Why NDA’s do not work in China
Asking a company to sign an NDA before sending sensitive drawings and information is common, and is recommended to protect IP and trade secrets. In the UK, Non-Disclosure Agreements or Mutual Non Disclosure Agreements are legally binding as you might expect. However, when dealing with China, sending an agreement that works in the UK does not mean it will apply or be interpreted the same in China.
NDA = little protection
Non Disclosures in China are interpreted as not being able to share confidential information with 3rd parties, which is of course good. But NDA's do not stop factories from using the information for their own benefit. If a company wants to copy your design, it can with an NDA. Critically, they are not sharing your information if they are using it for their own benefit internally. Now, there are many reputable people and companies in China, like those that Get It Made partner with. But care and awareness of what is legally enforceable in China is important.
What can be done?
NNN Agreements, Non-use, Non-disclosure, and Non-circumvention Agreements, are designed specifically for use in China, usually in dual language to stop any misinterpretation. In China, signed contracts using a signature are void, signatures are not a valid means of agreeing to a contract in China's legal system.
Get a company "Chop"
A Chop as it is known in China, is a stamp. It is a company seal, that only someone with approval to enter into agreements will have. A stamp can be easily bought online for less than £20 (stampsdirect.co.uk). Use it to sign the agreements with China.
Most factories in China will have two companies, one in PR China, the other in Hong Kong. You will usually have the agreements with the China factory, but will end up paying the company in Hong Kong. To give added protection, create two NNN Agreements, one for PR China and one for Hong Kong. This means that your IP, your designs, your trade secrets cannot be used by either company. The two agreements will have to be different but the good news is that the Hong Kong legal framework is similar to the UK.
Get in touch if you would like help in drafting a NNN Agreement We can recommend a quick and easy to use a solicitor in the UK. Get It Made has general agreements with our great manufacturing partners in China, but we can develop specific agreements that contains and references your IP for added protection.