A Good China Contract? Of Course You Want One.

A post we did on China NNN Agreements many years ago received the following comment, which comment was sent to me by a reader this weekend along with a bunch of similar and additional followup questions:

Your posts on NNN are beyond a shadow of a doubt “the most fascinating and informative” articles on nondisclosure agreements I’ve found anywhere on the internet — and I’ve searched!

I’m confident that your posts have saved me the embarrassment and work in formulating and presenting a worthless NDA to my Chinese manufacturer. Not to mention, the possibility of monetary loss somewhere down the road — although pretty remote right now given the product and initial MOQ.

This will be my first order overseas and I will have others. To what degree of success I’ll have is yet to be determined. Still, I don’t intend to leave my guard down and I hope to make some sort of statement, as it pertains to protecting my trademark and copyright. My only concern is that using an NNN in the initial stages may spook the manufacturer. And given an NDA isn’t worth the paper it’s printed on — I’m at a loss.

One of the first things I noticed in their reply to a price quote request was that they hoped to “build a relationship”. That sounded to me like a company less interested in litigation and more interested in doing business.

Which begs the question…

In your expert opinion, do you feel it is necessary and advantageous at this juncture for a newbie like me (trying to build a new, trusting and lasting relationship), to use an NNN for a product that is not technological and that requires no patent protection. Although, I may need patent protection in the future.

My mind tells me an NNN is too aggressive. However, my instincts tell me “better safe than sorry”.

I look forward to your reply.

We get this sort of comment/question quite often and our response usually something like the following:

Five years ago, I might have told you that putting a good contract in front of your Chinese counterpart might be risky, but I would never tell you that today. In fact, if anything, I would tell you the exact opposite. My firm’s China lawyers have drafted literally hundreds of contracts with Chinese companies over the last five years and I cannot think of a single instance where a legitimate Chinese company refused to sign such a contract or was angered by it. In fact, legitimate Chinese companies welcome good contracts because they work to their advantage as much as to yours. Like you, they realize that a clear contract now presages a good and stable relationship later. That is particularly true right now for American (and to a somewhat lesser extent, European) companies because Chinese companies tend not to believe they are doing business with China for the long-haul, what with the tariffs and political tensions and all.

Certainly asking a company to agree not to abuse your intellectual property should cause no offense and if it does, the angered company is not one with which you should want to conduct business.

What are you seeing out there?