How to Avoid Scammers and Win at Exporting
You’ve been approached by someone who wants to buy your product or be your representative in a foreign country. You have never done business in this region before, and you have never heard of this new partner, and can find very limited information about them doing a basic Google search. You are cautious of a potential scam or time waster, yet you do not want to miss out on an opportunity to build a relationship with a legitimate, new firm. How can you find more complete information to make a well-informed decision? We asked District Export Council members, a group of experienced exporters approved by the Secretary of Commerce to provide export education, advocacy, and mentorship, to provide tips on what they do when contacted by prospective buyers.
Some companies ignore ALL international inquiries but given that 95% of the world’s population lives outside the US, this could be foolish. One piece of advice from an experienced North Dakota District Export Council (ND DEC) member is to selectively ignore some requests. “Many simply ask for a list of all our products with the pricing. Those I ignore. I also never open attachments from unsolicited inquiries.”
Do Your Own Research
You can quickly reply to unsolicited requests. From an DEC member: “I reply in the first 1-2 days with some basic information on our company and a request for more information on their company and specifics of what they are looking for.” Several DEC members also suggested sending a standard New Buyer Questionnaire, so you can be quickly responsive to requests, but it puts the onus of proving legitimacy back in the prospect’s court. Scammers will generally not take the time to fill out a questionnaire. Another ND DEC member suggests that you engage pro-actively with the entity making the inquiry. “Many times, you can find out important information by simply probing for information. You can also use internet searches to find out more about the company. If the communication progresses enough to a point of making a deal, we will utilize global credit insurance agencies to underwrite and/or conduct background checks on not only the company but also the political and trade risk of the country the potential partner operates in.
Another Free Tool - Use the U.S. Commercial Service Local and International Offices
Your local and overseas CS offices can run basic background checks by searching our databases, often at no or very low cost. We can also contact the CS office in the home country of the new prospect to see if they are familiar with that company, or if they can conduct basic research on them.
A more extensive report can be done by purchasing an International Company Profile (ICP), or a partial ICP, which offers contact with trade and bank references, financial information, and a visit from a CS staff member to the potential partner. Click here for the fee schedule. If you want a sample ICP, let your local CS office know.
Develop a Relationship
Sometimes companies are too small to be known to global credit check firms or overseas CS offices. In this case, your best bet may be to go old school and develop a relationship with the company to gain mutual trust. This is how business is done in many other parts of the world since the credit check system and legal system often don’t protect contracts and relationships as strongly as in the US.