China sanctions US drone maker Skydio (opens in new tab)

While it might be hard for the US to make lithium batteries that are competitive economically, there are still many countries in the world that can make them economically that are not China, eg. SK, Japan, Taiwan, and the rest of SEA. For Skydio, surviving these sanctions is just a matter of moving their supply chain away from China.

It is not impossible for the US to develop batteries. The problem is that it will be costly in terms of investment and the resulting product will necessarily be more expensive for consumers. While this happens Chinese companies will dominate their internal market, Asian markets, Africa and South America. The US is trying to start a fight where their consumers will be left with high inflation and a protectionist market with low innovation.

I've always felt like China doing a "hot war" in Taiwan would be really uncharacteristic of them. What I think is more likely is that they sponsor parties/social movements in Taiwan that support reunification. Eventually I'd imagine Taiwan would do a referendum on whether or not to join the PRC.

The way I would frame it if I were China: 1. Re-join PRC and lose some civil liberties, but hopefully not have any worse material quality of life. 2. Stay in the US sphere of influence, and continue to be the hypothetical "first theater" of WWIII. Taiwan would need to increase military readiness and always live with the threat of invasion looming.

“Supreme excellence consists of breaking the enemy’s resistance without fighting.” -- Sun Tzu

DJI has had two insight that their Western competitors lacked:

- The market wants cheap and durable high-quality cameras that can fly. Drone/flying-centric features are secondary.

- Software and "AI" features are important but they don't have moat and can be easily copied.

Skydio had more reliable person-tracking feature earlier than DJI but their camera quality has almost always been inferior to DJI.

You mean with DJI? It's not remotely symmetrical. The US does not prohibit DJI from buying US parts to use in their drones. The US do not prohibit US citizens from buying DJI drones. Only the US Dept of Defense is prohibited from buying DJI equipment.

The US does this because DJI is considered a Chinese Military Company [1] (nb that DJI disputes this and asked to be removed from the list). China is sanctioning Skydio because they sold some drones to Taiwan.

[1] https://media.defense.gov/2024/Jan/31/2003384819/-1/-1/0/126...

From the article's opening sentence, it's clear that they are being sanctioned for doing business with Taiwan's Fire Agency, and not for any military reasons.

  A few weeks ago, China announced sanctions on Skydio for selling drones to Taiwan, where our only customer today is the National Fire Agency.

I don’t really think a sanctioned entity is under obligation to argue “both sides”. I doubt Chinese companies under similar conditions will do so, or have done so in the past.

>If there was ever any doubt, this action makes clear that the Chinese government will use supply chains as a weapon to advance their interests over ours.

In particular this sentence demonstrates a näive credulousness.

Kissinger would be laughing.

I agree. Feels like panic that China violated the Rules-Based International Order™

But how are they going to compete with the huge state-supported battery makers from China?

Tariffs are useless if you don't have investments to replace that product with local alternatives. Tariffs by themselves will not make the replacements appear (and here is the important part) with the same quality of the taxed product. Most countries that apply tariffs end up with inferior products and a monopolized internal market.

Sanction aside, this action is a wake-up call for all US based companies operating in geopolitically sensitive industries that they absolutely need to diversify their supply chain away from China.

And in terms of the sanction itself, it’s definitely a reasonable response by China, given the fact that DJI is heavily sanctioned by the US government.

First sentence of article.

>A few weeks ago, China announced sanctions on Skydio for selling drones to Taiwan, where our only customer today is the National Fire Agency.

Yeah of course, because China is sanctioning them because they are making it harder for the PROC to invade and annex another free country.