Manufacturing exclusivity agreements are designed to benefit a brand owner and often require the contract manufacturer to limit its production and sales of the same or similar products for a period of time. What types of exclusivity agreements and clauses are there?
NNN agreements
This is the Chinese equivalent of the Western World’s Non-Disclosure Agreement (NDA). An effective NNN agreement is used to protect your confidentiality when working with manufacturers directly in China. NNN agreements contain non-use, non-circumvention and non-disclosure clauses.
Non-Use
The non-use clause in an NNN agreement means that the company you are contracting with cannot use the product for any purpose other than that agreed in the contract. This ensures that the manufacturer does not use your product or idea to compete with you or sell your product to competitors.
Non-Circumvention
This clause is an essential safety precaution and may vary depending on the situation. A company you work with may be trying to sell your product directly to your customers for a much lower price. This clause prevents this and serves the important purpose of protecting your company from exploitation. The restricted parties agree not to conspire against each other to circumvent or take advantage of the protected party in their dealings
Non-Disclosure
The purpose of secrecy is to prevent trade secrets and proprietary information from being stolen or disclosed. The nondisclosure clause should clearly state who can view and use protected or confidential information within a group. If any member of the group has committed a breach, the factory that made the disclosure should be held fully liable and this should be clearly stated in the NNN.
NNN or NDA
NNNs should be used when doing business with a Chinese company directly as they have more legal authority and power in China.
NDAs are perfect if you have a sourcing company like Global Trade Specialists or wholesalers based outside of China that may have offices or partners in China to do their job.
Sourcing Companies and NDAs
NDAs are suitable because the procurement companies you work with should already have their own NNN agreements and relationships with reliable companies. Global Trade Specialists has been involved in sourcing since 1991.
Buying direct from China is more than the price.
Finding a capable, honest Chinese manufacturing company that you can trust to deliver quality products and keep all proprietary information confidential is critical to success.
At Global Trade Specialists we can help you design your product, create prototypes from it and get it into production with our foreign partners. We’re here to make the products your business needs.
