One NNN, or One Per Supplier?

So someone suggests the obvious shortcut. One agreement, four suppliers named in it, everybody signs. It's cheaper and faster. I've been asked to draft it more times than I can count. I say no every time. When I draft China NNN agreements for several suppliers, each supplier gets its own.

What that document does

Put four factory names on one page, and you've told each of them who else is bidding. In a manufacturing town, the mold makers and the assemblers often know each other. One phone call is enough to pass that on. You've handed your sourcing plan to the people you're negotiating against. And you paid a lawyer to do it.

Then there's the obligation itself. You're probably not sending the same thing to all four. One gets an outline with dimensions, because you're still deciding. One gets the full package, because it's the frontrunner. A single document covering both will be either too broad for the first supplier or too thin for the second. And the one you end up suing will be the one it fits worst.

Chinese law cares about that fit. Protection depends on whether the measures you took match the information you claim. Courts look at how easy the measure was to identify. They also look at how well it matches what you say was secret. A document written to cover four different disclosures doesn't match any of them well.

The signing problem does the most damage. Three suppliers chop it, meaning they stamp it with the company seal. The fourth stalls. Now you hold a four-party document that only three parties have signed. Is it in force? Against whom? Every one of them has a reason to argue about that later. You've given them the argument for free.

What I do instead

I use one agreement per supplier, all built from the same core. The terms that took the thinking stay the same across all four:

• the definition of protected categories;
• non-use;
• non-circumvention, meaning the supplier can't go around you to deal with your customers directly;
• how the supplier gets your consent to use subcontractors;
• how damages are set;
• forum, meaning where disputes are heard;
• survival, meaning how long the duties last after the deal ends;
• return of your materials.

What changes is the party details, the list of what you disclose, and anything the company registry check shows about that supplier.

That last part is where the real work is, and it's why this isn't four times the cost. Each agreement includes a basic registry check on that company. A full identity check report is a separate fee. On a shortlist of four, I'd normally expect at least one surprise. The company quoting you may be a trading company, and the factory a separate company. Or two of your "independent" candidates may share a shareholder. You want to know that before you send anything.

Split the disclosure into levels while you're at it. Most shortlists don't need the complete technical file at the quoting stage. Send outlines to four and the full package to one. That cuts both your exposure and the drafting.

Two things people get wrong

The first is letting the four versions drift apart. A supplier negotiates a change to a core term. You accept it for that supplier. Six months later, you can't say what you agreed with whom. Each time you give a concession, decide whether it applies to all four or only to that one. Write it down.

The second is not checking what comes back. I've seen a signed agreement come back different from the version that went out. A clause was quietly dropped, and a party name was changed. Comparing the signed copy with your approved form takes ten minutes. That's where problems show up.

When one document with several parties is right

Sometimes the suppliers really are related. The trading company issues the invoice. The factory does the work. A third company under the same control receives your files. Here, you do want a single agreement that binds the whole group. Otherwise you're only contracting with whichever company happens to send the paperwork.

That version needs a list naming each related company it covers. A loose reference to "affiliates" isn't enough. The main supplier must also stay responsible for anyone it gives access to. The law helps here too. Say a manufacturer making goods to your order passes the main part of the work to someone else without your consent. Under Chinese contract law, it is still answerable to you for what that third party does. You can also end the contract (Civil Code art. 772). That's a useful fallback. But it won't tell you who is holding your files.

The part that doesn't get solved by paperwork

Running four agreements doesn't reduce the risk that comes from the disclosure. If all four candidates get a complete technical package, you have four times the exposure, however good the documents are. Three steps do more for that than any agreement I could write:

• split the bill of materials so no single supplier holds the whole product;
• release information in stages;
• file a design patent in China before you disclose.

The paperwork decides what happens after something goes wrong. What you send, and to whom, decides how likely that is.

Adrian Liu (Xiaoyu Liu, 刘效宇) is a PRC lawyer based in Xiamen, acting for overseas buyers. This article is general information on PRC law. It isn't advice on your matter. Authorities referred to: Civil Code arts. 490 and 772; Anti-Unfair Competition Law (in Chinese) (2025 revision) art. 10; SPC Provisions on Civil Trade Secret Cases (Fa Shi [2020] No. 7 (in Chinese)) arts. 5–6.