This is untested but you should be able to hook into ‘wcvendors_approve_vendor’ action. It is also passing the $wp_user_object to you which you could get the user id from…OR $_GET is a global, so you can still access $_GET['user_id'] if you wanted. The ’10’ in the add_action is the priority and the ‘1’ tells it that there is a parameter passed.
So probably in your functions.php you could add the following
add_action('wcvendors_approve_vendor', 'your_function', 10, 1);
function your_function($user_object) {
create_submerchant ($user_object->ID);
}