Do I Need a China NNN Agreement or a China Manufacturing Agreement? Usually Both.
Companies planning to manufacture custom products in China often ask us whether they need an NNN Agreement or a Manufacturing Agreement. Most need both, at different stages. The NNN Agreement comes first, while you are evaluating manufacturers and before you disclose anything valuable to companies you may never hire. The Manufacturing Agreement comes after you choose the factory and before you pay a substantial deposit, commit to tooling, or start production. Asking which one is better misses the point, because the two contracts do different jobs at different times.
There are two exceptions. If you have already picked your manufacturer and can sign a comprehensive Manufacturing Agreement before disclosing anything sensitive, that agreement can carry the non-disclosure, non-use and non-circumvention protections a separate NNN would otherwise provide. And if you are buying a small quantity of ordinary off-the-shelf goods and disclosing nothing of value, you may need neither.
The NNN Agreement Protects You While You Choose the Factory
To evaluate a Chinese manufacturer, you usually have to tell it enough about your product for it to decide whether it can make it and what it will charge. Depending on the product, that can mean drawings, specifications, prototypes, formulas, software, pricing or customer information, all of it material you would not want a factory using for itself. You end up disclosing valuable information before you know which factory you will hire, and the NNN Agreement exists to cover that gap. NNN stands for non-disclosure, non-use and non-circumvention, and a properly drafted one can bar the Chinese company from disclosing your information, from using it to compete with you, and from using the relationships it learns through you to go around you.
You also do not have to give every candidate everything at once. Screen with non-sensitive information when you can, narrow the field, put NNN protection in place with the serious candidates, and only then hand over what makes your product valuable. For our full treatment of when you need an NNN, what it should cover, and how to structure it, see China NNN Agreements: What They Do, What They Don't, and How to Get Them Right. For why your existing Western NDA usually falls short, see NDAs Do NOT Work for China but NNN Agreements Do.
The Manufacturing Agreement Governs the Production Relationship
Once you choose a manufacturer, confidentiality still matters, but you now also need the factory to make the right product with the right materials, meet your quality standards, deliver on time, follow your rules on subcontracting, protect your tooling, and answer for its failures. An NNN was never designed to do any of that. A China Manufacturing Agreement should cover product specifications and quality standards, inspection and acceptance, pricing, payment, quantities, delivery deadlines, and what happens with defective goods. It should also address subcontracting, product changes, intellectual property, molds and tooling, packaging, warranties, termination, damages, and governing law and dispute resolution, and it should carry forward the non-disclosure, non-use and non-circumvention protections. The exact terms depend on the product and the relationship, but nearly all of them deal with risks that do not exist, or do not yet matter, when you are only collecting quotes from several factories.
A purchase order is rarely an adequate substitute, and neither are emails, WeChat messages, quotations, or the factory's standard sales contract. For how Manufacturing Agreements, NNN Agreements, Product Development Agreements and Tooling Agreements fit together, see China Manufacturing Contracts: When One Agreement Is Not Enough.
When One Agreement Is Enough
If you have already selected the factory and can get a comprehensive Manufacturing Agreement signed before you share anything sensitive, that agreement can include the same NNN protections, and a single contract is often the cleaner approach. The risk lies in assuming you have reached that stage when you have not. Companies routinely start sending drawings and specifications while the Manufacturing Agreement is still being negotiated, and by the time it is signed, the factory may have had their most valuable information for weeks or months. If meaningful disclosure has to happen before the Manufacturing Agreement is final, sign the NNN first. If nothing meaningful changes hands until the Manufacturing Agreement is signed, one agreement may be all you need.
Settle Mold and Tooling Ownership Before Production
Tooling shows clearly why an NNN cannot stand in for a Manufacturing Agreement. Suppose you pay $75,000 for molds. Your NNN may stop the factory from misusing the drawings and specifications behind those molds, but it does not necessarily establish who owns the physical tooling, where it is stored, who may use it, whether it can be moved to another facility, or when the factory must return it. You want those questions answered before the molds are sitting on the factory floor and the relationship has soured. The same goes for engineering changes and improvements made during production. If the factory modifies your design, solves production problems, or creates other technical work, the Manufacturing Agreement should say who owns that work and what each side may do with it. For more on this, see Who Owns Your Molds? How Overseas Factories Hold Tooling Hostage and How to Stop Them.
Make the Transition From NNN to Manufacturing Agreement Deliberate
This is where companies, and sometimes their lawyers, create problems they did not need to have. After you select the factory, the Manufacturing Agreement usually becomes the principal contract, and we generally carry the key NNN protections forward into it. The handoff needs care. Suppose you signed an NNN in January, sent your drawings in February, chose the factory in March, and signed the Manufacturing Agreement in April. A boilerplate entire-agreement clause in the April contract can give the factory an argument that the January NNN was superseded, which puts in doubt your rights arising from the February disclosure. You do not want to learn in the middle of a dispute that the contract meant to strengthen your position undercut protection you already had.
The Manufacturing Agreement should therefore say what happens to the NNN. If the NNN stays independently in force, say so and specify which agreement controls if their terms conflict. If the Manufacturing Agreement replaces the NNN going forward, state expressly that rights and claims arising from earlier disclosures and earlier breaches survive. Getting this right matters because the period before factory selection is often when your most sensitive information changes hands.
Your NNNs With the Factories You Rejected Still Matter
Suppose you approached four factories, signed NNNs with all four, shared meaningful information with each, and chose one. Your Manufacturing Agreement governs your relationship with that factory and does nothing to the other three. Those NNN Agreements may remain your only contractual protection against the manufacturers you turned down, and depending on what you disclosed, they may stay important long after production has started elsewhere. This is why we treat the NNN and the Manufacturing Agreement as two stages of a single protection strategy.
Frequently Asked Questions
Is a standard NDA good enough while I evaluate Chinese factories?
Usually not for custom manufacturing. A conventional NDA focuses on disclosure, while the bigger risks with a Chinese factory are unauthorized use and circumvention. For the detailed comparison, see NDAs Do NOT Work for China but NNN Agreements Do.
Does the Manufacturing Agreement replace the NNN Agreement?
It can, but the contracts should say so. If the Manufacturing Agreement supersedes the NNN going forward, it should preserve rights and claims arising from earlier disclosures and breaches. If both agreements remain in force, they should address which one controls if their provisions conflict.
What if the factory refuses to sign the NNN?
Find out why. A manufacturer that proposes reasonable changes is negotiating, and that is normal. A manufacturer that refuses meaningful limits on using your designs for other customers, refuses to protect information passed to its affiliates or subcontractors, or insists on keeping the ability to go around you is telling you something very different. Resolve that before you disclose information you cannot get back.
The Bottom Line
For most custom China manufacturing projects, the sequence is straightforward. Disclose as little as possible while screening factories, sign NNNs with the serious candidates before sharing anything sensitive, and sign a Manufacturing Agreement with the factory you choose before you pay a substantial deposit, commit to tooling, or begin production. That Manufacturing Agreement should carry the NNN protections forward and say expressly what happens to the earlier NNN, while your NNNs with the rejected factories remain in force on their own. The sequence is simple, but getting it wrong is expensive, because your leverage is greatest before you disclose your information, pay for tooling, wire a deposit, or become dependent on a single factory. Do not let the legal documents fall behind the commercial relationship.
If you are deciding how to structure a China manufacturing relationship, Harris Sliwoski’s China manufacturing lawyers can identify the protections you need, put them in the proper sequence, and draft the agreements for where they will need to be enforced.
