To have a product made, you have to hand a factory what it needs to make it: drawings, tolerances, materials, suppliers, sometimes your customer list on the shipping documents. That transfer is the exposure, and a confidentiality agreement written for a Western commercial context addresses only the smallest part of it. NNN — non-disclosure, non-use, non-circumvention — is the response to the other two.
The three Ns
- Non-disclosure
- The supplier may not pass your confidential information to anyone else. This is the part an ordinary NDA already covers, and on its own it is the least of your problems: the party you are most exposed to is the one you deliberately told.
- Non-use
- The supplier may not use your information to make your product, or a similar product, for anyone but you. The European Commission’s China IP SME Helpdesk describes this as the core of an NNN: without it, a factory that keeps your file perfectly confidential can still run your design for a competitor.
- Non-circumvention
- The supplier may not go around you — approaching your customers directly, or bypassing the protections built into the arrangement. It is the commercial term rather than the intellectual-property one, and where a factory can read your buyers off the export paperwork it is often the one that costs revenue.
Why an NDA alone is the wrong shape for sourcing
A Western NDA assumes the underlying asset is separately protected — a patent, a registered design, a trade mark — with confidentiality as the perimeter around it. The Commission’s China IP SME Helpdesk makes the gap explicit: an NDA on its own is sometimes insufficient precisely because not every product is covered by a registered IP right.
Where there is no registration, you are relying on trade secret protection, and that is conditional. The Helpdesk sets out three conditions that must hold together: the information is not publicly known, it has actual or potential commercial value, and the owner has taken measures to keep it confidential. The third is under your control, and it is why signed terms and restricted circulation are not paperwork — they are what makes the secret legally a secret.
| The exposure | A standard NDA | What NNN addresses |
|---|---|---|
| The factory leaks your files to a third party | Covered — this is what an NDA is for | Same, usually with clearer definitions of what is confidential |
| The factory makes your product for a competitor | Often not covered: nothing was disclosed to anyone | Non-use — the information may not be used for anyone but you |
| The factory launches its own version of your product | Often not covered | Non-use, with an express restriction on similar products |
| The factory sells to the customers on your shipping documents | Not covered — not a confidentiality question | Non-circumvention |
| A sub-supplier receives your drawings and is bound by nothing | Depends entirely on the drafting | Flow-down obligations, plus a restriction on subcontracting |
Where an NNN is the right instrument — and where it is not
NNN practice grew up around manufacturing in China, and that is where the term belongs. Copying a China-drafted NNN into another country is a mistake of the same kind as using a US NDA in China: the right document in the wrong legal system.
If you are producing in Vietnam, India, Bangladesh, Turkey, Portugal or anywhere else, the requirement is not "an NNN". It is a confidentiality, non-use and IP agreement enforceable where your manufacturer actually is, drafted by someone who practises there. The three concerns are the same everywhere; the instrument, the language, the governing law and the forum are local questions, and a translated template answers none of them.
The Commission’s South-East Asia IP SME Helpdesk is blunt on the underlying point: never start a partnership without a signed contract, and be aware that a contract read as binding in Europe may be treated in some South-East Asian countries as a guideline for cooperation rather than a strict obligation. That is a reason to get local advice, not to skip the contract.
Enforceability is the whole point, and it is jurisdictional
An agreement is worth what you can do with it when the supplier ignores it. That turns on where your counterparty and its assets are, which language the contract is in, which law governs it, and where a decision in your favour could actually be enforced.
Two facts from the EU SME Centre are worth knowing before signing anything in China. Company names in English have no legal value there — only the Chinese name does. And a legal company seal, or chop, is circular, red, with a star in the middle; other shapes are not valid legal chops. The Centre also recommends checking the business licence, so that the name and business scope match the contracts. A contract naming an entity that does not quite exist is not one you can enforce.
On the forum, the distinction that matters is between an arbitral award and a court judgment. Arbitral awards travel comparatively well: the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, concluded 10 June 1958 and in force since 7 June 1959, has 172 parties. China acceded on 22 January 1987, effective 22 April 1987; Viet Nam on 12 September 1995, effective 11 December 1995. Both with reservations, including the reciprocity reservation under which the state applies the Convention only to awards made in another contracting state.
A judgment from your own national court is different. Whether it can be recognised and enforced against a supplier abroad depends on whether a treaty or reciprocity arrangement exists between the two countries — a question for a lawyer covering that specific pair, not one to assume in either direction.
One more practical note: refusing to sign a confidentiality agreement is itself a signal. The China IP SME Helpdesk observes that NDAs are widely used and well accepted by Chinese courts — and that the Helpdesk does not draft contracts, referring you to your own lawyer.
Sub-suppliers: where most agreements quietly stop
Your contract binds the company that signed it. The company that dyes the fabric, cuts the tool or moulds the housing signed nothing. If your drawings reach a second tier, your protection reaches it only if the agreement says so and the first tier passes the obligation down.
The South-East Asia IP SME Helpdesk goes further than flow-down: a supplier should not subcontract the production of components, because subcontracting is where control of the product and its know-how is lost. Its measures follow — prevent third-party access to the production area, arrange unannounced visits. Whether subcontracting happens at all is a vetting question, answered before the contract: see how to vet an overseas manufacturer.
Tooling, moulds and design files
Tooling is where ownership and possession come apart, decided by who paid and what the agreement says — not by whose product it makes. The South-East Asia Helpdesk puts it plainly: where the supplier paid for the tools and the agreement ends, you may be unable to recover them or move them elsewhere, whereas ownership gives you the right to recover. It also warns that a supplier whose contract has ended may simply keep producing, which is why recovering all tools on exit matters.
So settle four things in writing before a tool is cut: who owns the tooling, who holds it and where, what happens to it on termination, and who owns the design files, patterns, specifications and test data. Ownership of the physical tool and of the file that generated it are separate questions.
Circumvention is not hypothetical
The version brands worry about is the factory selling to their customers. The version that catches them more often is registration. The South-East Asia IP SME Helpdesk records a case in which an SME sourcing in Malaysia had not registered its trade mark there, a subcontractor registered it instead, and the SME had to pay a substantial sum to recover ownership before it could move production — against a cost the Helpdesk puts at under EUR 300, excluding agent fees, had it filed first. So the lesson is sequence rather than cost: register your marks in the country of manufacture before you manufacture there. First-to-file systems reward whoever files, and that can be your supplier.
Controls that work whether or not the contract does
Treat the agreement as one control among several. The others do not depend on a court.
- Stage the disclosure. A quotation rarely requires your full technical package; a first sample rarely requires your supplier list.
- Split what can be split. Where a product has a genuinely distinctive element, having it made or finished elsewhere means no single supplier holds the whole thing.
- Own and control the tooling. Paying for a tool and knowing where it physically sits is worth more than a clause about it.
- Keep a hand on the specification. If the material or process that makes the product work is bought by you, copying it is harder.
- Register locally, early — in the country of manufacture as well as your sales markets.
- Keep the confidentiality measures real. Restricted distribution, marked documents, named recipients — which is also what evidences a trade secret.
How Library of Trade approaches it
We are not a law firm and do not draft your agreements. What we do is raise the question before the disclosure rather than after it — what is being sent, to whom, at which stage, and what is agreed about tooling and design files before a tool is cut. Buyers contract directly with their suppliers, so the agreement is yours and so is the choice of adviser.
- Before you send the technical package
- Agreement reviewed or drafted by a lawyer qualified where the manufacturer sits
- Supplier named by its registered legal name, in the language that has legal force locally
- Business licence checked, and the name and business scope matched to the contract
- Signatory authority and the company seal verified against local requirements
- Non-disclosure, non-use and non-circumvention all present, not just the first
- Similar products expressly within the non-use restriction
- Subcontracting prohibited, or subject to consent and flow-down obligations
- Tooling ownership, location and return on termination agreed in writing
- Ownership of design files, patterns and test data agreed separately from the tooling
- Trade marks and any registrable rights filed in the country of manufacture
- Governing law, language and forum chosen with advice on where a decision could be enforced
- Disclosure staged, so the first quotation does not carry the full package
- Confidentiality measures documented — named recipients, marked documents