Will Trump ever understand that tech protectionism is a losing game?
Ramping up the tension, the Trump administration is now gunning for China’s DJI, the undisputed world leader in drone production, forcing state and local agencies to stop using the company’s products, despite being the most competitive, and trying to use government subsidies to produce alternatives in the United States.
History shows that in the long-term, protectionism and production subsidies are not the best way to forge technological leadership. There are any number of reasons why DJI is the leader in the global drone market, but the bottom line is that it has dominated design and production in the category since its inception, creating increasingly versatile uses for drones. Some Chinese companies have benefited from protectionism, but in the case of DJI, which has always competed in international markets, this is of relative importance.
Raising the specter of DJI drones sending data back to China, as the White House did with Huawei’s smartphones, may well deprive the company of lucrative public contracts, but it’s not going to provide any kind of sustainable competitive advantage to US companies, because technological advantages simply don’t work that way: closing borders doesn’t make an industry more competitive and simply demonstrates to what extent the current administration fails to understand how competitive advantages in technology are created.
The most competitive US drone manufacturer in its day, 3DR, announced in March 2016 that it would now focus on the development of drone software and applications for mining, engineering and construction, mainly for equipment manufactured by DJI. As its founder, Chris Anderson, says about DJI, “they make the best stuff, they’re innovating the fastest, their prices are competitive — they’re the giant.”
In short, DJI’s success is not down to Beijing’s protectionism or the closing of its borders to foreign companies, as may be the case with other Chinese companies. Instead, DJI has grown as drones have required new applications as the sector has expanded into more and more industries, doing so with unstoppable consistency.
When a company achieves technological supremacy in an international market, trying to compete by imposing restrictions based on as-yet unfounded threats and using government subsidies is a losing game. Trade wars, in today’s borderless technological age, make no sense and simply produce countless victims and no clear winners. In today’s environment, borders are artificial constraints that simply distort the competitive scenario in the medium term, creating more problems than solutions. The day we realize this, we will start to make some real progress.
(En español, aquí)