It is not uncommon for one of our China lawyers to receive an email along the following lines:

I am leaving for China tomorrow to meet with potential Chinese manufacturers and I just learned that a US-style NDA is of little to no value in protecting my trade secrets from Chinese companies.  Can you get me an NNN Agreement by tomorrow and how much will it cost?

Our response to these emails is usually something like the following:

I am sorry but there is no way we can complete such an agreement in one day.  The way we do these is to send you a fairly substantial questionnaire and we usually have follow-up questions after that. We then draft the NNN Agreement in English and then secure your approval to that.  We then have one of our lawyers fluent in Chinese translate it into Chinese for use in China. This typically takes us 3-7 business days.

We then talk about their other options, which vary depending on the nature of the business.

Over Thanksgiving we took on a quasi-rush job (well over one day) for a China NNN Agreement and we just completed that NNN Agreement.  Because the time frame was so short, we had to condense much of our instructions into fewer emails.  The following comes from the email from us to the client, enclosing the completed NNN Agreement. We are posting the bulk of this email below as it is helpful in explaining a bit more about what it takes to secure an enforceable NNN Agreement with a Chinese company.

  • An OEM agreement would contain similar non-disclosure, non-compete, and non-circumvent provisions to those in this NNN agreement, and if you were certain that a you were going to be using a certain Chinese factory to manufacture your product and that their price/quality/speed was acceptable, then you could just skip the NNN agreement and go straight to an OEM agreement.
  • It is of course difficult to know whether a given manufacturer can meet your specifications before it has manufactured a single item. The ideal way to handle manufacturing in China of unique products such as yours is to have three agreements. First, an NNN Agreement, for the situation where you reveal confidential information to determine, conceptually, if the Chinese party can make the product. Second, a development agreement, to cover the cost/procedure/ownership of rights/etc. of product development, and to figure out if the Chinese party can in fact make the product you want at a sufficiently high level of quality, in a suitable timeframe and at an acceptable cost. Third, an Original Equipment Manufacturing (OEM) contract, to cover the manufacturing and purchase of the product(s). Many vendors want to cram everything into one agreement, promising that they can of course manufacture what you want, and any product development will be folded into the manufacturing contract. It’s an awkward fit. A manufacturing agreement is not a development agreement.
  • I note that you are dealing with a Hong Kong company that is related somehow to a Chinese company. Your replies suggest that the counter-party should be the Chinese company, and we have drafted the agreement accordingly. As a general rule, the counter-party in an NNN agreement should be the entity to which you are directly sending confidential information.
  • Assuming that the Chinese company is the proper counter-party, you should be sure to follow the terms of the NNN Agreement. Only send information to the Chinese company. Do not send information directly to the Hong Kong company unless the Hong Kong company also signs an NNN agreement (which would have to be revised to be enforceable in Hong Kong). Be careful not to treat the Hong Kong entity and the Chinese entity as the same company — regardless of what the Chinese side might say. They are not the same company, and a court would not treat them the same.
  • You had asked about whether both ______ and ______ should be signatories. It does not matter much who signs the agreement on behalf of the Chinese company, so long as the company chop is affixed. That said, ideally you would find out the name of the Chinese company’s legal representative (listed on the company’s business license) and have that person sign the NNN agreement. It is also possible to have both _____ and ______ sign in their personal capacities — that is, to be personally liable — but I doubt they would agree to that.

There you have it.

Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog ( Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.