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Qnet

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QNET
Company typewholly owned subsidiary
IndustryConsumer goods
FoundedHong Kong, 1998
FounderVijay Eswaran
Websitewww.qnet.net

QNet ltd, formerly known as QuestNet, GoldQuest, and QI Limited, is a Hong Kong based direct selling company owned by the QI Group. The company sells a variety of products including energy, weight management, nutrition, personal care, home care, luxury goods, and fashion accessories.[1] QNet was founded in Hong Kong by Vijay Eswaran in 1998.

The company's marketing strategy follows a multi-level marketing model, depending on independent representatives to refer its products to consumers and receive compensation based on the sales volume of their referrals and the sales volume of other independent representatives in their teams who are arranged in a binary fashion.

QNet is a member in the Direct Selling Association of Malaysia, Philippines and Singapore.[2][3][4] It has offices in some Asian countries such as Indonesia, Philippines, United Arab Emirates, Thailand, Taiwan and Vietnam and franchise companies in India and Turkey and it also operates or has operated in other countries such as Saudi Arabia, Egypt, Côte d'Ivoire and Rwanda.[5][6][7]

Egypt,[8] India,[9][10] Iran,[11] Indonesia,[12] Nepal, Rwanda,[13][14] Saudi Arabia, Sri Lanka,[15][16][17] Sudan, Syria, and Turkey accused and sued QNet for allegedly operating a product-based pyramid scheme. The company denies any wrongdoing, and some court cases against it were dismissed.[18]

History

QNet is the main subsidiary of the QI Group and was founded in Hong Kong by Vijay Eswaran in 1998. The company was first known as GoldQuest and made custom-commissioned numismatic coins.[18][8] It first diversified in 2002, into travel and vacations, with a partnership with QVI Club brand holidays.[19] In 2005, QI Group acquired QI Comm, a British telecommunications company[18] In 2006, it began marketing energy, health, and nutritional products, and also the Bernhard H. Mayer brand of watches.[8] That same year, QI Group acquired Prana Resorts and Spa, a vegetarian holiday resort in Koh Samui.[20][19] In 2007, the QI Group acquired Down To Earth (DTE), a vegetarian organic health store chain in Hawaii.[9][10]

Between 2007 and 2012, QI Group direct sales increased by 70%.[18]

In 2013, Qnet announced its intention to shift its manufacturing operations to India and to open an office in Russia.[21][22]

Business model

A typical MLM binary tree structure. The blue individual will receive compensation from the sales of the downline red members.

The company's marketing strategy is based on a multi-level marketing model which depends on a group of independent representatives who refer its products to consumers and receive compensation based on the sales volume of their referrals and the sales volume of other independent representatives in their teams who are arranged in a binary fashion.[11]

Many governmental entities have described QNet's business model as a simple pyramid scheme: early entrants earn money, and as the number of Independent Representatives (IRs) increases, finding more IRs to join becomes difficult or impossible; IRs that join late do not earn enough to cover their first outlay and the model collapses.[23][13] QNet's Public Relations manager said that QNet offers a business opportunity that doesn't have high start-up costs. When an IR recommends the product the customer makes a purchase through QNet's system and the IR receives a commission.[11]

The compensation plan operates by the recruitment of customers by existing IRs. An IR is provided an ID that gives access to a 'Tracking Centre' (TC) in its system that tracks sales. A TC has a left and right customer group. A 'direct' transaction (a customer's personal reference or sale) is counted as one transaction. An 'indirect transaction (someone in the customer's TC buys/refers/sells) is also counted as 1 transaction. the company pays $250 each time 3 product sales on an IR's left customer group are matched by 3 product sales on the right.[16][unreliable source?]

QNet is a member of the direct selling association of Malaysia, the direct selling association of Singapore,[3][4] the Hong Kong Health Food Association,[24] and the Health Supplements Industry Association of Singapore.[25]

Products

Under the names GoldQuest and QuestNet the company primarily sold gold collectible coins as an investment item.[26]

Currently, QNet mainly markets products made by other subsidiary companies of QI Group. The products are in travel packages, nutrition, personal care, home care, collectibles, fashion accessories and education.[27]

The Amezcua Bio Disc (also spelled BioDisc and BioDisk) is one of the company's products. QNet claims that the Bio Disc can "redefine and harmonise the energy of water, greatly maximising its positive affect on the human body".[28] These and other claims relating to the product have been denounced as fraudulent by various scientists, media commentators and watchdogs.[29][30] Critics have noted that the claims are based on pseudoscientific concepts such as hexagonal water and that they have never been validated by peer-review.

Controversies

Australian Politician Cameron Thompson, the Nepalese Home Ministry, the Sri Lankan Central Bank, and the Iranian Government have described GoldQuest as a pyramid scheme. In 2002, the Australian Office of Consumer and Business Affairs listed the company as one of 61 alleged pyramid schemes.[31][32][better source needed] The Nepalese Home Ministry banned the company from operating in Nepal in 2003, and Bahadur Manandhar, chief of the foreign exchange department of the Nepal Rastra Bank, stated GoldQuest was “a hundred percent fraud.”[33] The Sri Lankan government banned GoldQuest in 2005, claiming that the company had caused 15 million dollars to leave the country.[15][34][35][17] The same year, the Iranian government also banned GoldQuest, after prosecutors found that company activities had “led to the exit half of a billion dollars from Iran.”[36]

In 2007, APLI, the direct selling Association of Indonesia, called GoldQuest a pyramid scheme,[12] and Interpol arrested Vijay Eswaran and other company officials for fraud.[37] QNet responded that the allegation is unfounded.[38] After three weeks in jail, Indonesian courts released Vijay Eswaran, and the court dismissed the charge soon afterward.[18] Qnet continues to operate in Indonesia, where its partners include state-owned postal company Pos Indonesia.[39]

In 2008, around 3000 people marched on the presidential palace in Kabul to demonstrate against the government's temporary withdrawal of QuestNet's license to operate in Afghanistan. The business started in Afghanistan with around 600 IRs in 2006 and had expanded to 21,000 when the government temporarily withdrew the license to enable it to write operating laws.[40]

The Rwandan Government's Ministry of Finance banned QuestNet in 2009 for violations of company and tax laws after The National Bank of Rwanda described the company as a pyramid scheme which "is collecting money from subscribers in Rwanda and sending it outside to companies called Park King Development and DBS Hong Kong using swift transfer."[41] Citing article 4 of the companies act and articles 9 and 10 of the tax act, Minister James Musoni issued the order forcing Questnet and its IRs to immediately stop all activities.[42] Questnet appealed the ban, and the appeal was granted in 2012, with the condition that it strictly follows the country's laws in the future.[43][44][6]

Also in 2009, The Sudanese government banned QuestNet after allegations were made relating to poor product quality and the and non-receipt of products.[45][46] After the shut down, another agent wanted to renew Questnet's contract in the Sudan, but the government refused.[citation needed] The same year, the Syrian ministry of economics shut down QuestNet for violating its commercial registration.[47] Ramzy Asawda, Director of Facilitation and Trade Efficiency in the Syrian Ministry of Economy, stated QuestNet had operated a pyramid scheme in Syria, withdrew billions of Syrian pounds from the country, and paid few taxes in return. The shutdown also applies to other agencies of the company.[48]

In 2010 Questnet opened in Turkey with 150 distributors; 80 of which police detained in an investigation that charged 42 with gaining an unfair advantage.[49] In 2011, the Turkish Trade Ministry investigated QNet following complaints that it was a rebrand of Questnet. The Ministry also revealed that Quest was fined TL3.64 million(USD 1.9 million) for its illegal activities in 2010.[50] In 2011, QI Group resumed operations in Turkey with the acquisition of the Dögan Hotel in Antalya.[51][52]

The governments of Egypt, Saudi Arabia. Indonesia, and India have accused QNet of operating a product-based pyramid scheme.[53][54][55][32] Dar al-Ifta issued QNet a Fatwā in 2012 stating its business in Egypt is haram (forbidden under Islamic law) and could harm the country’s economy.[56][57] The same year the Saudi Arabian Ministry of Commerce and Industry banned Qnet, accusing the company of theft, falsification, and failure to register with the ministry, and published an official message warning the Saudi people to avoid involvement in fraudulent schemes operating in the country, mentioning QNet specifically.[58][59]

In August 2013, the Economic Offenses Wing (EOW) of the Central Bureau of Investigation of India made the first arrest in a case which began in India in 2008.[60] Members of the company were arrested for cheating and were remanded into police custody until August 22. EOW sent teams to Bangalore and Chennai to investigate fraud linked to Vijay Eswaran, considered the prime accused in the QNet case. Six of Qnet's bank accounts were frozen as part of the case.[61][62] QNet has advocated for the regulation of Indian multilevel marketing companies and for the banning of pyramid schemes in India.[63][21][64]

Rebuttals

Donald Frazier, a writer for Forbes who focuses on Asian businesses, stated in 2012 that the charges against Qnet "tend to originate in apocryphal, anonymous or debunked sources".[65]

GoldQuest disputed Iran's findings, claiming that their Iranian operations were not a pyramid scheme, but network marketing.[66]

See also

References

  1. ^ "All Products". QNet. Retrieved 17 December 2011.
  2. ^ "Direct Selling Association of the Philippines - Directory". Direct Selling Association of the Philippines. Retrieved July 21, 2013.
  3. ^ a b "Members List". Direct Selling Association of Malaysia. Retrieved November 12, 2011.
  4. ^ a b "List Of All Members". Dsas.org.sg. Retrieved November 12, 2011.
  5. ^ "Worldwide Offices". Qnet. Retrieved December 16, 2011.
  6. ^ a b Times Reporter (6 Oct 2013). ""e-Commerce platform opens in Rwanda"". The Sunday Times. Retrieved 29 Oct 2013.
  7. ^ Ted Nuyten (28 Aug 2013). "QNET Expands Into Vietnam". Business For Home. Retrieved 29 Oct 2013.
  8. ^ a b c "GoldQuest". Quest International Holding. Retrieved April 11, 2012.
  9. ^ a b "Organic Health Food Supermarket Chain". QI. Retrieved August 11, 2012.
  10. ^ a b "Organic and Natural". Down to Earth. Retrieved October 13, 2012.
  11. ^ a b c "Direct selling - How does it work". Qnet. Retrieved 18 April 2013.
  12. ^ a b "Kewaspadaan terhadap Bahaya Money Game Meningkat". Asosiasi Penjualan Langsung Indonesia. Retrieved September 9, 2013.
  13. ^ a b Rabie, Passant (10 August 2011). "Caught in a Pyramid Scheme". Business Today Egypt. Retrieved 18 April 2013.
  14. ^ Gahamanyi, John (3 August 2009). "Rwanda: QuestNet Banned". AllAfrica. Retrieved 25 April 2013.
  15. ^ a b "SriLanka banned Gold Quest long time ago". Muthamil.com. Retrieved November 12, 2011.
  16. ^ a b "Frauds and Scams Introduction - Crimes of Persuasion – A Resource for Investigators". Retrieved 2011-11-12.. {{cite web}}: Check date values in: |accessdate= (help)
  17. ^ a b Ahmed Feteha (5 Jan 2012). "QNet: Not all pyramids make money for Egypt". Ahram Online. Retrieved 7 Oct 2013.
  18. ^ a b c d e Donald Frazier (5 Nov 2013). "Selling a Better Life". Forbes Asia. Retrieved 4 Oct 2013.
  19. ^ a b "QNet Timeline". QNet. Retrieved 5 Oct 2013.
  20. ^ "QI's Prana Resorts & Spa rebrands and expands". QI Group. 6 July 2012. Retrieved 6 Oct 2013.
  21. ^ a b Mihir Mishra (13 May 2013). "QNet plans to set up production base in India". The Indian Express. Retrieved 6 Oct 2013.
  22. ^ "QNET Will open a representative office in Russia". Sostav. 25 Oct 2013. Retrieved 29 Oct 2013.
  23. ^ Faso, Brukina (04-05-2010). "QuestNet pyramid scheme drops anchor in Africa". France 24. Retrieved 20 December 2011. {{cite news}}: Check date values in: |date= (help)
  24. ^ "Members". Hong Kong Health Food Association. Retrieved 1 Nov 2013.
  25. ^ "HSIAS Current Members". Health Supplements Industry Association of Singapore. Retrieved 1 Nov 2013.
  26. ^ Sucheta Dalal; Yogesh Sapkale (15 November 2012). "QNet, the MLM has resurfaced in India; will people be duped again?". MoneyLife. Retrieved 18 April 2013.
  27. ^ "Products for Life". QNet. Retrieved May 6, 2013.
  28. ^ "Bio Disc 2 (product description)". QNet. Retrieved 11 November 2011.
  29. ^ "BIO DISC SUMMARY" (PDF). Africa Center for Apologetics Research. Retrieved 11 November 2011.
  30. ^ Fulcher, Ben (April 2008). "Feature Article: Scalar Energy" (PDF). Jeremy (newsletter of the University of Sydney Physics Society). Retrieved 11 November 2011.
  31. ^ The Office of Consumer and Business Affairs in South Australia
  32. ^ a b "ParlInfo – Title Details". Parlinfo.aph.gov.au. Retrieved November 12, 2011. Cite error: The named reference "prlinf" was defined multiple times with different content (see the help page).
  33. ^ "Gold Quest banned". Nepali Times. Retrieved November 11, 2012.
  34. ^ "The Efforts of Sri Lanka to Combat MLM Pyramid Schemes" (PDF). Pyramid Scheme Alert. Retrieved November 11, 2011.
  35. ^ "Registrar of Companies refuse renewal agent Quest Net in Sudan - Niles" (in Arabic). ALN. Retrieved January 3, 2013.
  36. ^ "Iran busts more pyramid scammers". PressTV. Retrieved November 12, 2011.
  37. ^ "Report: Indonesian ex-president helps catch Malaysian businessman in fraud case". International Herald Tribune. 7 May 2007. Archived from the original on 12 May 2007. Retrieved 28 March 2010. (Sourced from the Wayback Machine.)
  38. ^ Ina Rachman (21 Jun 2013). "Qnet Indonesia Bantah Menipu". Tribun Jakarta. Retrieved 23 Oct 2013.
  39. ^ Dahlan Iskan (10 Jun 2013). "Economy in brief: Pos Indonesia, QNET sign business deal". The Jakarta Post. Retrieved 23 Oct 2013.
  40. ^ AFP (11-02-2008). "Thousands protest in Kabul for banned scheme". Daily Times. Retrieved 20 December 2011. {{cite news}}: Check date values in: |date= (help)
  41. ^ John Gahamanyi (29 July 2009). "Rwanda: BNR Warns of Major Fraud in Popular Pyramid Scheme". Retrieved Dec 21 2001Template:Inconsistent citations {{cite web}}: Check date values in: |accessdate= (help)CS1 maint: postscript (link)
  42. ^ GAHAMANYI, John (04-09-2009). "Questnet banned". The Newtimes. Retrieved 20 December 2011. {{cite news}}: Check date values in: |date= (help)[dead link]
  43. ^ "Questnet". Questnet. Retrieved November 11, 2011.
  44. ^ Gertrude Majyambere. "Gov't lifts ban on Quest Net". The New Times Rwanda. Retrieved November 11, 2102. {{cite web}}: Check date values in: |accessdate= (help)
  45. ^ "Sudanese Independent daily political". Al-Watan. Archived from the original on 2010-02-17. Retrieved November 12, 2011.
  46. ^ "After The Prohibition And Stop The Activity" (in Arabic). ALN. Retrieved January 3, 2013.
  47. ^ "The Ministry of Economy stopped Quest Network in Syria" (in Arabic). Al-Watan. Retrieved November 12, 2011.
  48. ^ "إلغاء وكالة "كويست نت" تمّ منذ أشهر وعملها غير شرعي". syria-news.com. Retrieved June 4, 2012.
  49. ^ Saadet Zinciri Operasyonu. "TRT - Anasayfa" (in Turkish). TRT HABER. Retrieved November 12, 2011.
  50. ^ Ergin Hava. "Ministry to investigate QNet in Turkey". Today’s Zaman. Retrieved November 11, 2012.
  51. ^ Mehmet Baransu (17 May 2013). "QI Malaysian way of Turkey". Taraf. Retrieved 21 Oct 2013.
  52. ^ "Lifestyle Hotel and Resorts". QI Group. Retrieved 21 Oct 2013.
  53. ^ Ir. Widarto Wirawan (April 2007). "Money Game Marak Lagi!". Bulletin of the Direct Selling Association of Indonesia (in Indonesian). Asosiasi Penjualan Langsung Indonesia (Direct Selling Association of Indonesia). Retrieved 16 November 2012.
  54. ^ Ramakrishnan, Sathyalaya (20 February 2010). "Multi-crore Gold Quest scam case SC hearing on February 26". Asian Tribune. Retrieved 25 April 2013.
  55. ^ "Quest for more gold: gullible public fall prey again". WebIndia123. 3 May 2008. Retrieved 25 April 2013.
  56. ^ "Al Azhar Fatwa" (in Arabic). DAR-Alifta. Retrieved December 14, 2012.
  57. ^ El Hariri, Nora (22 February 2012). "QNet: Making Your Own Decision". Business Today Egypt. Retrieved 18 April 2013.
  58. ^ ‘Suspicious’ "Qnet banned". ArabNews. Retrieved November 2, 2012. {{cite web}}: Check |url= value (help)
  59. ^ "Ministry of Commerce and Industry" (in Arabic). Ministry of Commerce and Industry. Retrieved November 12, 2012.
  60. ^ "Gold Quest to face more cases". The Times of India. Retrieved November 11, 2011.
  61. ^ http://articles.timesofindia.indiatimes.com/2013-08-18/mumbai/41422291_1_qnet-police-custody-eow
  62. ^ http://articles.timesofindia.indiatimes.com/2013-08-29/mumbai/41579812_1_marketing-firm-qnet-cheating-case
  63. ^ "Lack of legislation hurting direct selling in India: QNet". Business Standard. Press Trust of India. 12 May 2013. Retrieved 8 Oct 2013.
  64. ^ Ajita Shashidhar (13 May 2013). "We welcome on a ban on pyramid companies". Business Today. Retrieved 8 Oct 2013.
  65. ^ Donald Frazier. "Followup on the News: Internet Spat Breaks Out over Qnet and Multi-level Marketing in india". Forbes. Retrieved February 3, 2013.
  66. ^ "The Pyramidal Mirage". Press TV Global News. 17 July 2010. Retrieved 6 Oct 2013.
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