How to Protect Trade Secrets in China: 2025 Legal Guide

Trade secrets are a cornerstone of business success, especially in a dynamic market like China. From proprietary technology to client lists, safeguarding confidential information is critical to maintaining a competitive edge. This guide explores how to protect trade secrets in China, offering actionable legal strategies and best practices for businesses in 2025.

What Are Trade Secrets in China?

A trade secret is any non-public information that provides a competitive advantage, such as manufacturing processes, formulas, or business strategies. Under China’s Anti-Unfair Competition Law (AUCL), trade secrets must meet three criteria:

• Non-public: Not widely known or easily accessible.
• Commercial Value: Provides economic benefits to the holder.
• Confidentiality: Protected through reasonable measures.

Understanding these criteria is essential for businesses operating in China to ensure compliance and protection.

Why Protecting Trade Secrets in China Matters

China’s fast-paced market and complex legal landscape make trade secret protection critical. Risks like employee poaching, industrial espionage, and weak enforcement can expose your business to losses. By implementing robust safeguards, you can:

• Prevent unauthorized disclosure of proprietary information.
• Maintain your market position.
• Avoid costly legal disputes.

Legal Framework for Trade Secret Protection in China

China’s legal system has evolved to offer stronger protections for trade secrets. Key laws include:

• Anti-Unfair Competition Law (AUCL): Updated in 2019, it defines trade secrets and outlines penalties for misappropriation.
• Civil Code (2021): Strengthens contractual obligations for confidentiality.
• Criminal Law: Addresses severe cases of trade secret theft with penalties up to 7 years in prison.

Recent judicial interpretations also emphasize proactive measures, such as non-disclosure agreements (NDAs) and employee training.

Types of Trade Secret Infringement

Infringements occur through:

• Illegitimate acquisition methods such as theft, coercion, or bribery.
• Unauthorized disclosure or use of trade secrets obtained through improper means.
• Breach of confidentiality agreements by disclosing or utilizing protected information.

Third parties who knowingly engage with improperly obtained trade secrets are also liable.

Exceptions: Reverse Engineering

Acquiring information through reverse engineering—disassembling and analyzing publicly obtained products—is legally permissible and does not constitute infringement.

Essential Strategies to Protect Your Trade Secrets

To effectively safeguard your trade secrets in China, follow these expert-recommended steps:

1. Implement Strong NDAs
   Draft comprehensive non-disclosure agreements or more comprehensive NNN tailored to Chinese law. Ensure they cover employees, partners, and third parties. Include clear definitions of confidential information and obligations post-termination.
2. Use Non-Compete Clauses Wisely
   Non-compete agreements can prevent former employees from joining competitors. Ensure compliance with Chinese labor laws, which limit duration (typically 2 years) and geographic scope.
3. Secure Physical and Digital Assets
   Use restricted access controls, encryption, and secure storage for sensitive data. Regularly audit IT systems to prevent cyber threats.
4. Conduct Employee Training
   Educate staff on the importance of confidentiality and the consequences of breaches. Regular training reinforces a culture of security.
5. Register Intellectual Property (IP)
   While trade secrets are unregistered, consider patenting certain innovations to complement trade secret protection. Consult a China IP lawyer for guidance.
6. Monitor and Enforce Compliance
   Regularly review contracts and conduct audits to ensure compliance. Use monitoring tools to detect potential leaks or unauthorized access.
7. Seek Legal Recourse Swiftly
   If a breach occurs, act quickly. Engage a specialized IP attorney to pursue civil or criminal remedies under Chinese law.

By implementing these strategies, companies can strengthen their defences against trade secret misappropriation in China.

Take Action to Protect Your Trade Secrets Today

Safeguarding your trade secrets in China requires proactive measures and legal expertise. Need help protecting your trade secrets in China? Contact our expert China IP lawyers at contact@gbaiplawyer.com to get started.