Sourcing 101 part 3 - good companies gone bad?

Suppliers are one eager crowd to get noticed and get new buyers, right? In this world where new factories, trading companies and warehouses pop up every day, India, China, Bangladesh, Pakistan, Vietnam, Brazil – all present both great trading opportunities and sources of supplier fraud.  In this article we’ll talk about some basic due diligence you can do avoid getting scammed and list some tools you can use to do it.

Simple scams

We see a lot of suppliers that register with our site without providing even basic information such as company address, telephone numbers or any other details that can help with due diligence. They list products, with photos and descriptions. When you review the contact information, you will often find email addresses from Yahoo, Hotmail or Gmail, but you no corporate websites and e-mail addresses.

There are many small businesses that are taking advantage of the internet to trade. If the business is registered there should be a way to verify their information. We suggest staying away from those who refuse to provide the basic business info.

Hijacked identities

In China and many other countries businesses that want to sell overseas must obtain a proper export license. Many businesses that focus on internal market have no export license, no English speaking staff and generally no data available in English. Impersonators use their info to create supplier profiles on various B2B trading sites, put unreasonably low prices, add their own contact and payment info and lure buyers to place orders.

Companies that do have export license and a website can also be a subject of such identity theft. Impersonators provide their own contact information mixed with the data from the legitimate business. The website information is real, products are real but the listed representative has nothing to do with the actual business. If you see that contact email is listed as Yahoo or Gmail while the actual business has a real business domain this is a real red flag.

What can you do to avoid these traps? 

• Use tools available at your disposal to make sure you deal with legitimate businesses and their real representatives

Supplier verifications

Factory audits

• Hire sourcing agent you trust to do the due diligence work for you. Many western professionals find opportunities in Asia these days because of the issues listed above. They often know the language, the culture and have local connections to help you get what you are looking for.

Find supplier that is right for you

Engage early and manage the project to get the product you need with the quality you want

Inspect factory and products to ensure your goals are met