If your company is working with Chinese manufacturers to produce goods or prototypes, you've likely encountered a non-disclosure agreement (NDA) along the way. But many companies don't realize that standard U.S. NDAs are often not enforceable in Chinese courts.
Using a generic template, or skipping legal review altogether, can leave your intellectual property vulnerable. To better protect your business, here are three essential steps to take before entering into an NDA with a Chinese supplier.
Step 1: Confirm the NDA is legally binding in China
U.S.-style NDAs typically won't hold up under Chinese law. For the agreement to be enforceable in China, it should be written in Chinese (or as a bilingual document where the Chinese version is the official version), comply with local contract requirements, and specify the governing law and forum for dispute resolution.
At Clark Hill, we routinely collaborate with Chinese legal counsel to help our clients prepare agreements that meet enforceability standards. An NDA that looks good on paper but fails in court provides little, if any, real protection.
Step 2: Clearly identify confidential information and limit disclosure
Vague clauses that refer to "all business or technical information" won't suffice. The NDA should clearly describe what qualifies as confidential—such as technical drawings, pricing information, or production methods—and should also define exclusions like publicly available or independently developed information.
Equally important: only share what's truly necessary. Limiting access and disclosures helps mitigate risk far more effectively than relying on overbroad legal language.
Step 3. Vet the supplier and strengthen contractual leverage
Before signing any agreement, make sure you're dealing with a legitimate business. Confirm the company's full legal name, business registration number, and license. Ensure that the person signing has legal authority to do so—and that the company's official stamp (or "chop") is affixed to the agreement.
For added strength, NDAs should be embedded within broader agreements—such as a manufacturing or supply contract—so the confidentiality obligations carry weight within a larger legal and commercial context.
Final word: NDAs are just the starting point
An NDA should serve as the foundation, not the entirety, of your IP protection strategy. When manufacturing in China, it's critical to pair legal safeguards with operational controls and active enforcement.
At Clark Hill PLC, we help businesses around the world protect and commercialize innovation through tailored IP agreements, cross-border transactions, and proactive legal planning. If your company is engaging with manufacturers in China, we'd be happy to help you navigate the risks and opportunities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
