The discovery of more than 1 billion yuan ($147.5 million) in staff corruption at China’s DJI, the world’s biggest drone maker, is drawing attention to the country’s persistent problem with supply-chain bribery.
DJI’s case came to light after internal documents leaked online. According to local media reports, DJI’s internal investigation found that procurement officials had received kickbacks for accepting components that had not passed quality tests or for paying above-market prices. The company’s component costs were inflated last year by more than 20% because of such practices.
Vendor misconduct has been an endemic problem for Chinese industry, with high-tech companies far from immune. Recent months have brought revelations at Alibaba Group Holding, ByteDance, Tencent Holdings, Baidu, Meituan Dianping and JD.com. At ByteDance, operator of video sharing app TikTok and news aggregation service Jinri Toutiao, an employee was found to have improperly accepted 4.3 million yuan from an advertising agency.
Out of 45 DJI employees alleged to be involved in the recent kickbacks, 29 have been fired. Sixteen cases may be submitted to government prosecutors.
DJI accounts for about 70% of the world’s drone market and has an estimated valuation of around $21 billion. While it does not disclose its financial results, its annual net income is estimated at roughly 6 billion yuan.
Nikkei Asian Review | January 21, 2019