A privately owned startup believes it has the answer to the U.S. government’s concerns about Chinese-made drones, which account for the majority of commercial sales in the U.S. market.
Anzu Robotics, whose CEO and founding partners are all American, is headquartered in Texas, and its drones, which are expected to be used by law enforcement, public works, architects and others, are assembled in Malaysia and run on servers in Virginia.
There’s just one problem: Anzu has close ties to China and DJI, the Shenzhen-based company that’s been the target of legislative and regulatory efforts to curb the sale of Chinese-made drones in the United States.
About half of Anzu’s components are made in China, as is much of its software. Anzu licenses its drone designs from DJI and receives payments from DJI for each drone it orders from a Malaysian manufacturer.
The crossover raises questions about whether Anzu is truly independent from DJI, the leading Chinese drone manufacturer, or whether it has simply rebranded.
Despite accounting for 58% of commercial drones sold in the U.S., according to a 2022 analyst report, DJI’s business has recently been shadowed by federal and state regulations aimed at preventing China’s potential access to information collected by drones in the U.S.
The company now faces a major threat from a bipartisan bill in the House of Representatives that would significantly restrict its future access to the U.S. communications infrastructure on which its products run.
Given its ties to DJI, Anzu represents something of a test for Chinese companies facing an increasingly hostile regulatory environment in the United States.
If moving manufacturing out of China and distributing products through companies with U.S. zip codes can help companies avoid being blacklisted by federal agencies and effectively outlawed by Congress, the formula Anzu has established could work not only for DJI but also for other Chinese companies whose operations in the U.S. are under scrutiny.
If these efforts fail, it would be another setback for Chinese companies trying to navigate growing suspicion and hostility toward China in Washington.
In exchange for granting Anzu a commercial license, DJI will take a cut of every dollar Anzu pays the Malaysian manufacturer to make the drones, Randall Warnus, Anzu’s CEO and sole employee, said in an interview.
But he acknowledged that Anzu was essentially DJI’s idea.
Early last year, he recalled, a DJI representative, representing the company’s senior executives, asked a group of U.S. drone industry executives, “What can we do to make our technology — DJI’s technology — suitable for long-term use in the United States?”
The DJI concept, which Warnus said was also pitched by several other DJI employees, was embraced by Anzu’s founder, Warnus, and his three partners, who he said are U.S. citizens.
Their goal is to “somehow remove the Chineseness from their technology,” For sale in the United States.
Warnas has been in contact with the office of Rep. Elise Stefanik, a New York Republican who is spearheading a new bill that would effectively ban any future operation of DJI drones in the U.S., to discuss Anzu’s efforts and how to comply with U.S. regulations. But Rep. Stefanik seemed unfazed by more than an hour of Q&A with one of Warnas’ staffers on Thursday.
“Their desperate attempts to evade tariffs and sanctions are futile,” Stefanik said in a statement Friday. “DJI and all of its shell companies will be held accountable.”
DJI spokeswoman Regina Lin said in a statement that the company’s licensing agreement with Anzoo was “designed to increase the availability of high-performance, cost-effective drones in the marketplace.” She said DJI has no other financial relationship with Anzoo, which she said is a “fully independent company.”
Some analysts say that while Anzu’s strategy may be successful in the short term, its business model could soon be threatened by tougher restrictions that Congress and regulators are considering imposing on Chinese companies and their affiliates in the United States.
“This is like putting a band-aid on a bullet wound,” said Craig Singleton, China program director at the nonpartisan Foundation for Defense of Democracies.
Still, some lawyers and drone industry veterans praised Anzu’s ingenious strategy and say the company’s business model poses no immediate regulatory risk.
“Anzu Robotics is delivering on something that a lot of people in our industry have been waiting for,” said Chris Fink, a drone dealer in Fayetteville, Arkansas, who has fielded inquiries about Anzu Drones from users who are worried about buying Chinese products in the current regulatory environment but can’t afford U.S.-made drones.
Anzu officially launched in April, four months after receiving approval for its device from the Federal Communications Commission in Washington. Wornas said the company has already received thousands of inquiries about the drone, which he estimates have led to at least 400 orders, all of which have been referred to third-party U.S. brokers like Fink.
The company is run from the home office of Warnath, a longtime drone salesman who worked at DJI earlier in his career and briefly served as CEO of Ortel, another Chinese drone maker, in 2021. Warnath resigned after just nine weeks, blaming his short tenure on his own lack of autonomy.
Warnus, a US national, lives outside Salt Lake City, Utah, but Anzu collects its mail from a corporate office building in Austin, Texas, and lists that address as its official headquarters.
“Austin will be the location for Anzu Robotics’ long-term future, but we don’t have a reason to get too involved there at this time,” Warnus said.
Anzu’s parts are manufactured in both China and Malaysia, and they are assembled in a factory in Malaysia, according to Warnas and documents reviewed by The New York Times.
The product assembled there is a forest-green commercial drone called the Raptor that drone experts say closely resembles some of DJI’s Mavic 3 models. It will be shipped to a logistics hub in the U.S., where it will be operated by flight-control software and a user app, which Woernus said was developed by DJI but has been enhanced by Anzu’s data security partner, Aloft, which is headquartered in Syracuse, New York, with servers in Virginia, to ensure that user data stays in the U.S. and isn’t collected by third parties without the user’s permission.
This complex structure was felt to be necessary by Anzu’s founders because of Washington’s hostility towards China.
Social media network TikTok could be effectively banned in the United States unless it is sold to a domestic owner soon, according to a bill passed by Congress in late April and quickly signed by President Biden.
Congress is considering a variety of bills aimed at restricting Chinese technology and products, including Stefanik’s proposed “Counter Chinese Communist Party Drones Act” that would effectively reduce DJI’s presence in the U.S. Congress and Biden also both support new tariffs on Chinese products, continuing efforts begun by the Trump administration to boost U.S. manufacturing.
The difficulty domestic drone makers face in competing with DJI, combined with national security concerns, has led to measures to crack down on the Chinese company — a trend that is spreading to other Chinese technology companies, who are scrambling to find workarounds.
“Chinese companies are thinking creatively and using every possible means to find these cracks and exploit every legal and regulatory loophole,” Singleton said, adding that Chinese companies expect it will “take Washington years to find and close these loopholes.”
David Montgomery Contributed reporting from Austin. Tashni Sukumaran He contributed reporting from Kuala Lumpur, Malaysia.
