Why B2B buyers don’t trust suppliers
A manufacturer enters a new market with catalogues and certificates, and showcases its production facilities. A distributor sends a price list and terms of delivery. On the face of it, all the proposals look convincing. But a B2B buyer sees things differently.
The problem is that, in a new market, the selling company sees a deal, whereas the buying company first and foremost assesses the risks, according to experts at Halla Systems Korea. And the first of these is the risk of working with a new supplier. The buyer is unsure whether the counterparty will fulfil its obligations, whether the documentation meets local market requirements, and how the partner will behave if the deal does not go to plan. And, of course, how much will it cost the business to switch to a different supplier?
Halla Systems Co. Ltd helps suppliers (in agribusiness, textiles, electronics, equipment and automotive parts) to enter new markets, and buyers to find reliable partners abroad. Unfortunately, we are increasingly seeing non-linear trends in B2B sales. The problem is that most deals fall through not because the buyer finds better terms, but because they cannot trust an unknown counterparty. This automatically places them in a zone of uncertainty that they are reluctant to enter. At what points during negotiations do these fears and concerns arise?
Agribusiness: Standards Take Precedence Over Price
In agribusiness, the stability of supplies and the predictability of the supply chain are becoming key factors, according to managers at Halla Systems. Processors, traders and importers do not begin discussions on price without first agreeing on supply standards. The same type of wheat is certified for a specific import market and supplied to meet the varying requirements of the destination country (differences in moisture content, gluten content, number of certificates and labelling). A supplier who has not prepared the documentation before negotiations begin creates a barrier at the final stage – when a delay already means the loss of a seasonal contract. The very first transaction with such a counterparty is a risk. And the buyer, as a rule, does not take on this risk.
South Korea is one of the world’s seven largest grain importers. However, the market is strictly regulated: by certificates, tariff quotas and labelling requirements in accordance with Korean standards. According to UNCTAD, around 18 per cent of international shipments are delayed due to non-compliance with these requirements. As a result, a lack of preparedness for local requirements becomes, for many companies, a direct reason for abandoning a deal.
Experts at Halla Systems conduct a thorough and rapid analysis of the market and dealers, and help producers of grain, oil and maize find buyers on the company’s trading platform.
Textiles and workwear: certification is key before negotiations
Any Korean manufacturer of textiles or workwear entering the European market must be familiar with the requirements of the Oeko-Tex and REACH standards — regarding the safety of materials, chemical content and the labelling of fabric composition. Buyers in Europe check for compliance before negotiations begin.
Foreign suppliers of textiles and leather goods entering the Korean market are required to apply KC marking, according to experts at Halla Systems Korea. They must also take particular care when supplying children’s products.
Buyers work with dozens of suppliers simultaneously. A failure on the part of just one supplier is a problem for the entire supply chain. The absence of the necessary certificates is seen as a sign of a lack of seriousness regarding the contract and the partnership. Textile manufacturers, wholesalers, retailers and shops can place orders on the Halla Systems platform.
Electronics and smart devices: local adaptation as a prerequisite for market entry
Buyers of electronics – whether distributors or retail chains – work with several suppliers simultaneously. And a mistake in choosing a supplier almost always means not just a delay, but a loss of market share. The goods supplied must be: adapted to local electrical standards, labelled and certified for import. The same smart device requires different adaptations for Europe, the Middle East and South-East Asia.
Similarly, all electronic products imported into South Korea must undergo KC certification before customs clearance. Without it, the shipment will physically not be allowed to cross the border.
A supplier that fails to take market conditions into account is not prepared for negotiations. Halla Systems Co. Ltd works directly with manufacturers of modern household appliances and electronics, vetting suppliers and verifying quality and certification.
Car parts: classification and compliance with standards as a condition of the transaction
A buyer of automotive spare parts - whether a distributor or a service network - assesses a new supplier based on how well they understand the operational realities of their market. An incorrectly specified HS code leads to customs disputes, additional duties and delivery delays - and this is a sign that the supplier does not understand the basics. In markets with strict regulatory requirements, such as Saudi Arabia, automotive spare parts undergo mandatory SASO certification via the SABER platform. Without it, the shipment will not clear customs – and no amount of negotiation will change that.
The same logic applies to a foreign supplier entering the South Korean market - trust is placed in those who, in addition to the standard set of documents (KC marking, commercial invoice, packing list, certificate of origin, import licence, correct HS code), can demonstrate how they will ensure continuity of supply. If they fail to understand this, they lose the deal.
Halla Systems Co. Ltd is a key player in the automotive industry’s digital market. The company conducts direct negotiations with suppliers, verifies documentation and certificates for specific markets, and drafts contracts and agreements. Trends in the South Korean market continue to evolve, and in this dynamic environment, it is crucial not only to keep track of changes but also to adapt to them. A supplier who fails to understand this will lose the deal.