Get a Chinese Supplier to Sign a Contract Without Hurting the Relationship

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You’ve worked with the same Chinese factory for years. You send an order, they make it, you pay. The factory even designs some of what you sell. Now your business is growing, and you want a real contract. But you don’t want your supplier to think you suddenly don’t trust them.

My advice: raise it with the factory owner yourself, and have a lawyer prepare everything behind the scenes. Tell them why you want a contract: your business is growing, and you want to plan for that growth together. Most of the contract should just write down what you already do. Then fix a few gaps that matter: who owns the designs, who protects your customer information, and how either side can leave.

Why sign now, if everything works?

Because “everything works” only lasts as long as nothing changes.

In a way, you already have a contract. Every order the factory made and you paid for counts as one, even if nobody signed it. What you don’t have is anything that says how the relationship works, or how it ends.

And that’s the weak point. Without a written agreement that says how long it lasts, your supplier can stop working with you whenever it wants. At best, it has to give you reasonable notice. At worst, it can just stop accepting your orders. That’s fine while things are good. It matters when the factory gets a new owner, lands a bigger customer, or hears you’re talking to other suppliers.

A contract locks in what you now rely on:

the designs they made for you;
room on their production line in your busy season;
your customer information sitting in their files; and
your ability to move production if you ever need to.

How to bring it up without hurting the relationship

Suppliers rarely mind the idea of a contract. What bothers them is how it shows up: a long English document from a law firm, out of nowhere, with all the duties on their side, right after something went wrong.

Talk to the factory owner yourself. If a lawyer’s letter is the first thing they see, it looks like you’re getting ready to sue. Let your lawyer work behind the scenes: preparing the summary, the draft, and your negotiating limits.
Tell them the real reason: your business is growing. Orders are going up and you want to plan capacity together. Maybe your customers now ask for written supply terms. Only say what’s true.
Send a one-page summary in Chinese first. Agree on the main points (term, payment, lead times, designs, confidentiality), then draft the full contract. The owner can read it and share it with their own people. A lawyer who reads Chinese can write it so it’s accurate but still friendly.
Lead with what’s in it for them, and make the rules work both ways. They get clearer order forecasts from you, clear rules on payment and inspection, more notice before you ever move production, and confidentiality that protects them too. Point out where the contract just writes down what you already do.
Pick a calm moment. Annual planning, or before your busy season. Not right after a quality problem, a late payment, or during a price talk, or the contract becomes part of that argument.
Start with future orders. Apply the contract from the next order on, and leave old orders alone.

What Chinese law says if you never sign

This is what you have today without a written agreement, and what to write instead.

	If you never sign	Write this
The relationship	The factory can stop supplying you. At best, it must warn you first.	A fixed term, renewal, and a notice period long enough to move production
Designs the factory made	The factory owns the copyright. You may only use them.	A signed design list with a written transfer, and no reuse for others
Files and samples you hold	Holding them doesn’t make you the owner	The same written transfer, plus return of files when you part ways
Design patents	Whoever files first gets it, even the factory	Who files, in whose name, and a handover of anything already filed
Infringement claims	It’s often unclear who pays. The factory may owe you nothing if it followed your design.	Each side covers the designs it made
Your customer information	Years of dealing alone don’t make it a trade secret	Confidentiality, a narrow “don’t go around me” clause, return or delete
Money owed when you part ways	The factory can hold your finished goods	Rules for settling disputed amounts and cancellation costs
Disputes	A judgment from your home court is hard to enforce in China	A place to resolve disputes that can reach the factory’s money, and which language version wins

Here is the legal basis for each row.

The relationship. A supply relationship with no end date can be ended by either side with reasonable notice. Article 563⁠ If a court sees only separate orders, there is nothing to end, and the factory can simply decline new ones.

Designs and patents. Where copyright stays with the factory, you may use the design for the purpose you ordered it for, free of charge, and nothing more. SPC rule, Art. 15⁠ Owning the files or sample doesn’t change who owns the copyright. Art. 20⁠ A transfer must be in writing and name the works and rights. Art. 27⁠ US law also requires a signed writing (17 U.S.C. § 204⁠). Design patents go to the first to file. Patent Law, Art. 9⁠ A patent transfer only counts once it’s registered, and a transfer from a Chinese company to a foreign buyer takes extra paperwork. Art. 10⁠

Infringement claims. The seller must make sure no one else has rights in the goods, unless you knew or should have known about those rights when you ordered. Articles 612, 613⁠ If the CISG⁠ applies (the UN treaty on international sales of goods), the seller is responsible in fewer cases. It usually owes nothing if it followed your design, and you lose the protection if you don’t report a claim quickly.

Customer information. A court won’t treat a customer as your trade secret just because you’ve dealt with them for years. SPC rule, Art. 2⁠ Custom-made goods help a little: making goods to your specs is a “contract for work,” and the factory must keep your information confidential and can’t keep copies without your OK. Article 785⁠

Money owed at exit. If you owe money, the factory can hold the finished goods. Article 783⁠ You can cancel an order before it’s finished, but you pay the factory’s losses. Article 787⁠

Disputes. The CISG has applied to Hong Kong since December 1, 2022. HK government⁠ Hong Kong arbitration awards can be enforced in mainland China, and mainland courts can freeze assets while the case runs. HK and Mainland rules⁠ If an English and a Chinese version are equally valid, the law assumes they mean the same thing, which is why a bad translation turns into a fight. Article 466⁠

The rest of this article is about what to write.

Who owns the designs your factory made?

If the factory designed it and nothing in writing says otherwise, the factory owns it. Copyright Law, Art. 19⁠ You can keep using it for your orders. But you can’t stop the factory from selling the same design to someone else, and you can’t register it or go after copycats on your own.

Having the files or the sample doesn’t fix this. Neither does a single line saying “all designs belong to the buyer.” You need a written transfer.

The easiest way is to sort your designs into three groups, because each needs a different rule:

Designs you gave them: the contract confirms they’re yours and can only be used for your orders.
Designs they made just for you: the factory transfers them to you in writing and promises not to reuse them, or anything close to them, for anyone else.
Their existing designs, changed with your colors or logo: you won’t get their base design, so don’t ask. Ask for exclusivity instead: which changes are yours only, where, and for how long.

Designs from past years can go on one signed list. For designs you’ll sell for years, consider a Chinese design patent, and agree who files it. If the factory already filed one, the contract should make them hand it over.

How to explain it to your supplier: a written transfer is what lets you register the designs and stop copycats, which protects the business you share. If the factory has been designing for free, it may ask what it gets in return. That’s fair. Have your answer ready before you meet.

Who pays if a design copies someone else’s?

If a product you sell copies someone else’s design, you’re the one who gets the demand letter. The question is whether you can pass the bill to the factory.

By default, maybe not. If the factory just followed your design, it likely owes you nothing. If it picked the design itself, you’d still have to argue about what each side knew.

So tie the risk to who designed what, using the same three groups:

Factory designs, and anything the factory picked itself: the factory promises they’re original or licensed, and pays if someone makes a claim.
Your designs: you make the same promise to the factory.
Factory designs you changed: the factory is responsible for its original design, and you for the changes you asked for.

Whoever hears of a claim first tells the other side quickly, and both help defend it. Standard wording is in Part 1, section 11.

Is your customer list protected?

Not just because you’ve worked together for years. By now, your factory knows who your customers are, what they buy, and what you charge them. To protect that, the information has to be specific (names, contacts, order details), and you have to have taken steps to keep it secret. A contract is the main step.

Your agreement should:

Cover the customer details that come with each order: end customer names, delivery addresses, labels, packaging.
Keep the “don’t go around me” clause (the factory can’t sell directly to your customers) narrow. Name the customers or sales channels you’re protecting. A ban on working anywhere in your industry is hard to defend and easy for the factory to refuse.
Require them to return or delete everything when you stop working together.

The three promises of an NNN agreement can go into the same document.

How to explain it to your supplier: make confidentiality work both ways. Their pricing, processes, and other customers deserve the same protection as yours.

Write down what already works, and agree how to leave

Write down what already works, the way you already do it. That is the version your factory will find easiest to sign.

Check who you’re signing with. After a few years, the company on your invoices, the bank account you pay, and the factory that makes your goods may not be the same. Sometimes one is a Hong Kong trading company and another is a mainland factory. Use the full registered name: for a mainland company, its official Chinese name and 18-digit credit code (the free China supplier check looks both up). If the company you sign with doesn’t make the goods, name the factory that does. See trading company vs. factory and Part 1 on checking the company and signing.

Use one main agreement for the rules, and your orders for the details. The main agreement covers quality standards, remakes, inspection deadlines, lead times, busy season capacity, and payment. Each order only covers quantity, price, and dates. For which one wins when they conflict, see whose contract to use.

Decide whether the factory has to accept your orders. If it must, it will usually want a minimum order from you. If it can say no, you have no guaranteed capacity. Either can work. Just know which one you have.

Then write how either side can leave:

How long the agreement lasts, and how it renews.
How much notice either side must give. Make it long enough to move production.
How orders already in production get finished, shipped, and paid for.
How unpaid or disputed amounts get settled, so the factory doesn’t hold your goods.
How design files, samples, and your materials come back to you.
Whether the factory keeps supplying you while you move.

How to explain it to your supplier: an exit plan protects them too. It guarantees that orders in production get paid for, and that they get real notice instead of a sudden stop.

Which law and dispute clause should you choose?

Start with where the factory’s assets are, not with the law you like best. A win you can’t collect on is worth nothing.

Buying from a Hong Kong company? The CISG may already apply to your orders, even if no document mentions it. Say in the agreement which law applies, and whether you keep or exclude the CISG.
Factory and assets in mainland China? A judgment from your home court is hard to enforce there. Arbitration in Hong Kong is a common choice. Learn more about HKIAC, freezing assets during arbitration, and enforcing an HKIAC award in China.
Have the contract in both English and Chinese, and say which version applies if they differ. Your supplier can read the Chinese, and you can read the English. If the translations don’t match, this clause settles which one counts.

If your supplier pushes back

Don’t push for a signature on the spot. Give them time to read it and talk to their own people.

Pushback usually comes down to three points:

Unlimited liability. Offer to limit their liability, for example to the value of the order, with exceptions only for things like copying your designs or leaking your information.
Broad exclusivity. Narrow it to the designs, customers, or markets that actually matter to you.
Long minimum terms or volumes. Trade them for something you need, such as capacity in your busy season.

Decide in advance which points you can give up. If they still refuse something important, see which clauses you can negotiate, and when to walk away.

The bottom line

A good supplier relationship doesn’t need a contract to survive a fight. It needs one to survive growth, a new owner, or the day you need to move production. A contract can’t stop a supplier from walking away, but it can make sure that if they do, your designs, customers, and production plans stay yours.

Already have a draft? That’s a good place to start. Through our China manufacturing agreement service, I can prepare the Chinese summary, the bilingual draft, and your negotiating limits, while you keep the conversation with your supplier. I’ll check your draft and past orders against the table above, so you end up with an agreement your factory can read, sign, and live with.

References

National People’s Congress, PRC Civil Code, effective January 1, 2021, official text published by SAMR. Articles 466, 563, 612, 613, 770, 783, 785 and 787: https://www.samr.gov.cn/zw/zfxxgk/fdzdgknr/bgt/art/2023/art_60fb3863b7364b759123a42d1df568ca.html⁠
National Copyright Administration of China, PRC Copyright Law, 2020 revision effective June 1, 2021. Articles 19, 20 and 27: https://www.ncac.gov.cn/xxfb/flfg/flfg_532/202103/t20210309_50530.html⁠
Supreme People’s Court, Interpretation on the Application of Law in Copyright Civil Disputes, second revision effective September 1, 2026, full text published by the Shenzhen Yantian District People’s Court. Article 15: https://www.shenpan.gov.cn/sfgg/zywj/content/post_1971731.html⁠
China National Intellectual Property Administration, PRC Patent Law, 2020 revision effective June 1, 2021. Articles 9 and 10: https://www.cnipa.gov.cn/art/2020/11/23/art_97_155167.html⁠
Supreme People’s Court, Provisions on the Application of Law in Civil Cases Involving Trade Secret Infringement, effective September 12, 2020. Article 2: https://www.court.gov.cn/fabu/xiangqing/254751.html⁠
United Nations, Convention on Contracts for the International Sale of Goods, 1980. Articles 6, 42 and 43: https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/19-09951_e_ebook.pdf⁠
Hong Kong SAR Government, Application of the CISG to Hong Kong from December 1, 2022, press release of June 30, 2022: https://www.info.gov.hk/gia/general/202206/30/P2022063000275.htm⁠
Hong Kong Department of Justice, Arrangements with the Mainland, including mutual enforcement of arbitral awards and court-ordered interim measures in aid of arbitral proceedings: https://www.doj.gov.hk/en/mainland_and_macao/arrangements_with_the_mainland.html⁠
United States Code, Title 17, Section 204(a), execution of transfers of copyright ownership: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title17-section204&num=0&edition=prelim⁠

Frequently Asked Questions

Can a new agreement cover designs the factory made for us in past years?

Yes. List those designs and have the factory sign a written transfer that covers them. New designs can be added to the list as you go. The one thing it can't undo is anything the factory already sold or licensed to someone else before signing.

We already wrote our own draft. Can we use it?

Yes. It's a good starting point because it shows what you want. Have it checked for five things: the right company name, a real transfer of designs (not just a line saying they're yours), an exit plan, a dispute clause that can reach the factory's assets, and a Chinese version the factory can read.

Will a supply agreement force us to order a minimum amount?

Only if you agree to one. Without a minimum, the factory can usually turn down orders. If you want guaranteed capacity or exclusive designs, the factory will often ask for a minimum in return. Tie it to the contract term, pricing, and on-time delivery.

If the contract gives us the designs, do we still need to register them?

The contract only binds the factory. Registration helps against everyone else. In China, design patents go to whoever files first. Copyright registration is optional, but it helps you prove ownership. Register the designs you expect to sell for a long time.

How to Get a Long-Term Chinese Supplier to Sign a Contract Without Hurting the Relationship