Company Screening: 👩🔧 DIY Guide
Working with a new supplier, distributor or business partner may provide ample opportunity. However, there is also a risk because at the start of a relationship there is not yet that much experience in cooperation and a lack of trust. Risks may end up in delivery issues or payment defaults. Hence, vetting a business partner may expose potential challenges and support in designing applicable delivery and payment terms. Within this two-part blog we have first considered WHY it is important to vet a business partner (access here). Now, in the second part, we will explain HOW a new partner may receive some initial screening.
The company screening process will mostly consist of desk research on the internet. Generally, it will be easier to find information on German companies than on their Vietnamese counterparts. This is due to the fact that Vietnamese firms often do not have the same, extensive presence on the internet regarding websites and social media. They are often smaller in company size and show a difference in sales methods (see: Circle of Trust).
We recommend taking a 360° View of the target company. Externally, this should include the views from web/social media, reviews by customers and employees as well as press articles. Internally, information on financials, management and location should be collected. The extent of available data will be different with each company with regards to legal publication duties, company size as well as well communication strategies.
Visualization of the 360° View
In the following sections, we will evaluate certain factors. Within these, "deal-breakers" will be flagged red 🔴, "warning signs" will be yellow 🟡 and "favorable indications" will be green 🟢.
To understand local language content we advise installing a browser extension for google translate. This tool automatically translates all the content on a site into your language. It is available for all major browsers, e.g. Chrome or Firefox.
🥰 Desirable: A company having a certain presence on the internet to display its products/services and to signal some form of accessibility as well as transparency.
For most company checkers this will likely be the first stop. In our opinion, nowadays every company should have a homepage. In practice though, some don't. This is especially true for pure commodity trading companies. Also, some Vietnamese entities only have pages in local language. What to take note of is displayed below.
🔴 If a section for Imprint and Data Security is missing. This information is mandatory by law and often located at the bottom of the page
🟡 If the overall impression of the page seems outdated. The site should contain relevant information with a modern design
🟡 If the domain of e-mail addresses (e.g. @vietnam.ahk.de) on the website diverges from the website's domain
🟢 If the website has a section "About us" providing additional info on the company and its team
🟡 If no homepage is provided
🟢 If an English version with relevant data is available
Generally, it seems that for some Vietnamese enterprises websites do not play the same focal role as in western countries (see "Circle of Trust"). They do often not reach the extent of content European companies are used to.
📱 Social Media
Usage of social media heavily diverges between Vietnam and Germany. There are also pronounced differences between industrial sectors with manufacturing companies typically being less active and service/consumer goods enterprises having an increased presence.
Channels on the following platforms are common:
Vietnamese Companies: facebook.com (FB really is "king" in Vietnam)
When looking at these channels we recommend evaluating the following points:
🟡 If no social media channel is available
🟢 If there is a "relevant" number of followers
🟢 If a channel is regularly updated
🥰 Desirable: A company with a positive impact on its immediate surroundings as well as on society in general.
Google News provides very good info on company updates. The URL is news.google.com. Here you can search for relevant news by typing in the target company's name into the search bar. Make sure to "play around" with the "country/region" settings on the left side to receive relevant data. You should at least try to play with these settings in Vietnamese/German/English. Google Translate (see above) may help to understand foreign-language texts.
News coverage characteristics as following:
For Germany: There are hundreds of local newspapers reporting even on smaller companies. At least for manufacturing enterprises there should be some news available. For smaller trading or service companies it might not be a surprise to find nothing.
For Vietnam: There is generally less local reporting on smaller companies. But searching is still worth a try.
Depending on the results you might reach the following conclusion:
🔴/🟡 If "bad" news comes up
🟢 If "good" news is available
🥰 Desirable: A company with positive recognition from its clients.
Regrettably, most B2B directories do not provide customer reviews. Checking out social networks (see above; in Vietnam especially FB) is mostly the only way of getting some insight. Occasionally, we have also found some customer comments on google. For this, just search for the enterprise name. If a company profile appears on the right side, scroll down to the comment section.
Regarding customer voices on social media and google:
🔴/🟡 If "bad" comments/ratings come up
🟢 If "good" comments/ratings are available
Naturally, reviews on social media should be taken with a grain of salt.
🥰 Desirable: A company with a positive attitude towards its staff.
🔴/🟡 If "bad" comments/ratings come up
🟢 If "good" comments/ratings are available
🥰 Desirable: A company with solid financials and management as well as with a "suitable" location
The target enterprise should have "suitable" premises. For example, a manufacturing company should be located in an industrial zone or similar. A service or sales company should have a "respectable" address, ideally in an office building or likewise. Locations can be easily searched on "Google Maps" at https://www.google.com/maps. Additionally to the traditional "satellite view" a "street view" might bring bonus insights. Business types and locations are manifold and thus the indicators below may only serve as indicators.
🔴 If a "manufacturing" enterprise has their sole address in a city center or in a private home
🟡 If a sales/service firm has their headquarters in a private home or in other "unsuitable" or "generic" locations
🟡 If a manufacturing enterprise's premises make a degraded impression (satellite view/street view)
🟢 If an enterprise is in a "decent" location. For manufacturing: An industrial zone. For sales/service: In a modern office building (Vietnam: City center)
For foreigners, it can be hard to evaluate "suitable" locations. For example, Vietnamese might be astonished to find German world leaders in small and remote villages. Germans on the other hand have to get used to buildings looking degraded by the hot and humid weather conditions in Vietnam, even though they are quite new. But still, an initial assessment might be possible. We have seen some obviously unsuitable locations over the years.
Finances and Management
The financial situation and management structures can be one of the most important decision-making factors for a new cooperation. However, information on these "internals" may be hard to find within a desk research.
For Germany, we recommend taking a look into northdata.com. This database provides information based on company reports in the German Federal Gazette. The FOC version displays basic data on turnover and management structures. The full version costs 49 Euros/month and has all publicly reported data as well as some additional estimates on stock. Northdata also holds company data on some other European countries.
For Vietnam, there are a couple of free databases like masocongty.vn displaying basic company registration data including addresses, legal reps and business licenses. For more info on financials and shareholders, there are professional data providers. Feel free contacting us if you need access.
Some indicators could be:
🟡 If shareholder structures are overly convoluted
🟡 If the company has made repeated losses over several years
🟡 If company registrations don't match with data received directly from it (e.g. addresses, info on company management)
🟡 If financials or business licenses/business purpose does not match with information from the company (e.g. an alleged "manufacturing" company shows uncharacteristically low turnover/assets indicating it actually being a trading/consultancy firm)
🟢 If an enterprise is producing positive returns and company data matches other information
Generally, information of smaller companies is harder to get than for larger ones. In Germany, this is due to publication duties only kicking in after reaching a certain turnover/size. Hence, if there is no information available on a German company this could either mean that it is small OR that one of the shareholders is fully liable (which would exclude certain publication duties).
And there you have it: A basic assessment of a Vietnamese/German business partner should be doable on a DIY basis.
Of course, for deeper analysis, some chargeable information will likely have to be procured, especially on financial data. Also, some country-specific traits will be hard to assess without experience (e.g. a "suitable" location). And while Google translate will certainly support in understanding local content it has limits in regards to achieving full comprehension of foreign-language content.
If you need support with company screenings, we can offer to prepare a full report on German/Vietnamese companies. Further info here.
A sample for a German company is available here:
A sample for a Vietnamese company is available here:
Feel free contacting us in case of questions!