In international trade, the supplier you choose shapes almost everything that follows: product quality, delivery reliability, cost, financing options and, increasingly, your exposure to legal and reputational risk. A competitive quotation is only the starting point. A disciplined selection process helps buyers distinguish between suppliers who look attractive on paper and those who can be relied upon over time.
This article sets out a practical framework for selecting suppliers in cross-border trade, with particular relevance to businesses sourcing through or from the UAE.
Define what you actually need
Before approaching the market, write a clear specification. It should cover:
- Product details – technical specifications, standards, grades, packaging and labelling.
- Volumes and frequency – trial orders, regular call-offs and expected growth.
- Delivery requirements – destination, lead times and acceptable shipping modes.
- Commercial parameters – target price range, payment terms and currency.
- Compliance needs – certifications, origin documentation and any regulatory approvals required in the destination market.
A precise specification makes quotations comparable and reduces disputes later.
Build a shortlist from credible sources
Potential suppliers can be identified through trade fairs, industry associations, chambers of commerce, established trading networks and referrals. Online marketplaces can be useful for discovery but should never replace verification.
At this stage, eliminate candidates who cannot provide basic company information, who are unwilling to share references, or whose communication is inconsistent.
Conduct due diligence and KYC
Due diligence is the heart of supplier selection. The OECD's guidance on responsible business conduct encourages companies to take a risk-based approach to identifying and addressing risks across their supply chains and business relationships, noting that many significant impacts occur within supply chains rather than in a company's own operations.
A proportionate due diligence process typically covers:
Corporate identity and ownership
- Company registration documents and trade licence.
- Registered address and operating premises.
- Directors, shareholders and ultimate beneficial owners.
- Bank details that match the contracting entity.
Sanctions and restricted-party screening
Screen the supplier, its owners and, where relevant, its banks and logistics partners against applicable sanctions lists. In the UAE, this includes the UAE Local Terrorist List and the UN Security Council Consolidated List, alongside any other lists relevant to your markets, banks and counterparties. The Central Bank of the UAE has highlighted the importance of effective screening against these lists. Screening should be repeated periodically, not only at onboarding.
Export controls and import permits
Some goods – for example, dual-use items, chemicals, telecommunications equipment, medicines, food and certain consumer products – may be subject to export controls in the country of origin or require prior approval in the country of import. The UAE Government Portal notes that restricted goods require prior approval from the relevant authority before they can be imported or exported. Confirm requirements before placing an order, not after the goods are shipped.
Financial stability and track record
Review financial information where available, trading history, existing customers in comparable markets and any record of disputes. A supplier that is financially fragile may fail to deliver even with the best intentions.
Responsible business conduct
Depending on the sector, assess labour practices, environmental management, anti-bribery policies and the supplier's own approach to managing its sub-suppliers.
Verify quality before you commit
Paper certifications are useful but not sufficient. Depending on the value and risk of the order, consider:
- Samples evaluated against your specification.
- Factory or facility audits, conducted directly or through an independent inspection company.
- Pre-shipment inspection of production lots.
- Laboratory testing for regulated or safety-critical products.
Agree in writing what happens if goods fail inspection: rework, replacement, price adjustment or rejection.
Agree clear commercial and delivery terms
Use Incoterms® rules correctly
The International Chamber of Commerce's Incoterms® 2020 rules provide eleven standard trade terms defining the respective obligations of seller and buyer for delivery, risk transfer, carriage, insurance and customs clearance. Choosing the right rule – for example, FCA, CIF, CIP, DAP or DDP – and naming the place precisely avoids costly misunderstandings. Note that Incoterms® rules do not deal with transfer of ownership, payment or remedies for breach; those must be covered in the sales contract.
Choose appropriate payment terms
Payment structures range from advance payment to open account, with documentary collections and letters of credit in between. The right choice depends on the relationship, order value, country risk and financing needs. Avoid unusual payment instructions, last-minute changes to bank details and requests to pay third parties; these are common indicators of fraud.
Put it in a written contract
A well-drafted supply agreement should address specifications, quantities, prices, delivery terms, inspection and acceptance, warranties, liability, intellectual property, confidentiality, compliance obligations (including sanctions and anti-bribery), termination rights, governing law and dispute resolution. For significant contracts, legal review by qualified counsel is advisable.
Start small and monitor performance
Where possible, begin with a trial order before scaling up. Once the relationship is established, track performance against agreed indicators:
- On-time, in-full delivery.
- Quality acceptance rate.
- Responsiveness to issues and complaints.
- Accuracy of documentation.
- Continued compliance with screening and certification requirements.
Review suppliers formally at regular intervals and maintain at least one qualified alternative for critical products to reduce dependency.
Common warning signs
- Prices significantly below the market without a credible explanation.
- Reluctance to disclose ownership or allow inspections.
- Pressure to pay quickly, in advance, or to an unrelated account.
- Inconsistent documents, addresses or contact details.
- Offers involving goods that typically require permits, without any reference to them.
A supplier selection checklist
- Is there a clear, written specification?
- Have identity, ownership and beneficial owners been verified?
- Has sanctions and restricted-party screening been completed and documented?
- Have export-control and import-permit requirements been confirmed?
- Has quality been verified through samples, audits or inspection?
- Are the Incoterms® rule, payment terms and contract clearly agreed?
- Is there a plan to monitor performance and re-screen periodically?
Discuss your sourcing requirements with SOMAK
SOMAK Global Solutions supports buyers and sellers through trading agency and commercial brokerage services, with a structured approach to counterparty identification, due diligence coordination and transaction follow-up. We do not guarantee counterparties or outcomes, and every transaction remains subject to KYC, sanctions screening and applicable permit requirements. If you would like to discuss a sourcing or supply requirement, we would be pleased to hear from you.
This article is general information and does not constitute legal or regulatory advice.
