A Higher-Tech Way to Find Overseas Suppliers
Abe Rosenfeld traveled to India in 2010 to find a specialty manufacturer for his eight-employee business, Superb Packaging, which is based in Monroe, N.Y., and supplies companies with all sorts of plastic bags used for product packaging. He had tracked down a company there that made exactly the sort of bag a big customer of his was looking for, and at a great price.
When he met with the managers at the company, they were able to prove they had been exporting around the world for years. The company did not have a track record in the United States, but it had the necessary license and was on top of all the required paperwork, they assured him. Mr. Rosenfeld closed the deal for a shipping container full of bags — about $30,000 worth, the usual minimum order — to arrive in a month. But a month came and went, and then three months, before Mr. Rosenfeld found out that the manufacturer’s paperwork just wasn’t cutting it for United States Customs. “I lost an account because I didn’t get those bags,” he said. “I decided that was the last time I’d use a company that can’t prove it’s done a lot of exporting to the U.S.”
In business for 17 years, Mr. Rosenfeld is no newcomer to the import world. To lower his costs, he switched from using mostly American suppliers to using mostly overseas suppliers about eight years ago. Now, 90 percent of his bags are imported. He won’t disclose his annual revenue, but he said he has individual customers that buy $200,000 worth of bags a month, and he will routinely bring in 10 containers a month carrying a total of more than $300,000 worth of bags from a single supplier. The company, he said, has been growing about 15 percent a year over the last several years.
So why is such an experienced, successful owner still getting burned? The problem is the dearth of information to be had on overseas companies in developing nations — in many cases the very companies that offer the best deals. But Mr. Rosenfeld believes he has lowered his risks by using an online service based in the United States called Panjiva. It has thrown itself into making companies that export to America a little more transparent. Panjiva was co-founded in 2006 by Josh Green, a former manager in an electronics company, after his boss at the company asked him to find a new supplier and Mr. Green discovered how hard it could be to get useful information on overseas suppliers.
It’s one area for which the Internet hasn’t been a reliable source of data. With language problems, the relatively lax business regulation in most developing countries and incomplete or hard-to-enter government and industrial databases, overseas manufacturers can be opaque even to an experienced online searcher. Often, the only way to try to verify that a company can do what it says it does — or even just to make sure the company exists — is to visit it. That keeps Mr. Rosenfeld on the road most of the year, much of it visiting factories not only in India but countries including Brazil, China and Vietnam.
When checking out new suppliers he has heard about, typically from trade shows or word of mouth, he is often unable to find them. That’s because many overseas companies do business under different names in different countries, or even in the same country. And in some areas of many countries, including India and much of Asia, there’s no street-address system like ours — addresses are descriptive and based on landmarks, rendering them impenetrable to nonnatives. And even if he can find and visit a company, Mr. Rosenfeld said, he can’t be sure it can deliver until he gets that first container — a costly form of validation if it never arrives, as happened with that company in India.
Mr. Rosenfeld signed up with Panjiva a little over a year ago for $99 a month. Panjiva’s information is culled from United States Customs databases, most of which are not easy to reach directly. (The company also offers more expensive services that provide additional access to information taken from other databases.)
Though the data is sometimes too sketchy or out of date to be of much help, he said, about half of the listings he sees provide enough information for him to confirm that a company has the export experience he’s looking for.
“If I can see they’ve been shipping at least two containers a month to a company like Purina, I know they’re legitimate,” he said. He still insists on visiting to make sure the factory looks solid and to negotiate a good deal, and Panjiva usually provides enough contact data to allow him to find the company. (A companycalled ImportGenius offers a similar online service at similar prices. Mr. Rosenfeld said he had tried that service, but felt that Panjiva had turned up more useful data.)
Mr. Rosenfeld said the extra information really paid off in dealings with Vietnam, an apparent hotbed of low-cost plastic-bag manufacturing. In a visit there three years ago, he tried unsuccessfully to track down several companies whose names he had come across. But last June, equipped with a list from Panjiva, he visited three of them, and he now has a deal with one of them. He has had better luck in India, too. An American meat-processing company shared with him the name of the distributor that provided its super-airtight bags. Mr. Rosenfeld used Panjiva to track down the Indian manufacturer supplying the distributor, and also confirmed that the manufacturer shipped to a large American supermarket. So he visited the manufacturer in India, negotiated a deal, and has been told by the meat-processing company that a big contract is, well, in the bag.