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7 Tips to Vet Vendors in a Foreign Market

It’s been said that a business is only as good as its employees. The same could also be said of a business’s vendors. After all, they’re the people who can affect not only the quality of a business’s products — but how quickly and reliably they can be delivered to customers in the global marketplace.

Here are seven tips for finding international suppliers who deliver on their promises.

1. Scour Your Network for Leads

In early 2012, Hart Shafer launched TheraSpecs, a three-employee, Phoenix-based purveyor of glasses specially designed to alleviate migraines. After scouring the Internet, Shafer was able to find a vendor capable of manufacturing his product. But when he began looking for a second vendor in a foreign market, Shafer had less luck. On a whim, he reached out to his network. But with a background in software, he didn’t expect to have much luck.

“I often place one small detail somewhere in the RFQ, and then narrow my selection of vendors to those who respond with sensible, complete English and have caught my small detail.”

Brittany Keller, co-owner of ParacordPromos

Fortunately, a former coworker — with the help of several people — connected Shafer to an overseas vendor. He now uses two vendors: one in Taiwan and one in Italy.

2. Consider a Vendor Matchmaker

An online outsourcing service such as Alibaba.com can help an international business find and narrow down prospective vendors. These services typically offer reports that can help small businesses vet potential international suppliers, such as information on the company’s management, its products and where it exports.

3. Use Your RFQ to Weed Out Lemons

When small business owner Brittany Keller submits a request for quotation (RFQ) to a potential vendor, she uses an old trick of the trade to vet them. Keller, co-owner of ParacordPromos, an Atlanta-based purveyor of paracord wristbands, picked up the trick while working for a large international toy manufacturer. “I often place one small detail somewhere in the RFQ, and then narrow my selection of vendors to those who respond with sensible, complete English and have caught my small detail,” Keller says.

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For example, she’ll ask for a specific color of paracord or ask for her quote to be itemized for 5,000 and 10,000 pieces. “If I get only one price and they don’t mention [my request for itemization] that particular detail helps me figure out how detail-oriented they are,” Keller says.

4. Arrange a Conversation

If a business owner can’t meet prospective vendors in person, it’s important to at least speak with them remotely. “You might not be able to physically visit the factory, but you can use technology such as Skype and instant-messaging software to become more familiar with your potential partner,” says Michael Lee, director of global marketing at Alibaba.com, a global business-to-business platform headquartered in Hangzhou, China, which connects vendors and suppliers with small businesses.

By speaking to a potential vendor, business owners can answer several key questions that could play into the final decision: Can they speak the language with ease? Are they able to use the same kind of technology — Skype or other teleconferencing software? And did they seem more or less credible after the conversation?

5. Check References

It’s always a good idea to ask for references — particularly if the references are from the same country as the small business. This makes it easier to determine whether the vendor was able to deliver on time. “You should contact these references directly, preferably by phone,” Lee says. “If the supplier cannot provide you with one genuine reference, it may mean that something is up.” Business owners should be sure to ask references questions such as:

  • Did the vendor provide the product or service as requested?
  • Were they on time?
  • Would you hire them again?

6. Ask for a Prototype or Sample

Before submitting any payments to the vendor, business owners can consider asking for a prototype or sample up front. “I did that with both manufacturers, and got good results,” Shafer says.

Even with a prototype or sample in hand, the business owner should obtain an inspection from a third party. Independent inspectors can typically be found online, such as Paris-based Bureau Veritas, and Geneva, Switzerland-based SGS and Intertek.“This is generally an efficient way to give you and your buyers peace of mind that you are both getting what you pay for,” Lee says.

7. Discuss Payment Logistics

When discussing issues related to international payments, it’s important to gauge whether both parties are on the same page in terms of logistics. For instance, it’s wise to consider the frequency of international payments, and the potential exchange rates. A small business owner may want to ask international suppliers the following questions:

  • On an ongoing basis, when do you expect to be paid?
  • What foreign currencies will payments be submitted in?
  • Would you offer a discount for payments made in your local currency using the services of a trusted online fx provider?

When selecting an online foreign exchange service, it’s important to consider whether it provides relevant resources, expert guidance, 24/7 customer service and a wide selection of foreign currencies to choose from.

By giving careful thought to these vendor-related issues, international small businesses can select partners that will help grow their businesses for years to come.



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