The three Ns
| Element | What it prevents |
|---|---|
| Non-disclosure | Sharing your confidential information with third parties |
| Non-use | Using your designs, tooling or information for anything other than making your product for you, including selling it, or a close variant, under another brand |
| Non-circumvention | Going around you: selling your product directly to your customers, or dealing directly with partners you introduced |
A Western-style NDA focuses on the first. With a manufacturer, the second and third are usually the bigger risks. The factory already holds your drawings, molds and bill of materials; it does not need to disclose anything to compete with you.
Drafting for enforcement
The points below are general information, not legal advice. An NNN should be drafted or reviewed by a lawyer qualified in the law that governs it.
An agreement protects you only if it can be enforced where the counterparty and its assets are. For a manufacturer in mainland China, lawyers who specialize in China manufacturing commonly recommend:
- Governing law. Chinese law, so a Chinese court or tribunal applies familiar law. Enforcing a foreign court judgment in China has historically been difficult.
- Forum. A Chinese court with jurisdiction over the manufacturer, often where it is located, or arbitration. The choice between them is one to make with your lawyer.
- Language. A Chinese-language agreement, or a bilingual one in which the Chinese version controls, so there is no argument over translation.
- The right party. The manufacturer’s registered Chinese legal name and unified social credit code, not its English trading name, with the company chop (seal) on the signature page.
- Specific scope. Name the product, drawings, molds, firmware and samples covered, rather than relying on a generic definition of confidential information.
- Liquidated damages. A stated amount payable on breach, because actual loss is hard to prove. Chinese courts can adjust amounts they consider excessive, so it should be reasonable.
- Affiliates and subcontractors. Cover related companies and the sub-suppliers the factory uses for your parts.
The same logic applies elsewhere in Asia. For a manufacturer in Vietnam or Thailand, for example, the question is which law, forum and language will work against that company where its assets are.
What an NNN does not do
- It does not register your IP. China operates a first-to-file system for trademarks and patents. Registering your trademark in China, and design patents or utility models where relevant, is a separate step that is often recommended before production starts.
- It does not settle tooling ownership. Who owns the molds, and whether they can be moved to another factory, belongs in the supply or tooling agreement. See tooling.
- It does not replace careful sharing. Release information in step with the selection process: outline drawings and a summary of the PRD for screening, full CAD for shortlisted suppliers that have signed, and firmware files only for the supplier that will build, if at all.
Practical protection alongside the contract
A contract is a remedy after the fact. Teams that care about copying usually combine it with practical measures:
- Keep firmware, programming files and security keys under your control, and have the factory program units with tools you supply rather than with source code.
- Mark tooling as your property and record it in the tooling agreement, with a photo inventory.
- Where it makes sense, split critical parts between suppliers so no single factory holds the complete design.
- Once a Chinese trademark is registered, record it with China Customs, which can then check exports for goods that infringe it.
Timing, and what pushback tells you
The NNN belongs at the point where detailed files start to move, which in most programs is just before the RFQ package goes to a shortlisted supplier.
Some manufacturers push back on a strong NNN, particularly larger ones with standard terms of their own. That is a negotiation, and how a supplier handles it is useful information during supplier qualification.
Where Zefinity helps
Zefinity is not a law firm, and the agreement itself belongs with your lawyer. Deciding what to share with which candidate suppliers, and when, is part of running OEM/ODM identification and RFQs through Zefinity’s Connect service.
Frequently asked questions
Is an NDA enough when working with a Chinese factory?
Usually not on its own. A typical Western NDA focuses on disclosure to third parties and is often written under foreign law. A factory does not need to disclose anything to copy your product or sell it to your customers, and a foreign judgment can be hard to enforce in China. An NNN adds non-use and non-circumvention and is drafted to be enforced where the factory is.
Should an NNN agreement be governed by Chinese law?
Often, yes, when the manufacturer and its assets are in mainland China. The usual advice pairs Chinese governing law with a Chinese-language text that controls and a court or arbitration body that can act against the factory directly. Whether that fits depends on the deal, so have a lawyer qualified in Chinese law draft or review it. This is general information, not legal advice.
When should a manufacturer sign an NNN agreement?
Before you send anything you would not want copied: detailed drawings, CAD, schematics, the BOM, firmware or samples. First conversations with a long list of candidates can usually run on a short summary. The NNN should be signed before the detailed RFQ package goes out to a shortlisted supplier.