Many business owners turn to overseas supplier to control the rising production costs and to develop global competitiveness. But selection of overseas exporter or overseas supplier raises a number of issues for the importer such as language differences, payment methods and increased paperwork requirements. But always remember that the cheapest supplier is not necessarily the best supplier to deal with for imports. It is more important to find a reputable supplier who has the following qualities:
He will always gives delivery on time and keep up with demand
He will always deliver the specified and good quality products
He will always inform you if there is any problems or delays
He is highly reputable in the marketplace and financially sound
He has the ability to be flexible and absorb market fluctuations
Though, with a little research and proper planning these challenges can be easily overcome. Further, during the selection process they should keep in mind the following factors:
Selection of exporting country
Select a country with low labor costs and good quality control
Select a country where you can take a plane ride with comfort and ease
Select a country where you can understand the language
Select a country where you can respect and abide by the laws
Select a country where you can trust the people you do business with
Domestic trade is quite different from international trade, mainly when dealing with a country outside Asia, so an importer should consider the following factor before import.
Whether there are import or export restrictions at either end of the transaction
Are the technical standards in the supplier's country match with Indian requirements?
Who is legally responsible if a product causes harm or loss?
Whether your imported goods breach any intellectual property rights or not?
Who abide insurance costs at each stage of transit?
For the avoidance of disputes and disagreements, a written agreement or contract should be drafted between both the parties.
Remember that all the printed materials are error-free because you are dealing with people who do not speak the same language as you.
Always be careful in selection of payment method such as Letter of Credit (Documentary Credit, or L/C), Documentary Collection and Advance Payment Receipt.
Shipping of goods is also a complicated process because of distance between you and your supplier.
Consider the business and social practices of supplier's country which can help you build trust and develop relationships
You should consider from which country your supplier's raw materials have come from because the origin of your goods can affect the level of duty you pay.
Capability of Overseas Supplier
Ask to see a list of customers that your potential supplier supplies and contact them for references. Do a credit check on the company, and if you can, spend the money to physically visit them and inspect their premises, plant, and the quality of their output. If you’re not able to arrange a site visit, at least insist on samples before placing your order. Confidential information about the exporter may obtain through the banks and Indian embassies abroad. The importer can also take the assistance of Credit Information Agencies for specific commercial information on overseas suppliers.
Sources of Information of Overseas Suppliers
There are many sources of information about potential suppliers, including:
Chambers of Commerce
Trade associations for your sector
Other importers in your sector
Trade services departments of banks
Overseas trade visits
International trade fairs and exhibitions
Embassy of supplier’s country in India
Membership organizations for businesses trading between India and your source countries
Many popular websites
Trade Directories and Yellow pages
Consulate Generals and Trade Representative of various countries in India and abroad.
Friends and relatives in foreign countries
Indenting Agent of Foreign Suppliers
Role of Overseas Agents in India
Many overseas suppliers have appointed their agents in India. The job of agents is to operate as an intermediary, facilitating the purchase or sale of products between domestic and overseas companies. These agents procure orders from the Indian parties and arrange for the supply of goods from abroad. It is advisable to import through such agents as they can be readily contacted in case of any difficulty with regards to quality of goods, payment and documentation, etc.