies:.......................................................................................... 9

The development of DJI drones ....................................................................................... 11

History .................................................................................................................................. 11

Business model Canvas ......................................................................................................... 13 Customer segments .................................................................................................................................... 13 Value proposition ........................................................................................................................................ 14 Channels ...................................................................................................................................................... 15 Customer relationships ................................................................................................................................ 16 Revenue streams ......................................................................................................................................... 17 Key resources .............................................................................................................................................. 18 Key activities .............................................................................................................................................. 19 Key partnerships ......................................................................................................................................... 19 Cost structure .............................................................................................................................................. 20

Product Difference ................................................................................................................ 21

The success of DJI Innovation is attributed by the following factors ..................................... 23 Cost advantage ............................................................................................................................................ 23 The electronic center of China .................................................................................................................... 24 Advanced technology .................................................................................................................................. 25 Redefined Industries ................................................................................................................................... 25

The funding and financial of DJI .......................................................................................... 30

The challenges that DJI are facing ................................................................................... 31

In the SWOT analysis ........................................................................................................... 32

The threat of new entrants .................................................................................................... 33

Competitive rivalry within the industry ................................................................................ 33

Drone Distribution ................................................................................................................ 35

Private concern ..................................................................................................................... 35

Safety concern ...................................................................................................................... 36

COVID-19（The impact of international trade） ................................................................. 38

The opportunity of DJI .................................................................................................... 38

The Possible directions ......................................................................................................... 38

Development trends in the next ten years .............................................................................. 40

Reference: ...................................................................................................................... 41

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Abstract

Da-Jiang Innovations (DJI) has been a leading position in the consumer drone market, and its

market share has reached 74% in the market. They only took 14 years to develop from a start-

up company to famous company with a company value over a hundred billion. Since they

obtained great success from growing demand, it attracted massive competitors to enter the

consumer drone market. DJI had to develop the drone market in other industries to maintain

market share and continued profitability of the company. The purpose of this report is to

study why DJI could be a leader of the consumer drone market, what difficulties they

encounter, and what possibilities it could bring in new markets. Our method of collecting

data is through a case study by using secondary data such as books, newspapers, previous

research, and article, data released from DJI.

The study result found that the success of DJI depended on their continuous investment in

research and development of new products and systems, a geographical advantage to achieve

low cost and selling products at a low price, changing the development of other industries by

using their drone. At the same time, DJI has to encounter tons of competitors in the market,

new players joining the competitions, the problem of improper use of drones by customers,

the prohibition of use in particular areas caused by private regulation and personal protection,

and internal management problem. These problems may have negative impact to DJI revenue

and market positioning in the future.

Up to now, DJI has raised five rounds of financing, and they made use the money to invest in

development of new products and systems in other industries. They expand its business to the

agricultural market, which not only minimizes the negative impact of coronavirus but also

brings them a great opportunity. They expand its business to civil department which help

users to minimize the risk and collect data for making a better decision .DJI also uses

financing to expand the market in the education and hopes it can increase revenue steadily in

the future. With the advent of 5G, smart city will become a general trend and the application

of drone will become more and more popular. DJI must gather pace to develop new products

and flight control systems, utilize its technology edge to meet smart city.

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Introduction

With the expansion of the scale of smart city construction and the continuous advancement of

modern technology, UAV remote sensing technology, as a new technology, has played an

important part in the transformation of China's manufacturing industry. And with the advent

of the 5G era, drones have greater application space in urban management.

In 2020, under the influence of coronavirus, Chinese cities have demonstrated their

management capabilities. Big data, artificial intelligence and other technologies have played

an important part in analysing the epidemic situation, monitoring the propagation of urban

epidemic situations, and supporting epidemic prevention and control. After the epidemic, the

full implementation of 5G will promote the development of smart cities from various aspects

such as smart city management and urban security. 5G will drive intelligent terminals such as

video surveillance, drone aerial photography, VR / AR monitoring instruments, and

intelligent patrol robots to develop collaborative applications in the security field, forming an

important hub for urban data transmission, analysis, and utilization, and comprehensively

improving smart city governance capabilities.

In 2020, 5G will open new space for drone applications. Based on remote low-latency control

and real-time ultra-high-definition image transmission, and the ability to process massive

amounts of data given to networked drones by 5G technology, the application form of drones

will become more abundant. During the epidemic, the phenomenon of using drones to carry

out epidemic prevention work such as high-altitude shouting, disinfecting, delivering, and

body temperature measurement has appeared throughout the country. In the future, 5G +

drones will play a role in more and more fields such as emergency rescue, scientific research,

education, urban planning, surveys, and inspections.

Shenzhen DJI Innovation Technology Co., Ltd. (referred to as DJI Innovation) was

established in 2006. It is the world's leading manufacturer and manufacturer of drone control

systems and drone solutions, and serves customers in more than 40 countries around the

world. From the Skylogic (2018) Drones Market Report, we can know that, in the consumer

drone’s market, DJI maintains 74% market share. However, in the commercial drone market,

DJI has not yet occupied a strong market share, and competitors in the industry have already

occupied a certain position in the subdivided fields. With a large share in the consumer drone

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market and the leading technology advantages, DJI can provide technical support in the field

of drones for building smart cities with the advent of the 5G era. And according to the

characteristics of consumer aircraft drones that are friendly to novices, drones can be quickly

applied to urban supervision during the virus outbreak period. This is a good chance for DJI

to cooperate with the government or city management system and to enter the area of

commercial drone.

The reason why DJI should try to enter the professional drones field is that the consumer

drone market has less and less room for growth, and DJI must step out of its comfort zone.

According to Shen Wang (2017) reported that DJI's consumer drone revenue accounted for

85% of total revenue that year. DJI is too dependent on the consumer drones market, and

once the demand for the consumer drone market decreases, DJI will face huge challenges.

Therefore, this article will discuss the status of the drone market, the success of DJI, the

challenges DJI has encountered and how DJI finds new opportunities in the next development.

Drone market

The current status of drone market

UAV is a kind of unmanned aircraft which using radio remote control equipment and self-

provided program control device to operate. The main value of unmanned aerial vehicles is to

complete aerial operations for humans, and can form an aerial platform to expand

applications in combination with other components. Drones are divided into military-grade

drones and civilian-grade drones according to application fields. Civil-grade drones are

divided into consumer-grade and industrial-grade drones(commercial/prosumer drones). On

the otherwise, there is a predict which comes from AIRBORNE DRONES that the

commercial drones will over take Consumer /prosumer grade drones in the coming future.

For the history of the development of drones in China, originated in the 1980s. Before the

drones were mainly military, the emergence of drones D-4 marked the beginning of the

development of drones in China . From the 1990s to around 2006, private enterprises began

to enter the drone industry, and applied it to disaster monitoring, geophysical prospecting and

other fields. However, the products at this stage are not mature yet and have not gained

popularity. Only in 2012 did drones really enter the public's field of vision. At this stage, the

drone industry has developed rapidly. More and more companies forming unicorns in the

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industry have begun to enter the field, which accelerated the development of the drone

industry. The advent of DJI phantom3 has made drone aerial photography popular. Industry

unicorns have emerged, and more and more companies have begun to enter the game and

entered a stage of rapid development.

The main uses of consumer and commercial drones: Due to the economic safety and

operability of drones, it can provide aerial photography, sports and other entertainment

activities at the level of consumer applications. At the level of industrial applications, from

figure 1, we can know that it can be used in logistics transportation, forest fire prevention,

border patrol, crop yield estimation, disaster prevention and mitigation, search and rescue,

road inspection, traffic supervision, land and resources monitoring, meteorological detection,

resource exploration and other areas. Due to the technical complexity of other applications,

the use cases of drones will be mainly used for construction monitoring in the short term.

Figure 1.（Gartner,2019）

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The development trend of drones: Commercial drone:

Figure 2. (Tractica, 2018)

According to the report from the Tractica(figure 2), “Commercial Drone-enabled Services”,

we can find that commercial drones in different application areas have great space to grow in

the next few years. The fast-growing market means that more competitors will join this field.

As the subdivision of drone application scenarios becomes more and more clear, different

companies have begun to take shape in different application fields, and there are certain

industry barriers for new entrants.

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Consumer drone:

Figure 3. (Tractica, 2016)

Due to the relatively low price and ease of operation of consumer-grade drones, it has

attracted a large number of consumers who are interested in Aerial Games, Recreation, and

Aerial Imaging. Based on report from Tractica (2016), “Consumer Drone ”, the growth trend

of consumer-grade drones still exists, but drone technology is being mastered by more and

more companies. The competition pressure of drone companies on the same track is

increasing, and revenue is decreasing.

PEST analysis of drone market:

PEST analysis is used for scanning external environments which will influence the

company’s operation. Here PEST analysis is used to observe the current status of drone

development.

Political: the development of the UAV industry from the military field to the civilian field

must be accompanied by the formulation and gradual improvement of corresponding

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regulatory regulations to protect the industry development and the interests of the people. The

unmanned aerial vehicle has caused many controversies at the initial stage due to imperfect

industry policies, such as violations of people's privacy issues, safety impacts on aircraft take

offs and landings, and safety issues caused by urban flights. The industry policy is gradually

improved to promote the healthy development of the UAV market.

Economic: With the rapid development of the UAV market, a large amount of capital has

poured in. In recent years, the drone industry's financing volume has exploded, and it is

believed that as the financing market becomes more popular, more companies related to the

drone industry will gain opportunities for rapid growth.

Social: With the reduction in production costs, drones have become more and more popular

among the people from the niche consumer products of a few aeromodelling enthusiasts to an

aerial photography tool that many people can afford now. Has been recognized by more and

more people. In addition to the huge success achieved in the consumer-grade unmanned

market, drones have been widely recognized for their other stability and efficiency in

agriculture and terrain mapping. Many drone driving training institutions have also appeared

on the market, and some have also entered the relevant majors of universities. Aeronautical

colleges and universities have established drone research institutions, and social

organizations have carried out various aerial photography, drone design, drone competition

and other competition activities.

Technological: As technology advances and costs decrease, drones quickly enter the civilian

market. UAVs use flight control systems as the core. The cost of manufacturing and using

chips and sensors has dropped significantly. The functions of navigation and communication

systems are becoming complex and diverse. The technology of drone is constantly

developing, so, currently, the development of drone technology is in a state of breakthrough

improvement.

Market share of drone companies:

Initially, drones were mainly designed for the military. However, for last few years, the

development of the drone industry has continued to accelerate, and gradually extended from

the military field to the civilian field, and the civilian drone market has shown rapid growth.

In 2015, the global market commercial drone market was valued at 2,145 million USD

(Pankaj, 2017). The market size of commercial drone had up to 2.8 billion USD, in 2016,

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based on the market research from Gartner(Figure 4). At the same time, commercial drone

sales accounted for only 13% of the total and consumer drone accounted for 17%.

Figure 4. Drone Market by Sector(Goldman Sachs, 2016)

The data also came from Gartner, the same sales figure for commercial drones, in 2017, rose

to 3.68 billion USD from 2.8 billion USD. And for the Drone Market Size to reach 6 billion

in 2017 (Social Media week, 2017 ). According to the report published by Research And

Market, we can knew that, in 2018, the global drone market share had reached 14 billion

USD. And this report showed that North American was the largest reginal UAV market, but

for the Asian market taht had a higher growth rate. In such a fast-growing market, DJI has

always occupied a large market share in the production and sales of consumer and

commercial drones.

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Figure 5.( Schroth, 2019)

As shown in the figure above, in 2019, DJI was the top 1 drone manufacturer in the US and

its US market share exceeded 70%.

The development of DJI drones

History

In 2005, Frank Wang Tao, the founder of DJI had to choose a topic for final year project and decided

to study flight control system for drone. The main issue Wang wanted to deal with was to allow

remote-controlled drone to hover in the sky, stop wherever he wants. He continued to study the flight

control system day and night. He skipped classes in order to conduct research on the drone. After a

half year of hard-work, his product failed before the demonstration. However, his professor LI

Zexiang observed Wang and his team, and bought them into the UST master program.

In 2006, Wang did not give up. Eventually, he made a prototype of the flight controller in the

dormitory. And he won HK $ 18,000 bursary from the University (Shameen, 2019). With the

encouragement of LI Zexiang, Wang established DJI with his two classmates in Shenzhen. They

began to focus on the development and production of flight control systems. At that time, DJI

encountered a financial crisis. Lu Di – a friend of Wang’s family invested USD 90000 to help DJI

overcome the difficulties. After that, Lu Di took charge of the finance and became one of DJI’s

largest shareholders ( Mac, 2015).

In 2008, Almost all of the members of the core founding team left. Chen Jinying, Lu Zhihui, and

Chen Chujiang established or joined other drone startup companies, and eventually became Wang’s

competitors (UAS vision, 2016). Later, his mentor Li Zexiang joined, brought in funding, and

introduced many of his students to DJI. In the same year, the first mature helicopter - XP3.1 drone

launched, it fulfilled Wang’s wish to hover on the sky automatically.

In 2010, Swift Xie Jia- the best friend of Wang in high school as well as the key to DJI development

who managed in marketing terms. He sold his apartment to invest in DJI. In the same year, Wang

started to sell its products to new foreign countries, and he got information from a New Zealand

distributor that 95% of their consumers installed gimbal on multi-rotor (Shao, 2015). When Wang

realized the need of the market, they produced four-propeller quadcopters with only small changes in

the previous technology. At that time, there was a Garman company serving the multi-rotor market,

but consumers had to install its product by their own hand, which could not deliver a good user

experience to end-users. It led to a market gap, and DJI could enter the market. Since the market was

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in the early stage and not many competitors in the market, they produced a ready to fly drone to build

a reputation and gain a large proportion of market share.

In 2011, Colin Guinn was an owner of Aerial photography start-up, he contacted Wang for the

solution of shooting stabilized video for a drone. Back then, DJI was still a small company, but

fulfilled the needs of Guinn. Wang and Guinn cooperated and established a branch in Texas, which

opened the North American market. Guinn held 48% of shares in American business and was

responsible for the sale and management in the North American market (MAC, 2015). Guinn was an

excellent salesman who always proposes new ideas and brings profit to the company.

In 2013, DJI launched the first drones Phantom which cost USD 680. The selling price was far below

the market price but offered a better feature than competitors. Phantom was the top sale product at

that time, which contributed five times of original income(MAC, 2015). When the product came out,

Wang and Guinn had conflicts. Guinn called himself the developer and innovator of phantom and the

CEO of DJI that made Wang feel unhappy. Guinn also rushed into a business contract with GoPro

that GoPro took two-thirds of the profit. Guinn signed the unequal contract without authorization,

which made Wang could not unacceptable and terminated the cooperation with GoPro. DJI started to

develop its own cameras.

In 2014, the relationship between Wang and Guinn was broken, Guinn took many colleagues leaving

DJI and joined 3D Robotics as a senior vice president of sales and marketing to compete with Wang

(Popper, 2014). The same year, DJI launched a 4K camera – Inspire 1, handheld stabilizer – Ronin,

HD image transmission system – Lightbridge and signature series – Phantom 2.

In 2015, DJI launched lots of new products, such as Phantom 3 Advanced, Phantom 3 Professional,

Phantom 3 standard, Ronin M, Osmo. The series of the Phantom 3 has improved a lot. Due to

constant innovation and progress, DJI gained a ton of loyal customers.

In 2016, DJI expanded their business to other segments - Mavic Pro, the product is lightweight, easy

to carry and control that it contributed plenty of female users, photographers, and travelers to join the

aerial photography.

In 2017, DJI established a partnership with Hasselblad, they integrated Hasselblad ’s high-end camera

technology and brand reputation into its drones to meet the needs of professional photographers. At

the same time, DJI launched Matrice 600 Pro for combining Hasselblad’s camera.

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In 2018, DJI launched a Handheld gimbal camera - Osmo Mobile to enter the female market.

In 2019, a fraud scandal of DJI blew out. Procurement staff paid components over the market in order

to receive kickback. It caused DJI to lose RMB 1 billion. (Zaagman, 2019). DJI launched an

educational robot – RoboMaster for teenagers and technology enthusiasts.

Business model Canvas

A good business model can lead a company to success. It suggests that study nine different

segments in Business canvas could help one to quickly define DJI’s business model and

understand why they succeed.

Customer segments

Market Target customers

Consumer Individuals included private users, photography enthusiasts, amateurs

Commercial Corporations included construction, energy, media, agriculture

Civil

Enforcement

Civil departments included Police Operations, firefighting, search &

rescue

Military Security companies, armies

Figure 6.

There are four types of the drone market, and DJI mainly forces on the consumer,

commercial, civil enforcement market. Their target customers are individuals, corporations,

and civil departments.

Individuals are the main customer segment. It included private users, photography enthusiasts,

amateurs who look for customer drones, stabilizers, action cameras and Robo Master.

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Corporations are the growing sector. Due to a large number of competitors in the consumer

market, it is expected to slow down the sales of consumer drones in the future. Therefore, DJI

focuses on developing the commercial market in recent years.

Construction included buildings contractor and architecture company, which uses a drone to

capture a detailed map of a site for creating 3D renderings and progress monitoring.

Energy included nuclear, oil and gas, wind, solar, and power lines companies who need to

use a drone to inspect and monitor equipment.

Media included journalism, film production companies can easily track targets and capture

aerial footage for firm and news.

Agriculture included farmers and farms, which helped them to spray pesticides and water,

inspect crops.

Civil departments included policies, firefighters, and search and rescue teams that help them

to minimize the risk and collect data for making a better decision.

Value proposition

Before DJI entered the drone market, drones were mainly used for military purposes. They

are expensive and mainly sell to armies and defence companies. Few companies offer the

commercial market. DJI developed video gimbals, flight control systems, software and

introduced it to the market. They keep pursuing technology edge and innovative products to

meet the value proposition. Since their products are high quality, efficient, high performance,

low breakdown rate, but at a low price, these features solve the problem in the original drone

market that is difficult to use and high price, it drove more and more customers to know DJI,

buy their products, and become loyal customers. They provide better value to their target

customers as below.

Individual:

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Consumer drones are small size, easy to use with high-resolution cameras. Customers can use

it for selfie, landscape photographing, video taking, and entertainment, and it makes

beginning users and photography enthusiasts love it.

Commercial:

Drones are able to take aerial shots that allow companies to inspect and monitor a large area

of equipment or products. It can collect data faster, cost-effective with less workers involved,

but increase the productivity of the companies, thereby obtaining competitive advantages.

Civil departments:

Law enforcement officers and firefighters often face challenges and dangers in their work.

The emergence of drones can help them quickly assess dangerous areas and improve the

safety of team members. At the same time, data transmission can capture video of the

affected area, which helps commanders to make a better decision.

Channels

DJI reaches customers by dealers, retail stores, and online platforms all around the world.

They cooperate with dealers and divide into categories in order to reach different industries.

For instance, agricultural drone dealers target farmers, farms, and drone service providers.

Enterprise dealers target industries like Delivery, infrastructure, energy, property, media.

These dealers operate their businesses, both physical and online stores.

DJI has their own retail stores and corporates with other shops to sell their products to

individual customers. One of the examples is Apple, DJI can benefit from the popularity of

Apple, selling customer drones on their website as well as physical stores. DJI also have their

own website, and operate official stores in other platforms like Amazon, Newegg, AliExpress,

eBay for western market, and JD, Tmall, apply for the China market to sell their products.

DJI holds product conferences in the United States and China every year, they introduce their

latest products and invite the media to promote their products. DJI also produced a very

mysterious trailer before the conference. It has beautiful scenery, clear dynamic photography,

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and mysterious product outlines in the trailer that make people look forward to the launch

date of the products. The trailer will post to the major video platforms and social media,

which undoubtedly help marketing and sales.

Customer relationships

Get :

DJI makes good use of big data to analyze products, people, and market position, launching

dynamic design and packaging to attract customers. They also use online marketing on

mainstream social media channels like Facebook and Instagram to open European and

American markets. They use video advertising to communicate with customers, build

corporate image, drive awareness and interest, thereby generating sales.

Keep:

DJI has a customer service team for after-sales service. Customers can contact them by email,

online channel, and phone for product support and repair. In order to provide excellent

service to customers, their customer service team responds to inquiries very quickly. Other

than that, DJI set up a DJI forum for asking questions, customers who encounter problems

can describe it in detail on the platform, moderator, and other users will answer and share

their experience with the questioner. They also build a system allowing customers to monitor

the steps of delivery, repair, and return process so that customers can estimate processing

time.

Grow:

DJI has a membership progress in getting its customers to spend more. Customers who

become a DJI Select member can get five 20% discount coupons and accessories discount

coupons in the following purchase. They can also enjoy 50% off DJI care for the repair in the

future. These strategies stimulate existing customers to buy more products and generate sales.

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Revenue streams

Figure 7. Source from Forward Business and Intelligence

Figure 8. Source from DJI Innovation Public Relations Director Xie TianDi

DJI revenue mainly comes from the sales of the drone. According to research from Forward

Business and Intelligence, Consumer drone business accounts for 85% of DJI's total revenue

in 2017(Figure 7) (Peng, 2019). DJI Innovation Public Relations Director Xie TianDi stated

that overseas revenues account for 80% of total revenue, which North America is the largest

market, making up 40%. Other regions occupy 40%, China accounts for 20% (Figure 8)

(Guan cha, 2019).

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Since the drone market in China started late, DJI has taken the strategy of attacking overseas

markets from the beginning. DJI first entered the US market, successfully occupying 70% of

the market share, gaining brand awareness. Then, they expand their business into other

regions and focus more on China.

Key resources

Financial

Financing is an important source for expanding their business in other sectors and supporting

R&D and product optimization. In the past five rounds of financing, the amount of DJI

financings reached over USD 1.1 billion (Wan, 2015) (Wang & Denise, 2018). DJI utilized

the funding on R&D for agriculture and energy. They invested in education, AI imaging, and

cloud computing.

Intellectual

In order to maintain sustainable competitive advantages, DJI invests in patent and help them

to compete with other competitors. DJI stated that their global patent applications had

exceeded 9100, and global authorized patents have exceeded 3100 until 2019 (DJI, Jul 2019).

The fields included the structural design of the drone, stabilizers, circuit system, wireless

communication systems, flight control systems and so on.

Physical

Building, parts, and equipment are resources to complete the production process. At present,

DJI has its own factory in Shenzhen for assembly, installation, testing, and packaging. They

plan to build a new factory in the United States to meet U.S. trade restrictions and security

concerns.

Human

As DJI is an innovative technology company, it is crucial to have talent engineers for product

research & development and improvement. According to Yang & Chen, DJI has 14000

employees, and one-quarter of them engaged in R & D. This figure accounts for a

considerable proportion. DJI also requires a lot of expertise, such as traditional

communication, automatic control, production parts. With the application of more aspects,

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they need to recruit expertise in agriculture, infrastructure for the continuous improvement in

technology and business expansion.

Key activities

Research & Development is the key activity to deliver the value proposition. Fight control

systems are the essential part of drones, and R & D capabilities have always been the core

technology of drones. Therefore, DJI forces on R&D of flight control systems, other

components procure from suppliers. Since competitors release new products every year, it is

crucial to shorten R & D cycle for innovative companies. In order to shorten the R & D cycle,

DJI has a large R & D team to develop the best technology and create innovative products,

and these are the unique value to consumers.

Aside from R&D, marketing is a viral activity to help DJI stand out from others. Because

even though they have excellent products without good marketing strategies, no one knows

their products. The marketing manager uses advertising platform dynamics and analyzes the

market data to formulate and optimize advertising strategies and thereby to increase brand

awareness.

Production is related to components procurement, assembly, quality control, and cost control,

these are delivering the DJI value proposition. DJI has a large supplier system, so they can

purchase the best quality and obtain faster production for components. Meanwhile, affected

by brand awareness and high market share, DJI has high bargaining power over its suppliers,

it can minimize material costs. DJI has its own factory and hires workers to assemble

products in order to do quality control. Since they produce a large scale of products, they can

be easy to control cost, keep the price low.

Key partnerships

Through collaboration with the leader in the industry, DJI improves both hardware and

software to increase market competitiveness. Although the assembly, packaging, testing, and

R & D are all done by DJI, some components used in drones still need to be provided by

suppliers. For example, Leadcore Technology provides software-defined radio (SDR)

platform and chip, Shenzhen Fastprint Circuit Tech provides rigid-flex boards, Sunwoda

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Electronic provides battery and power management system. J.s.Corrugating Machinery

provides motors and drone shells. These components are vital resources to form a product.

Microsoft is one of the strategic alliances with DJI. They provide cloud computing service -

Microsoft Azure, which helps DJI develop a solution for construction, agriculture, and public

safety industries by using artificial intelligence, machine learning. DJI also launched a

Software development kit (SDK) on Windows, a platform for application developers from

other industries to customize their apps. Corporations utilize Windows technology to build

their own intelligent flying application to fit their needs, save time and money. At the same

time, DJI can obtain ideas, information to offer a technology edge for the commercial market,

deliver better value to corporations through the alliance with Windows.

Cost structure

The highest cost of DJI is raw materials, followed by R & D and marketing costs. According

to Forward Business and Intelligence, DJI generated around RMB 17.57 billion in 2017, that

net profit was RMB 4.3 billion. Their major fixed cost was raw material, which was about

RMB 1.59 billion, R&D was around RMB 430 million, and marketing was around RMB 344

million (Peng, 2019).

Primary fixed cost from the raw material is to fulfill product production. Secondary fixed cost

from R & D is to develop new products and flight control systems, improve existing products,

and impact on product innovation. Another fixed cost from Marketing is to communicate

with DJI target customers, promote products, and satisfy customer needs and wants. These

three costs come from the key activities of DJI and directly affect sales, they are an inevitable

expense. However, brand awareness becomes higher and higher, it leads to marketing costs

becoming lower and lower.

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Product Difference

Consumer Drone

Figure 9.

In the consumer drone market, small in size and easy to carry are very important to most

people, DJI has done a great job in these aspects. The video quality of DJI Mavic Mini did

not reach 4k, but the stability was good, and the price is acceptable. It is worth mentioning

that the weight of the drone is more than 250g, flyers have to register with government

departments in certain countries, so all drones need to be registered for flight except Mavic

mini. Compared to all the features, DJI Mavic mini is overall best, and it has a higher sale in

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China and the US. In the DJI’s consumer drone Mavic series, Mavic 2, Mavic Air are also

very popular nowadays.

Commercial

Figure 10.

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In the commercial drone market, video quality is one of the determinant factors. All the

drones above reached 4K, but Mavic Pro 2 achieves the best performance as it comes with a

Hasselblad camera that is able to capture high-quality footage. Furthermore, DJI Mavic Pro 2

has long flight time and small size over its competitors. However, DJI has an occasional app

problem that they need to improve. Compared to the price and features, Yuneec H20 and

Mavic Pro 2 are similar. However, Yuneec H20 has a huge problem in rolling shutter that it

needs to fly slower than other drones and affect the efficiency of 3D mapping in construction.

Therefore, Mavic Pro 2 is the overall best. DJI also launched Inspire 2, Mavic 2 Enterprise,

Phantom 4 RTK, and these are famous in the commercial drone market.

Among all the competitors in the drone market, DJI’s products are most successful and

popular as their products are a diverse, wide range and cover different industries. Whether it

is firm marking, agriculture, public safety, construction, or private users, customers can find

products on their website. What’s more, DJI’s marketing is also outstanding over its

competitors. They take spectacular impressive videos that attract customers to buy their

products after they watch it. It is true that the customer market now is in a mature stage. DJI

needs to improve both flight control systems and product features to overcome a hugely

competitive market. However, the commercial market is in a growth stage that there are few

companies in the market and can compete with DJI. DJI is still in the leading position in the

drone industry.

The success of DJI Innovation is attributed by the following factors

Cost advantage

The most successful drone of DJI Phantom launched in 2013. At that time, there were lots of

competitors in the drone market who produced more complicated drones set at a very high

price. As it happened, DJI saw a market gap and produced entry-level products at a low price.

Since Phantom has excellent performance and is easy to use, it attracted mass beginners to

purchase Phantom and gained a significant market share. According to Wang, they produced

entry-level products to avoid price war from competitors ( Shao, 2015). Indeed, low- price,

high-efficiency products contribute to the increased sales. A large number of orders reduce

procurement and production costs, thereby boosting the profit margin.

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The electronic center of China

In terms of manufacturing, DJI has a geographic advantage over its competitors outside

China since other companies have to develop their goods far away from their bases. DJI ’s

headquarters in Shenzhen, which is nearby its own factory, allowing them to test and revise

prototypes with engineers anytime, speed up the product development and creation, thereby

improving the value chain process. Besides, Shenzhen is the manufacturing center for

electronic communication components in the world where it can easily find cheap parts and

skilled labor, so that DJI can enjoy a value chain advantage more than other European and

American companies. Wang disclosed that because of the popularity of smartphones, it drove

the cost of GPS, G-sensor, GYRP, and other components that became cheaper, from the cost

RMB 6000 to now less than RMB 100 altogether (Shenzhen stock exchange, 2015). In other

words, DJI benefits from low manufacturing costs and easy access to skilled labor. It allows

them to set a lower price and provide higher quality to overcome their competitors.

Advanced technology

Aside from cost and geographic advantages, DJI has a technological edge over its

competitors. On the one hand, they recruit a massive of researchers and engineers to develop

UAV technology. With about 3500 employees in the R&D team, it allows DJI to develop

new products and improve the existing product (Yang & Chen, 2019). Within DJI, the work

environment is very competitive. DJI will conduct competitions, separates R & D employees

in few teams, requires these teams to develop a new product. After the competition, DJI

launches the most innovative and viable product to market, and losers have to help the

winning team to make it happen. Throughout the process, it not only incubates new ideas but

also helps DJI motivate employees to create new products. Until 2019, DJI’s R&B team has

successfully developed more than 9100 global patent applications (DJI, Jul 2019). One the

other hand. DJI has been supporting RoBoMaster competition for five years (DJI newsroom,

2020). Participants are engineers and students who come from all over the world, such as the

US, Canada, Hong Kong, Singapore. Some of them are studying in top universities. DJI

provides a platform for student to execute their ideas, cultivate younger talent researchers and

engineers. At the same time, DJI will invite the best participants to apply for a position in the

DJI related department directly. It can enrich the talent workers in the DJI R&D team, which

pursue a technology edge to compete with its competitors.

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Redefined Industries

Aside from the effective cost control, DJI's drone technology has completely changed the

original operating model of many industries. Due to relatively low cost, high efficiency and

the ability to operate in harsh environments, the demand for drones by customers

significantly rises.

a. Epidemic prevention & Rescue:

An increase demand for drone

Drones have been used in rescue operations in many countries in recent years. Since using

drones in rescue and search operations, fire departments can obtain huge benefits. For

example, when firefighters first arrive at the fire scene, they can use drones to assess the

situation of the fire. It can use less time and manpower to cover a large area , allowing

firefighters to plan an effective deployment faster. Most importantly, it reduces unknown risk

on the firefighter and quickly reaches survivors. In fact, Matrice 200 Series is a popular series

for firefighters, search and rescue operations, inspections and surveys. There are 300-400 U.S.

fire departments and police using drones to perform missions in 2017, and the number is

increasing (Findling & Pettitt, 2017) . This figure reflects a rising demand for drones from

firefighters and policies.

Collaborate with fire department

According to Ranosa, Los Angeles fire department (LAFD) signed an agreement with DJI in

April 2019, that DJI provide drone technology such as drone and training to LAFD for rescue

and search missions. Five months later, LAFD planned to raise the fleets of drones

substantially. Since LAFD is one of the largest fire departments in the U.S. , it could lead

other fire departments to use drones in the future.

The importance of the drone

26

In extremely harsh or dangerous environments, such as viruses, high temperatures. If rescue

operations are performed solely by ambulance personnel, it not only exposes the rescue

personnel to danger, but also makes the result of rescue operation less than ideal. Thus, it

needs to complete the scheduled work through the help of the drone. In the end of 2019, the

outbreak of novel coronavirus (COVID-19) occurred in Wuhan China. The COVID-19

spread out of many cities in China rapidly and medical supplies were in short supply in some

major cities. In order to prevent further spread of the virus, DJI utilized agricultural drones to

spray more than 3 million square meters of disinfectant in hospitals, factories, public areas

(DJI, 2020) . It avoided the risk of infected COVID-19 from human to human, but also

widely sprayed disinfectant to kill viruses.

Figure 11. (The paper, 2020)

Besides, DJI has made a huge contribution in preventing infectious disease and reduces the

workload of ambulance personnel. Drone (Mavic 2) widely utilized to decrease secondary

infections. Mavic 2 Enterprise has a thermal imaging sensor with visible infrared light and

built-in megaphone. When Mavic 2 is operating, it can detect the temperature of the targets

and broadcast in the air. According to the paper, community managers widely utilized drones

to settle the issue of secondary infections in Nanjing. They asked residents to stand behind

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the window and it helped staff measure the temperature of residents at home without any

contact. This not only reduces the pressure on police officers, but also prevents residents

from walking around and avoids the spread of immunity. Drones also were used to deliver

medical supplies such as medicines, facial masks. And propaganda the knowledge of

epidemic prevention.

b. Agriculture:

The growth of Agriculture Drone Market

Figure 12.

According to Zion Research Analysis, the global agriculture drone market is assumed to

increase its revenue by four times compared to 2015. The reason is the expanding need for

drones in agriculture.

In the agricultural aspect, drones are popular for agriculture that analyze fields, planting,

irrigate plants, monitor land, and remove insects. Farmers can quickly irrigate and spray

pesticides on farmland by using drones; this not only saves a lot of human resources, costs,

but also saves time. For example, DJI launched Agras T16 for an agriculture drone in 2019.

The product has a powerful performance and an excellent spraying effect, and can be used in

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a variety of operating scenarios such as flat, mountain, orchard. Agras T16 ‘s spray tank has a

loading capacity of 16L that it can spray up to 150 mu of cultivated land per hour( DJI, 2019).

Compared to human productivity, people could only spray 1 mu of cultivated land per hour.

The efficiency of the drone is much higher than humans. In light of this situation, agricultural

spraying drones will be used more often in the future.

Figure 13.

National policy in China:

In order to ensure adequate food supply, the Chinese government has set a red line of 1.8

billion mu of cultivated land to fulfill the needs of food (He,2014). This implies that the

demand for agriculture is still huge in the future, and the needs of drones in China will also

increase.

The drop in the number of farmers in Japan:

Japan is a famous agricultural country in history, but since it is facing the problem of the

aging population and a declining number of farmers. The agriculture industry is in difficult

times. According to the Ministry of Agriculture, Fisheries and Food, there were 3.8 million

farmers aged 61.1 years old on average in 2000. Compared to 2018, the agricultural

population fell to 1.7 million while the average age of farmers has risen to 66.8 years old.

This is 5.7 year on year increased from 2000 and over the retirement age 65. It indicates that

farmers may not be able to work in the agricultural industry for a long period of time.

Therefore the emergence of drones can alleviate the decline in the agricultural population.

Clouse border in the United States

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Due to the outbreak of the COVID - 19, countries have adopted measures to control crowds

and close borders in order to suppress the epidemic. The United States is the country with the

most confirmed case around the world. It has 671000 people infected with the COVID-

19( KIRO TV, 2020). A vast number of people went to supermarkets to buy food which

causes empty shelves in supermarket shelves. A decrease in logistics activities affected food

import. The closure of the United States border has prevented a large number of Mexican

farmers from entering the United States due to visa issues. It caused many farms to face labor

shortages and worry about the insufficient food supply (Becerril & Walljasper, 2020). It is

not good to overreliance on foreign workers as if the epidemic lasts for a long time, and it

will affect food supply. To deal with labor issues, farmers have to introduce a certain degree

of automation. Using drones to irrigation, monitoring, and deworming can avoid not only

inadequate manpower but also increase production capacity.

c. Filmmaking:

It is common to use drones to make films in recent years, especially those high-cost

Hollywood movies , because using a drone to make movies can bring a new perspective,

together with lower the cost of producing films. For example, during the car shoot,

filmmakers need to track cars at close range, capture fast action. Since using helicopters lacks

fixability , it is difficult for filmmakers to take shots in a narrow tunnel or cross through two

buildings. And thus, the shooting effect may not be ideal. Instead, the drone is small in size

and can travel to different locations thereby shooting a unique perspective.

What’s more, filmmakers used to rent a helicopter which cost HKD 200000 per day.

Compared to the most popular filming drone – DJI Inspire 2 Professional, it only costs HKD

77300 to own a new one. The price also included a ton of features like 5.2k resolution that

captures incredible image, excellent gimbal stabilizer that avoids unstable factors of wind and

vibration, a function of obstacle avoidance and detection that automatically hover or detour in

front of the obstacle without hitting the obstacle. As filming drones has advantages and cost

effectiveness, this explains why it can replace the use of helicopters and is widely adopted in

the film industry nowadays. Some famous films such as Captain America: Civil War, The

Wandering Earth Main Theme and Transformers: The Last Knight are used DJI drones to

shoot the films.

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The funding and financial of DJI

Time Round Valuation Amount Proportion Investor

2018-04-06 Strategic

Financing

$14.286

billion

$1 billion 7% /

2015-05-31 Equity

Transfer

/ $30 million / New Sky Capital

2015-05-06 C Round $7.5billion $75million 1% Accel Partners

2015-01-23 B Round / / Maixing Investment,

Sequoia Capital

China, UBS Capital,

Vision Capital

2015-01-01 Equity

Financing

/ / / Aeternam Stella

2013-01-01 A Round / Tens of

millions of

dollars

/ Sequoia Capital

China

Figure 14. (TianYanCha.com, 2020)i

DJI did not conduct an IPO, and they chose not to disclose their financial status and the

amount of most rounds of funding. Therefore, this part of the data is collected from the

Internet, and has been derived from DJI's share in the industry and the overall data in the

industry. The latest data collected from TianYanCha.com(2020)(figure 14.), for most rounds

funding, only the investment agency be posted. One of the most concerned is the strategic

financing in 2018. According to the data of TianYancChaC.com, before this round of

financing, DJI Innovations has completed five financings from January 2013 to May 2015.

The amount of financing is more than 75 million US dollars, and the few are also tens of

millions of dollars. In 2015, DJI developed rapidly and raised four rounds in this year.

Investors include Maixing Investment, Sequoia Capital China, Accel Partners, UBS Capital,

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Vision Capital, Aeternam Stella, New Sky Capital, etc. For the new round of US $ 1 billion

equity financing in early April 2018, the financing method adopted by DJI is bidding.

Bidding is not an ordinary financing method, but the fast-growing business and excellent

market share make DJI dominate the financing right.

Figure 15.（Thirty-six Kr,2018）

According to the above figure, DJI’s net profit was 1.424 billion RMB, 1.928 billion RMB

and 4.3 billion RMB. And the operating income of DJI came from 5.983 billion RMB and

increased to 17.569 billion RMB, From 2015 to 2017. In 2017, the operating income of the

company was 17.57 billion RMB, an increase of 79.6%; the net profit of DJI reached 4.373

billion RMB, an increase of 123.2%; in 2017, the revenue of selling consumer-grade drone

accounted for 85% of DJI's total revenue. It is with such good performance growth that DJI

can dominate the funding in 2018.

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The challenges that DJI are facing

In the SWOT analysis

Before formulating the development strategy, Using SWOT analysis to determine a

competitive advantage can provide an in-depth and comprehensive analysis of the company.

Figure 16.

In the SWOT analysis, the number one threat to Threat is that the industry competition has

intensified, and the price war has gradually started. The number of global drone

manufacturers in 2017 by China Research Institute's PwC statistics has reached 741, which

has tripled compared with 2006. As more and more competitors join the drone industry,

consumers have more choices Therefore, the unique competitive advantage of the product is

particularly important. The product positioning of DJI UAVs has always been mid-to-high-

end positioning, thanks to its leading technological advantages and accumulated brand

premiums. However, due to the presence of companies such as Google, Intel, Apple, Huawei,

Xiaomi, etc. in their respective fields, as the market is subdivided according to the needs of

consumers, the original anti-shake gimbal and Consumer groups attracted by technical

advantages such as intelligent obstacle avoidance will be dispersed by different functional

requirements. Therefore, as the technological competitive advantage becomes smaller, and

consumer-grade drones are developing toward smaller, lighter, and civilian-oriented trends,

- Cost advantage - Advanced technology

- Espionage & Corruption

- The electronic centre of China

- Redefined Industries

- The threat of new entrants

- Competitive rivalry within the industry

- The impact of

international trade

33

DJI must adjust the original international pricing model to maintain its market share. It is

recommended that North America and Europe with special overseas channel advantages in

DJI can maintain a high pricing model and capture more sales through product innovation,

and in the Asian market, mainly Chinese market, launch low-profile products to squeeze

competitors. On the other hand, the industry-grade drones provide more accurate and

professional supporting services to generate product premiums.

The threat of new entrants

Drones are now widely used by individuals, businesses, and government departments in

recent years. According to Globe New Swire (2019), the global drone market reached USD

13.2 billion in 2018 and is estimated to reach USD 144.38 billion in 2025. Since the drone

market has huge demand, with a high growth rate and high-profit margin, a lot of competitors

will join the market. Although the market share of DJI has reached 74% (Celia, 2019), new

competitors are constantly emerging in the market, and customers may turn to competitors'

products, resulting in a drop in profitability and market share.

Competitive rivalry within the industry

Apart from the increase of new competitors, DJI faces rivalry among existing firms.

According to Crunchbase, there are 2,130 drone companies in the consumer drone industry.

If one-tenth of companies launch new products with the same strategy form them or imitate

their products, customers can easily make a comparison. Moreover, existing firms launch

similar products that are cheaper than DJI can trigger a price competition. For instance, DJI

has been competing with XAG for the agricultural drone market for a while. DJI launched the

agricultural drone T20 in November 2019. At the same time, XAG launched three

agricultural drone models at a similar price. It could make potential consumers choose XAG's

products as they launched three products but more accessories.

To deal with those problems, DJI can Improve their customer service by trying their best to

tackle customers' problems and improve the response time. DJI can also set up a customer

satisfaction score to allow customers to evaluate the preference of their staff and the

satisfaction of the process. This measure not only allows the company to understand

customer needs but also monitors employee performance. As long as DJI improves customer

34

satisfaction, customers loyalty also increases, thereby building a long-term relationship with

their customers.

DJI can invest more in Research & Development of product differentiation, so that they can

optimize quality and design in existing products, develop innovative new products and

systems that are difficult to imitate. If DJI provides a unique experience that others do not,

customers will not switch to competitors' products as their switching costs are high, and DJI

can retain its existing customers.

Consumer demand for consumer drones that tends to be saturated. DJI Innovations has more

than 74% market share in the global consumer drone market, and it is undoubtedly the

biggest winner in this market. However, since the launch of DJI P4P in the field of consumer-

grade drones, it has basically entered a mature period. The possibility of adding new

functions to new consumer-grade products will become less and less. As early as the first half

of 2019, a report pointed out that the consumer UAV market has reached its peak and DJI has

ushered in a business cap. Wang Tao, the founder of DJI Innovations, said in an interview in

2016 that the drone market is about to reach saturation.

DJI Innovations is also looking for new breakthroughs in the professional drone industry. We

know that in terms of industry applications, it is a market no lower than the consumer market.

IResearch once pointed out in a report that by 2025, the Chinese drone market will reach 75

billion yuan, the aviation entertainment consumer market will reach 30 billion yuan, and the

remaining 45 billion yuan will come from the professional field. Unfortunately, DJI is not all

profitable in the professional drone industry, or the profit margin is not as high as aerial

cameras.

Especially in the field of plant protection, Jifei is a powerful opponent of DJI. This is a link in

the plant protection market, and DJI cannot make money or may lose money. In terms of

industry applications, DJI has not fully occupied the market share like its performance in the

consumer-grade drone market, and its sales share currently accounts for a small proportion of

the company's revenue. Agriculture, a huge drone market. According to estimates, as of 2018,

about 2 billion mu of cultivated land nationwid, the area of UAV plant protection only

accounts for about 6% of the total cultivated land area of China. "Drone plant protection", as

the name implies, is the use of drones to carry out "plant protection" operations in agriculture

35

and forestry. For now, drone plant protection is the most important use of agricultural drones

and the most valuable market. Drone plant protection has great prospects in China. With

reference to Japan, which is currently the most developed drone plant protection industry,

after more than 30 years of development, the coverage rate of drone plant protection has

stabilized at about 54%. The agricultural model between China and Japan is similar, but the

situation is not exactly the same.

Drone Distribution

According to the research report of CCID Consulting, in 2018, China's consumer-grade drone

market accounted for 45.7%, and the industrial-grade drone market accounted for 54.3%.

Among them, in the industrial drone market structure, agricultural plant protection accounted

for 41.5%, power inspection, security, logistics, etc. accounted for 17%, 13% and 11.5%. In

the agricultural field, DJI and Jifei Technology are in fierce competition in the plant

protection drone market, and even once appeared a "price war." At the same time, DJI also

encountered strong opponents in the field of logistics drones.(CCDI,2020)

Drone distribution is now a topic of great concern to everyone. For the industry of drone

distribution, there are already many companies doing it. For example, Jindong Logistics and

SF Express are doing this. Based on their industry advantages of JD Logistics and SF Express,

DJI Innovations needs more effort if it wants to make a career in drone logistics. The drone

logistics in the city is also affected by many factors. Security and privacy and some policies

are restricted. DJI can avoid direct competition with these giants in the logistics industry and

can choose to cooperate with them as a supplement to develop this business with its own

technological advantages.

The payback period may be longer. Due to policies, technologies, and other reasons, these are

the difficulties of the logistics drone industry. Most drone routes are approved in rural and

remote areas. The consumption capacity of these places has a certain gap compared with

cities. Single frequency is low, it is difficult to improve efficiency.

Private concern

In addition to flight safety, the management of unmanned aerial vehicles is also very

important for the protection of people's privacy.Aerial cameras pose a unique privacy

36

problem because aerial cameras can collect high-resolution clear images (usually long,

continuous, and hidden) in a remote, advantageous location, allowing people to secretly

continue to monitor the target person at high altitudes. As the price of aerial cameras declines,

more and more general public can also use it. In addition to being used for recreational

purposes, the aerial camera is also convenient for private individuals such as private

detectives and reporters to monitor target persons, including "paparazzi" to track well-known

people. Faced with the challenges brought about by these technologies, the privacy protection

provided by the current Personal Data (Privacy) Ordinance is very limited. This has also

caused great problems to DJI, because the ban on many airspaces has caused a huge impact

on the sale of drones.

Safety concern

After 36 hours of chaos, Gatwick Airport finally opened and a few flights were put into

service. The closure of the airport was due to drone activity in the airspace, affecting

approximately 110,000 passengers. According to British regulations, it is illegal to drive a

drone at a height of more than 400 feet from the airport boundary 1 km.

According to the data that from the British Airprox Committee (figure 17.), in recent years,

the number of drones invading civilian and military air traffic has risen sharply. In 2018, a

total of 117 such incidents were recorded, an increase of 24 from 93 in 2017. In the previous

two years, there were 71 cases in 2016, and 29 cases in 2015.

37

Figure 17（Airprox,2018）

According to Goldman Sachs(2016) estimates, the global drone market will reach 100 billion

US dollars in 2020.The consumer drone market includes hybrid drones, rotary wing drones

and fixed wing drones. With the popularity of drones, more and more accidents caused by it

have led to the rise of anti-drones technology. The main drivers are the security breaches of

unidentified drones and the growth of terrorist and illegal activities using drones around the

world.

With the popularity of drones, more and more accidents caused by it have led to the rise of

anti-drones technology. The main drivers are the security breaches of unidentified drones and

the growth of terrorist and illegal activities using drones around the world.

Espionage & Corruption(Internal Management problem)

DJI employees leaked product blueprints. Wang revealed that there was an employee who

stole our blueprints and sold them (Shao, 2015). Another case is that one of the DJI

employees utilized its internal facilities to produce copycat flight controllers and sold them to

their clients. These phenomena reflect the DJI internal management is lax.There was a severe

corruption incident within DJI, their employees in the Procurement Department exaggerated

the price of the materials and components, purchased substandard parts from suppliers in

38

order to obtain kickback. Because of this practice, the cost of components in 2018 raised 20%,

and the amount was as high as over RMB 1 billion (Zaagman, 2019). According to DJI

internal announcement, 45 employees have been arrested, 16 employees have been

transferred to judiciary, and 29 employees have been expelled directly (BBC, 2019).

These issues are blamed for the internal management process of DJI. Many corporations such

as Alibaba, Tencent, Country Garden, have set up a supervision department to investigate

whether there is any violation of regulation or disciplines in management, production,

operation process. The supervision department is independent of other business departments

within the company, directly affiliated with headquarters. They can directly investigate and

report to the top management without going through the relevant business department. Such

an investigation can prevent corruption and bribery activities, and promote the integrity of

managers. However, the supervision department of DJI fails to perform it well.

COVID-19（The impact of international trade）

At the same time, coupled with DJI's market for consumer drones, which account for the

largest proportion of overall revenue, it is basically abroad, and the world is banned under the

COVID-19. It has hit China ’s foreign trade and has doubled the cost of international logistics

transportation Rising, DJI is destined to be affected badly as one of them.

The opportunity of DJI

The Possible directions

DJI has occupied the vast majority of market share in the field of consumer drones, but there

are many opponents in the field of commercial drones. The consumer-grade drone market has

limited room for growth, and DJI needs to expand in other areas while maintaining its

consumer-grade market share. DJI has enough technical reserves to enter the commercial

drone market. However, for markets where industry barriers already exist, such as the plant

protection drone industry, which has been occupied by strong opponents, there will be no

high gains even if it is forcibly entered. DJI needs to consider whether there is still a blue

ocean in the drone industry.

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In the past few months, most cities have been affected by the epidemic. The use of drones to

monitor and provide services has repeatedly appeared in news reports. This has led people to

pay attention to the use of drones in urban management. But in fact, drones have been used in

urban management long before the Cornavirus-19 outbreak began. As more and more people

enter the urban production and life, the concept of smart city is proposed in order to better

provide people with good city services. The application of drones in the construction of smart

cities has been proposed very early, but due to the technical problems and safety problems of

drones, it has not been widely used. Smart city is a city form based on the support of

information technology and innovative technology. In recent years, with the development of

5G communication application technology and the development of drone technology itself, it

has become possible to use drones in the construction of smart cities. DJI can take this

opportunity to cooperate with the government to enter the drone market of urban

management.

The function of drones in smart city

In the early stage of smart city construction, drones can help the construction of smart cities

through terrain mapping and monitoring, making the city layout more reasonable and

comfortable. For example, distribution of roads in residential and commercial areas, bridge

construction, etc. When the city is running normally, drones can be used in all aspects of life.

For example, it provides information support for various applications such as police, medical,

traffic monitoring, package delivery and fire protection. However, when connecting drones as

part of a smart city, you still need to focus on the challenges of security, and privacy in

densely populated areas.

The applying of drones during COVID-19

We saw a lot of news about drones assisting city managers to monitor the outbreak. In the

city, police use drones to observe whether people wear masks in public; Use the special

characteristics of drones to carry out disinfection and sterilization operations in places

inaccessible to staff; Sending food to people who are isolated at home at the same time

reduces direct contact and potential risks; In rural areas with small populations, it is also

possible to monitor the movement of personnel and dissuade individuals who violate

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regulations. During this period, major drone manufacturers actively participated in the

prevention and control of the epidemic.

During the epidemic, the drones shouted propaganda and persuasion in the air; each drone

was active in the hospital, shuttled between the hospital and the disease control centre,

transported materials, and implemented automatic transfer of emergency drugs and

specimens for prevention and control; Unmanned aerial vehicles hover on highways to

replace manual air command work; unmanned aerial vehicles have replaced humans to

protect rural areas and even urban areas across the country.

The drone is a very ideal tool for spraying disinfectant. Compared with manual spraying,

drone aerial spray disinfection has the characteristics of high efficiency, continuous, isolation

and separation of human and medicine, and can be sprayed by a multi-machine formation to

solve all areas rural and urban communities have problems such as lack of disinfection

equipment and insufficient manpower. One drone can complete about 700,000 square meters

of disinfection spray per day, the efficiency is about 5 Times. For specific needs in specific

application scenarios, drones can minimize human-to-human contact. Therefore, whether

cleaning or disinfecting or medical transportation, drones can replace manual operations.

DJI's consumer drone market has a large market share, but there are many strong competitors

in the professional drone and commercial drone markets. It has lost its advantages in plant

protection drones and logistics, but the city supervision under the epidemic has given DJI an

opportunity to cooperate with the government. DJI's consumer-grade drones can be quickly

applied to the supervision system in terms of obstacle avoidance and convenient operation. If

DJI can take the opportunity to cooperate with the government and legally accumulate urban

flight data, it can seize the opportunity for future expansion, and it is also an excellent

opportunity for DJI to break the current development dilemma.

Development trends in the next ten years

Business Name Business Type Business Description

DJI innovation Advanced manufacturing UAV R&D manufacture

Robomasters Sports fitness Robotics platform

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Figure 18. (TianYanCha.com, 2020)

DJI is well known as a unicorn in the field of drones, but in 2019 DJI launched an

educational robot-- RoboMaster S1. There are many players in the field of unmanned aerial

vehicles, most of them are concentrated in the field of mass consumption. At present, as the

increment of consumer-grade unmanned aerial vehicles decreases, it also brings greater

uncertainty to the development of enterprises. Therefore, DJI has also begun to transform into

an industrial-grade drone. While agricultural drones are the mainstream of transformation, at

the same time, competition in the same industry is becoming increasingly oligopolistic.

Aware of the accumulated competition and development dilemma in the drone industry, DJI

has also expanded its business scope to other fields. While ensuring the advantages of the

UAV field, it also closely follows the trend of the times to develop robots. Drones and robots

have good development trends in the next ten years. While maintaining the advantages of the

consumer-grade drone market, DJI entered the robot market by virtue of its own

technological reserve advantages to seize the opportunities.

Reference:

Airborne Drones. (2019). Commercial drones vs consumer drones. Retrieved from:

https://www.airbornedrones.co/commercial-consumer-drones/

BBC. (2019). DJI pledges painful action to tackle corruption. 17/4/2020. Retrieved

from:https://www.bbc.com/news/technology-47055255

Becerril, D. Wallijasper. (2020). 'The watermelons will rot:' U.S. visa confusion in Mexico

keeps out agriculture workers. Reuters. 17/4/2020. Retrieved

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