Joint venture: Safran Group & Shanghai Aircraft Manufacturing Company

At Datenna, our China experts continuously track and conduct detailed investigations into joint ventures established between European and Chinese entities located in China. Through a series of articles in our resource library, we highlight striking EU-China joint venture case studies, analysed based on Datenna's in-depth, unique data on China's techno-economic landscape. This article elaborates on the joint venture Shanghai SAIFEI Aviation Ewis Manufacturing, set up by the French Safran Group and the Chinese Shanghai Aircraft Manufacturing Company.

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The Joint Venture

Shanghai SAIFEI Aviation Ewis Manufacturing Co., Ltd. is a joint venture established between Shanghai Aircraft Manufacturing Company, Ltd. and the French Safran Group. The joint venture is the main manufacturer of EWIS (Electrical Wiring Interconnection Systems) for China's COMAC C919 commercial aircraft. The two partners cooperate in the supply of EWIS systems applicable across a number of aircraft sections and processes. The joint venture has been active since 2012 and has since filed several patents, suggesting active research and development. The Chinese party holds a majority share of 51%, with Safran holding the remaining 49%.

The Chinese Partner: Shanghai Aircraft Manufacturing Company

Shanghai Aircraft Manufacturing Company, Ltd. was founded in 1950 and has been involved in the manufacturing and repair of more than 3,400 aircraft for the People's Liberation Army Air Force (PLAAF) and the People's Liberation Army Navy (PLAN), as well as for the Civil Aviation Maintenance Association of China. It is fully owned by COMAC — the Commercial Aircraft Corporation of China — an SOE funded by the Aviation Industry Corporation of China and Shanghai Guosheng (Group) Co., Ltd., the investment channel for major industrial projects of the Shanghai Municipal Government.

Safran Group

The French partner, Safran Group, is actively involved in the defence sector — offering a wide range of defence systems and equipment deployed by armies, navies, and air forces around the world. The company is also active in aerospace, enabling technologies for rocket propulsion systems and high-performance space optics. Given the company's size and footprint within Europe, a partnership with Safran provides a partner with access to cutting-edge aerospace technology.

COMAC's C919 Project

The joint venture between Safran and COMAC dates to the announcement of the C919 project in 2012 — the development of a 190-seat passenger plane intended to capture market share from the Boeing 737 and Airbus A320 within China. Foreign suppliers were selected through a bidding process, with COMAC specifying that winning suppliers would be required to set up joint ventures with Chinese companies to assemble modules for the C919 in China. A joint venture agreement was therefore mandatory. Taking all foreign suppliers into account, it has been estimated that up to 85% of COMAC's C919 was developed through inputs from designated foreign suppliers — making this joint venture a direct result of that framework.

Technology Transfer Risks

Foreign suppliers are often eager to join these kinds of projects. However, COMAC — a Chinese state-owned company — has made clear that its goal is to seize a considerable portion of the global commercial aircraft market. Foreign partners therefore face real challenges in protecting their intellectual property rights and should develop strategies to safeguard their IP and technologies, particularly when they could be contributing to the rise of a future competitor in their own sector.

The Chinese government's strategic interest in aviation is visible in the market access conditions for foreign investors. Articles 15 and 16 of the Special Administrative Measures for Market Access of Foreign Investment still require Chinese control for investments by foreign investors in public air transportation enterprises. The military links detected and the lack of control over the joint venture by the European partner justify serious concerns over the transfer of relevant technology and IP rights.

Inconsistent Application of the EU Arms Embargo on China

A further concern is that military-related activities are conducted by both partners, which could lead to jointly developed technologies being applied in military contexts. These concerns are compounded by France's narrow interpretation of the EU arms embargo announced in 1989 following the Chinese government's suppression of demonstrations in Beijing. The post-1989 list of items covered by the embargo was left unclear, giving individual member states latitude to compile their own national lists. Both the UK and France chose to restrict the embargo only to "lethal items" and "major weapon platforms" — a narrow definition that excludes a wide range of goods with potential military application.

Regulations on export control have prevented most EU countries from entering the Chinese market in sensitive sectors. However, potentially distortive export control practices — such as France's narrow embargo interpretation — could lead to the circumvention of these limitations, and represent a significant point of concern.