

Most small businesses do not have the buying power to buy direct from overseas suppliers of raw materials, components, or finished products. Nor can they afford the overhead of maintaining an import department that would be required to manage the importation of goods from many suppliers in multiple countries.
Small businesses generally rely upon local manufacturers, wholesalers, or distributors to source their raw material or product needs. Many of these organizations are importers or representatives of foreign companies. In addition, most multi-national corporations have operations in the U.S. and have sales organizations seeking orders from businesses large and small.
However, under certain circumstances, it may be necessary, more practical, or desirable for a small business to seek supplies direct from an overseas supplier.
Reasons to import directly may be:
How to find an overseas supplier? The importer needs to research possible sources of supply.
Once a number of potential source countries have been identified, conduct more detailed research by accessing the official Government web site of the foreign country, and by contacting the Commerce/Trade Commissioner at their embassy in Washington D.C. Once you have expressed your needs to the embassy officials, they will be eager to propose a number of potential suppliers in their country.
What attributes to expect of a supplier
Once a supplier has been selected you will have a contract/agreement or exchange of letters detailing how your orders will be processed, including shipping details and method of payment.
The most common method of payment is by letter of credit which guarantees payment to the supplier, and protects the buyer from paying and not receiving the goods. The process is as follows:
Once a high level of trust has been established between the supplier and the buyer, the supplier may extend open account facilities to the buyer. In this case the shipping documents are sent directly to the buyer, and the buyer pays the supplier according to pre-established terms: cash on invoice, 30 days, etc.
Other Considerations
The reader should be aware that trading with a supplier in a foreign country is more complex than with a supplier within your home country. There are many new factors to be considered which can be summarized as follows:
International Trade Resources: See Brief 13.06 for a list of valuable resources.
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