Followup on the News: Internet Spat Breaks Out over Qnet and Multi-level Marketing in India - Forbes
12/27/2013
Donald Frazier, Contributor Eastern Ex posure. Asian business, for the rest of the world.
BUSINESS | 12/18/2012 @ 1:40AM | 56,823 views
Followup on the News: Internet Spat Breaks Out over Qnet and Multi-level Marketing in India Reactions to Selling a Better Life, in the November 5, 2012 print edition of Forbes Asia. Perhaps it was only a matter of time before the detractors of Southeast Asian multi-level marketer Qnet and its controversial founder and chairman, Vijay Eswaran, came out in force. Our story Selling a Better Life attracted a great deal of attention, almost all of it positive and much of it overtly heartfelt. But a few voices echoed the dark allusions of fraud and shady dealing that have dogged this company almost since its inception. These voices were heard last month – but not in our own Comments section. Crusading financial journalist Sucheta Dalal, co-publisher of personal investment and business news site Moneylife and a prominent blogger, has campaigned against MLMs in general and Qnet in particular for a number of years. Her stories start out from the premise that Qnet is a scam, with headlines such as “QNet, the MLM has resurfaced in India; will people be duped again?” on November 11, and “QNet, the MLM company, has no answers to Moneylife’s simple questions” on November 20. It also appears in her Twitter feed, in comments such as “Its pathetic how Qnet is leading people to financial ruin” on December 12. She even aired the suggestion that Qnet paid Forbes Asia to run our story: “Several Qnet dealers pointing to Forbes endorsing QNet!! Waiting for #Forbes to clarify! is it paid news or real?” on November 19. A genuine concern in India, where stories in mainstream newspapers are in fact sometimes for sale. In fairness, fans and foes of Qnet tend to agree on one thing: the purpose of our story was to ‘endorse’ Qnet, a motive that never occurred to any of the people involved in its reporting, research, editing, fact-checking, and production.
C an nobody be trusted? Jimmy Wales, founder of Wikimedia. (Photo credit: Wikipedia)
In particular Dalal has locked horns with Qnet’s head of corporate affairs, Zaheer Merchant, in a volley of charges and replies over everything from the http://www.forbes.com/sites/donaldfrazier/2012/12/18/followup-on-the-news-internet-spat-breaks-out-over-qnet-and-multi-level-marketing-in-india/print/
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Followup on the News: Internet Spat Breaks Out over Qnet and Multi-level Marketing in India - Forbes
12/27/2013
legality of Qnet’s business model to basic facts on whether meetings between them did or did not take place. Words in this dialogue waged in cyberspace include bribe, liar, threatened, untrue, scheme, Ponzi, pyramid and so on. The back-and-forth between them became so contentious, with Dalal’s fervid denunciations and Merchant’s icy denials, that we extended an offer to both to use this column, Eastern Exposure, as a neutral site. We promised Dalal we would publish her questions verbatim and demand straight answers from Qnet; we promised Merchant we would publish his explanations verbatim. And we would let the readers decide. Regrettably, Dalal refrained from taking part. She also opted to not identify self-professed ‘victims’ of Qnet who, she says, came out in one of her for-pay seminars in Mumbai a few weeks ago. Merchant did the opposite; his reply to Dalal’s charges is below. But first, an observation on reporting in the age of the Internet. The charges against Qnet, we found, tend to originate in apocryphal, anonymous or debunked sources. They then find their way into Wikipedia or news blogs, which are then cited as fact. For example, it’s widely reported that Eswaran was arrested and jailed in Jakarta in 2007, but far less often that the charges were ruled as spurious and dropped. Publication of our story would, we expected, attract solid, credible information on Qnet’s misdeeds in our Comments section. More than 20,000 readers and 157 comments later, this has not happened. dpf Letter from Zaheer Merchant to Forbes Asia, responding to charges in Moneylife, its Comments section, and in Sucheta Dalal’s Twitterfeed. “We reply to Ms. Dalal’s various carges and assertions: Qnet has changed its name several times. Companies change their names frequently for reasons such as branding, variations in lines of business, and marketing. In our case, this was done for strategic business purposes. When Qnet was founded in 1998 it offered only one product, commemorative gold coins. As the company added more products to its portfolio and the e-commerce platform evolved, the name GoldQuest was no longer suitable and it was changed to QuestNet and then shortened to QNet. Hundreds of companies all over the world have done the same sort of thing. Disparaging information about Qnet must be accurate, because it’s in the Wikipedia entry. We strongly dispute the credibility of the Wikipedia entry on Qnet. But we can’t do much about it: Wikipedia’s policy does not allow a company representative, a PR agency or anyone with a stake in the matter to edit entries. We have lodged a complaint with Wikipedia administrators about the heavily bias of the entry and a debate has been opened up on their ‘Neutral Point of view’ noticeboard, that you can see here: http://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_view/Noticeboard /Archive_29#Qnet_ltd Please also note that Wikipedia is not considered an authentic source of information. Wikipedia is a public forum where anyone, even you can edit an entry. Unfortunately this has led to numerous quality problems for the portal which its founder Jimmy Wales admits himself. This has been acknowledged by leading media including the New York Times. You can read these two articles on the subject. http://www.forbes.com/sites/donaldfrazier/2012/12/18/followup-on-the-news-internet-spat-breaks-out-over-qnet-and-multi-level-marketing-in-india/print/
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Followup on the News: Internet Spat Breaks Out over Qnet and Multi-level Marketing in India - Forbes
12/27/2013
Wikipedia founder admits to serious quality problems http://www.theregister.co.uk/2005/10/18/wikipedia_quality_problem/ Snared in the Web of a Wikipedia Liar http://www.nytimes.com/2005/12/04/weekinreview/04seelye.html? pagewanted=all QNET invited journalists to Hong Kong in what was basically a bribe. While the company was being investigated in Chennai, we experienced a significant amount of negative media exposure, especially in the newspapers in South India. Hence, in order to set the record straight and be able to provide a true picture of the company, we invited different publications to bust the myth that we were a fly-by-night operator with no credibility. Journalists from several publications accepted this invitation and visited our Headquarters where they met with the global managing director of QNET and other senior officials of the company, visited our international customer support centre, our logistics facility from which thousands of products are shipped globally every single day, and also our training centre to watch an IR training in progress. They asked us questions in an open forum and we were able to respond to all their queries and concerns. We fail to see how a simple invitation to review the entire operations and efficacy of the same can be termed as a “softening” process or any kind of a ‘bribe.’ Qnet never met with Sucheta Dalal, one of the founders of Moneylife. As head of legal affairs, I met with Ms.Dalal in her office in August 2009. I addressed all her queries and also provided supporting documents, none of which were ever used. [Executives in this part of the world sometimes take part in a ceremonial photo of meetings like this, the purpose of which is here apparent. -- dpf] Qnet threatened Moneylife and Ms. Dalal. At no point did we threaten Ms. Dalal or Moneylife. But we are genuinely dismayed that a simple email querying her is being construed as a threat. We didn’t ask for damages, threaten legal proceedings, seek a stop order or anything of the sort. QNET does not belong to the Direct Selling Association in India. This is true. Some believe the IDSA is a government regulatory body. But it is not, and there’s no requirement to register. But we do plan to approach them for their membership requirements in the near future. QNET is already a member in the Direct Selling Associations of Singapore, Malaysia and the Philippines, countries which have clear legislation for the Direct Selling and Network Marketing industry. QNET was thrown out of India in 2008, but has now resurfaced as a fraudulent company depending on scams as its business model, with no real offices and a history of spurious names. As a business, the company has had a presence in India since 2001. Our first headquarters were in Mumbai and with regional office in Chennai, Bangalore and Hyderabad. At the time, we operated in India through a different franchisee company. In 2008, due to an investigation by the Chennai Police into our business, we had to halt our operations there, but it was only temporarily. We fully cooperated with the Chennai authorities and the matter finally being closed at the Supreme Court of India. We then appointed a new franchisee in http://www.forbes.com/sites/donaldfrazier/2012/12/18/followup-on-the-news-internet-spat-breaks-out-over-qnet-and-multi-level-marketing-in-india/print/
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Followup on the News: Internet Spat Breaks Out over Qnet and Multi-level Marketing in India - Forbes
12/27/2013
India in 2012 under which the QNET business is conducted in compliance with all legal regulations. Currently QNET is present in India under the franchisee, Vihaan Direct Selling India Pvt Ltd (“Vihaan”) with an office in Bangalore. Vihaan has approximately more than 20 employees at the moment and is growing. We will open another facility in Mumbai with a product showcase area, open to all our IRs. QNET operates through its franchisee, Vihaan which is registered under VAT No: 29500670395 and Service Tax No: ADCV8173FSD001 in India. It is also incorporated under the Companies Act, 1956 and allotted No. U52399KA2011PTC060730. QNET claims it can provide IRs with “instant riches” and a “high growth rate.” This is not true. QNET has always clearly stated that it is not a ‘get rich scheme’ and has also provided an Earnings and Income Disclaimer in its website – http://www.qnetindia.in/en/footer/earnings_and_income_disclaimer/ which states: “We make every effort to ensure that we accurately represent our products and services and the potential for income. Earning and/or income statements are estimates of what you can possibly earn, nothing more….. There is no guarantee that you will make these levels of income and you accept the risk that the earnings and income statements differ from individual to individual. We do not purport our business and/or us as being a ‘get rich scheme’. “There is no assurance that examples of past earnings can be duplicated in the future. We cannot guarantee your future results and/or success. There are some unknown risks in business that we cannot foresee which can reduce results. We are not responsible for your actions. Any claims made of actual earnings or examples of actual results can be verified upon request. “The use of our information, products and/or services should be based on your own due diligence, which you undertake and confirm that you have carried out to your entire satisfaction. You agree that our Company is not liable for any success or failure of your business, acts and/or conduct that is directly or indirectly related to the business and/or the purchase and use of our information, products and/or services. Qnet is in violation of India’s Prize Chits and Money Circulation Schemes Act, 1978. This Act bans all illegal money circulation schemes, and in no way applies to or regulates the direct selling or MLM industries. For example, we do not promise quick and easy money, and there is no ‘entry fee’ or periodical subscription required QNET is a pyramid, or Ponzi scheme. This is untrue. Pyramid selling schemes focus on recruiting participants and reward IRs for it, not on selling goods or services. But whenever people have a complaint about an MLM, often because they can’t make money as a participant, they say it is a pyramid scheme. As a result QNET has been a victim of endless media accusations, speculations and of baseless complaints. All of these charges have been proven groundless. Also, we operate in parts of the world with the most sophisticated laws and regulations governing this industry. We know that some people in MLM may engage in unethical practices, http://www.forbes.com/sites/donaldfrazier/2012/12/18/followup-on-the-news-internet-spat-breaks-out-over-qnet-and-multi-level-marketing-in-india/print/
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Followup on the News: Internet Spat Breaks Out over Qnet and Multi-level Marketing in India - Forbes
12/27/2013
making it an easy target for slurs like this. QNET has always complied with local regulations in any country it has operated in, paid taxes, contributed to numerous philanthropic activities and reinvested in the country, including in India. We also instill a strict code of professional conduct in our distributors and take action against those who violate our policies and procedures. QNET uses advertising, sponsorships, endorsements, and its corporate social responsibility program as a cover-up. This is untrue. In today’s age of mass media consumption, almost all companies, especially those with a multinational presence embark on a marketing campaign to create awareness about the brand, to create visibility and to establish its presence in the markets it operates in QNET as a dynamic, young and fast growing company and through our sponsorships in the area of sports, be it in motor racing or tennis or football, we are able to communicate our brand’s identity to our customers by associating with events which have similar attributes. CSR for us is not a marketing gimmick. QNET has been involved in supporting worthy causes around the world since its inception. It is our way of giving back to the society and the communities we do business in. Advertising, Marketing and CSR are standard practices undertaken by any reputable company, anywhere in the world. To allege that QNET is involved in these as some kind of ‘cover-up’ is utterly baseless and smacks of desperation to try to discredit the company using any tactics. QNET uses its ranking system to limit the success of people in the network. QNET has a reward and recognition program in place to recognise high performing IRs for their achievements. To achieve a certain rank, an IR has to fulfill the requirements of that rank. And once they achieve the rank, their earning capability goes up. Also, it does not mean that they can now stop working. Everyone who reaches a Platinum or Diamond rank must continue to meet certain criteria in order to maintain that rank. Since its launch in June 2012, 44 IRs have made it variously to these two ranks, of which nine are from India. QNET sells three shares for every Rs1, an ownership stake in the QI group. IRs are entitled to get 14% of share capital they or their victims raise. We have no idea where Moneylife got this information. This is completely untrue. Qnet sells different schemes and packages for selling different investors, rather than one clear product or service. QNET is proud to position itself as a lifestyle company that provides a wide range of products and services. QNET has never claimed to be an investment opportunity. We have always been clear that this is a legitimate business opportunity where distributors are paid commissions on products sold.” Thanks to everyone who took part in this story.
This article is available online at: http://www.forbes.com/sites/donaldfrazier/2012/12/18/followup-on-the-newsinternet-spat-breaks-out-over-qnet-and-multi-level-marketing-in-india/
http://www.forbes.com/sites/donaldfrazier/2012/12/18/followup-on-the-news-internet-spat-breaks-out-over-qnet-and-multi-level-marketing-in-india/print/
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