Understanding NNN Agreements

What is an NNN Agreement?

An NNN Agreement combines three critical protections into one document: Non-Disclosure, Non-Use, and Non-Circumvention. While Western NDAs focus primarily on confidentiality, NNN agreements address the specific risks of manufacturing in China.

The Three Pillars

Non-Disclosure

Like a traditional NDA, this prevents the manufacturer from sharing your confidential information with third parties. However, Chinese courts interpret confidentiality narrowly—information must be clearly marked as confidential and the scope must be specific.

Non-Use

This is where NNN agreements diverge from standard NDAs. Non-use provisions explicitly prohibit the manufacturer from using your information for their own benefit—such as manufacturing your product for themselves or others. In China, confidentiality alone doesn't prevent this.

Non-Circumvention

The non-circumvention clause prevents the manufacturer from going around you to contact your customers, suppliers, or other business relationships. This addresses the common scenario where a manufacturer uses the connections they learn about through your business to compete directly with you.

Why Standard NDAs Don't Work in China

Standard NDAs written for Western legal systems often fail in China for several reasons:

• They're typically governed by foreign law, which Chinese courts won't enforce
• They lack the specific provisions Chinese courts look for
• They don't include liquidated damages, making enforcement costly and uncertain
• They're often in English only, creating translation and interpretation issues

Key Elements of an Effective NNN Agreement

• Chinese law jurisdiction — Chinese courts enforce Chinese law
• Bilingual text — With Chinese as the controlling language
• Liquidated damages — Specific monetary penalties for breach
• CIETAC arbitration — For efficient dispute resolution
• Asset preservation rights — To freeze assets before judgment

Coming Soon

This article is being expanded with detailed explanations of each clause, common pitfalls to avoid, and real-world examples of NNN enforcement in China.