An unmanned flying boat named HAMADORI, developed by Japanese company Space Entertainment Laboratory and is equipped with various sensor options for survey, enabling safe operation on the open sea, is displayed at Japan Drone 2020 exhibition at Makuhari Messe in Chiba, on Sept 30. Photo: REUTERS/Izumi Nakagawa
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Wary of security issues, Japan moves to shut China out of its drone supply chain

12 Comments
By Kaori Kaneko and Izumi Nakagawa

Japan may effectively shut off China from supplying drones to its government to protect sensitive information, according to six people in government and the ruling party familiar with the matter, as part of a broad effort to bolster national security.

The primary concerns, those people said, centered on information technology, supply chains, cyber security and intellectual property - worries that have been rising outside Japan as well.

But Japan must balance such fears - particularly Beijing's growing push to export sensitive technologies such as commercial drones and security cameras - against deep economic dependence on China.

It must also navigate increasingly choppy waters between China and Japan's closest ally, the United States, which is at odds with Beijing over many things, including technology.

"China is a big market and it is important for Japan," one of the senior government officials said. "On the other hand, there are worries that advanced technologies and information could leak to China and could be diverted for military use."

The defense ministry has several hundred drones, including some made by Chinese companies; the coast guard has about 30, and most are Chinese. Both said they were not using Chinese drones for security-related issues. Other government entities also use such drones.

It's unclear whether all would need to be replaced, but the new drones, used for sensitive work such as criminal investigation, infrastructure work and emergency rescues, would have to be secured against data leaks and go through stricter vetting procedures, the revamped policy says.

The tightened rules, set to come into effect in April 2021, don't mention any country by name. But the senior government and ruling party sources told Reuters they were created with China in mind.

The initiative includes fresh investment rules for foreigners enacted last year; ruling party lawmakers are also preparing a proposal on an all-encompassing law to promote economic security that will be unveiled this year.

Separately, Japan's National Security Council has set up a unit in April to examine how economic matters, such as advanced technologies, could affect national security.

Domestic drone makers expect to benefit from the changes, as they mean government ministries will most likely do their drone shopping at home.

A Japanese drone manufacturer, Tokyo Aircraft Instrument Co Ltd, developed a camera drone that can fly in high winds - making it ideal for surveying damage after a disaster - and the company is talking potential applications with the government.

"The drone platform, flight-control system and radio communication equipment are all domestic-made, and it is our unique model based on our years of experience in avionics components," said Kazuya Sumida of the company's drone division."We plan to further enhance the security of the drone's information and communications functions."

To be sure, government sales make up a small part of the nation's drone business market, which stood at 140.9 billion yen($1.35 billion) in the fiscal year to March 2020, up 51% from the previous year, according to Impress Research institute. The market is expected to grow to 642.7 billion yen in the fiscal year to March 2026.

But the aim isn't to boost local drone makers, the measure's backers say - it's to keep Japan secure.

"Japan will keep diplomatic ties with China but we will be more carefully respond to sensitive technologies and information," said another senior government official.

Analysts say the U.S. can't fully cut off China either because it would hurt the U.S. economy.

"I think allied nations will discuss critical technologies, especially information and technologies which could give military advantage to China," said Tsuneo Watanabe, senior fellow at the Sasakawa Peace Foundation.

Japan has already set aside around 300 billion yen to diversify its supply chains and reduce reliance on China by bringing production home or locating more in Southeast Asia.

© Thomson Reuters 2020.

©2020 GPlusMedia Inc.

12 Comments
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Shutting China out of drone supply chain can be costly, as China-free drones cost upto 10 times as much as Chinese drones.

-3 ( +1 / -4 )

As long as China represents such a large export market, and Japan and other countries depend on it for raw materials and manufacturing, the Chinese will have the upper hand. The cost of reinventing the wheel due to security concerns for countries that depend on Chinese products is simply too high for any one country. The only way around it would be for the US, EU, JApan, Canada, Australia, NZ and the UK to produce products for their own military/surveillance/security ops - the schematics for whch the Chinese would then steal.

-1 ( +2 / -3 )

No need to imitate the failing USA, which has cut off trade with China because it can't compete anymore. Japan should join China, the rising power, not the USA, the failing power.

-5 ( +3 / -8 )

all countries need to shut China out of everything. They’ve done enough to the world this year.

1 ( +4 / -3 )

Samit Basu

Shutting China out of drone supply chain can be costly, 

Lol.

And relying on your chief rival for military hardware isn’t...

Ridiculous

6 ( +6 / -0 )

Too little too late.

0 ( +0 / -0 )

China can go on supplying cheap low tech drones to the mass market, just not the high tech and security sensitive market. Of course if they want to supply anything else they could supply the IP and codes, just like China insists on,

0 ( +0 / -0 )

China doesn't want Japanese drones. China doesn't want Japan. You'll see.

0 ( +0 / -0 )

China can go on supplying cheap low tech drones to the mass market, just not the high tech and security sensitive market. Of course if they want to supply anything else they could supply the IP and codes, just like China insists on,

The cheap mass market drones sold by Chinese companies represent perhaps the greatest of all security risk. Their docking stations and controllers can be accessed from China via the internet. Lets say China wants to see things happening in a particular geographic location. It can query the docking stations of Chinese made drones to see what drones have been operating in a specific lat and long based on the gps systems built into the drones, then download their video feed. A perfectly innocent civilian in Japan or the US could be flying their drone around with its camera in a location proximate to some military installation or physical infrastructure (power plant, electrical switch yard, water works, dam, airport, whathaveyou) and unwittingly be providing Chinese intelligence with near real time video feeds of places that interest them.

0 ( +0 / -0 )

Uneducated and fear is the result of this bad decision. Does Japan still think China is that behind the times ???.PLEASE wake up Japan.

-1 ( +0 / -1 )

TARA TAN KITAOKAToday  06:37 pm JST

Uneducated and fear is the result of this bad decision. Does Japan still think China is that behind the times ???.PLEASE wake up Japan.

It has nothing to do with Japan thinking China is behind. If you know anything about IP theft, then you'll know that it's the fact that China is "up to speed" that is the scurity problem.

China would be 10 years behind without the IP theft spanning decades.

1 ( +1 / -0 )

Uneducated and fear is the result of this bad decision. Does Japan still think China is that behind the times ???.PLEASE wake up Japan.

It has been demonstrated that Chinese intelligence agencies are able to access the locations and video feeds of inexpensive home hobbyist quad copter drones equipped with cameras. How does this imply China is behind the times? Japan is not the only nation taking Chinese drones off line as fast as they can btw. Please do not be naive. By Chinese law, all Chinese sourced software has to be accessible to Chinese authorities. If it only affected your own privacy maybe it would not be a national level problem. However, what those drones see with their cameras can often be of value to military planners who do not otherwise have the ability to see details a drone can see since they can be much closer to the target of surveillance. For their military this can be priceless information for which they will do anything including selling the public goods with back doors accessible to then from China.

1 ( +1 / -0 )

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