Why is it necessary to verify business partners when entering the Vietnam market?
The verification of business information of partners in Vietnam about legal status, financial capacity, technology, reputation, and experience is important but often overlooked by foreign companies seeking investment partners, or business cooperation partners in Vietnam. If done systematically, the verification and evaluation of partners’ business information for the purpose of trading goods, or investment or cooperation will help foreign businesses avoid dealing with the business not as described, or the businesses partners having unsuitable capacity or even committing fraudulent activities. The cooperation with these wrong business partners in Vietnam might also result in business cooperation not being achieved, for example, the quality of the goods is inappropriate, the goods are not received on time, or the payment is made without receiving the goods, or the investment project is not as fruitful as proposed.
The verification of customer and business partner information can be assigned to professional consulting companies with the advantage of local knowledge, available information channels, or expertise.
In order to conduct the assessment of customers, business partners, and investors, foreign companies need to provide the basic information necessary for the assessment. The information about the partners needs to be objective. The information about the partners should be specific, and instructive which orientates the action and decision of the requester. When conducting the assessment, information about the business partners will need to be compared and verified from different sources if possible to help have a more objective view, even visiting the business location might be required.
What to be verified when entering market to work with Vietnam partners?
Legal status of the company includes business license, practising certificate, background check of Board of Directors, fulfillment of tax payment obligations, litigation, trade disputes, and causes (if any).
The type of business includes joint stock company, limited liability company with one member or multi-members, partnership company, family company.
Financial capacity includes financial situation, revenue, profit, share value, stock price fluctuation, the increase or decrease of tax obligation, financial difficulties or bankruptcy status, experts’ assessment of the company’s operational capacity and development prospects.
Expertise and technology includes the level of technology compared to other enterprises in the industry, management team, skilled staff, and business network in the region and the world.
Business and management experience includes operation duration, the field of activities, implemented projects.
What is the methods to be chosen when conducting background check of a company?
Before conducting business partner verification, the professional consulting companies in Vietnam with qualified consultants will consider the specific level and scope of the information to be verified, the source of information, the approach to information depending on the level of requirements of the client, the size and importance of the project, and the local culture.
Public sources could be consulted from target company websites, business directories, chambers of commerce and industry, industry associations, stock exchanges, and public financial statements.
Other sources includes contacting the state competent authorities, meeting at the company’s office, visiting production and business places, learning about business activities and cooperation possibilities; acquiring information through government service; collecting information through stock investors.
Further informal verification methods includes contacting businesses operating in the same industry, competitors or partners who have co-operated with the company (especially in large projects), the network of businesses, banks, etc.
After collecting information from different sources, it is necessary for the business consultants in Vietnam whom help making assessment of Vietnam partners for foreign company entering Vietnam to compare and synthesize sources to make comprehensive assessments of the target company being verified, combining background check of individuals of stake holders, public sources or through secondhand information about company for the client’s further decision making process.
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