Qnet

From Wikipedia, the free encyclopedia

Qnet

Type wholly owned subsidiary

Industry Consumer goods

Founded Hong Kong, 1998

Founder Vijay Eswaran

Headquarters Hong Kong

Key people Vijay Eswaran, Chairman

Website www.qnet.net

QNet Ltd and QN Europe, 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. It promotes its products on its website
using claims "that would not pass official muster in much of the world."[2]
The company's marketing strategy follows a direct selling and 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.[2]
The company has operated in Indonesia, Philippines, United Arab Emirates, Thailand, Taiwan, Vietnam, Saudi
Arabia,Egypt, Côted'Ivoire and Rwanda with franchise companies
in India and Turkey.[3][4] Egypt,[5] India,[6][7] Iran,[8]Indonesia,[9] Nepal, Rwanda,[10][11] Saudi Arabia, Sri
Lanka, [12][13][14]
Sudan, Syria, and Turkey sued Qnet for allegedly operating a product-based pyramid scheme. The
company and its franchise Vihaan are also being investigated in India.[15] The company has denied the
allegations.
History

Qnet, the main subsidiary of the QI Group of Companies, was founded by Vijay Eswaran and Joseph Bismark in
Hong Kong in 1998. The company, first known as GoldQuest and QuestNet, made custom-
commissioned numismatic coins and later began selling luxury jewelry and watches.In 2000, Qnet was the
official distributor of the Sydney Olympic Games commemorative coins and was also a distributor at the 2004
Athens Olympic Games and 2008 Beijing Olympic Games.

In 1999, Qnet expanded its operations to Malaysia and Singapore and began a partnership with B.H. Mayer's
Mint, a German-based mint coin facility.[17] The company expanded its operations to Dubai, India, Indonesia and
Thailand during 2001. Qnet started to diversify its products in 2002 into travel and vacations by partnering with
QVI Club brand holidays.[19] During this time, the company also announced that it was the official coin distributor
for the 2002 FIFA World Cup and an expansion into Europe, Australia and Sri Lanka.

Qnet became a licensed distributor for FIFA in 89 countries with its commemorative coin program in July
2004. In 2005, Qnet acquired QI Comm, a British telecommunications company.The company announced that it
had more than 1 million independent distributors during the introduction of the aspIRe Magazine.In 2006, Qnet
began marketing energy, health and nutritional products. That same year, Qnet acquired Prana Resorts and
Spa, a vegetarian holiday resort in Koh Samui.Qnet also acquired the Swiss watchmaker, Cimier.In 2007, the QI
Group acquired Down To Earth (DTE), a vegetarian organic health store chain inHawaii.

The company announced an initial sponsorship of Team Meritus, a Malaysian motor racing team, and became a
sponsor for the Commonwealth Heads Of Government Meeting Business Forum in 2007.In 2007, Qnet acquired
Down To Earth (DTE), a vegetarian organic health store chain in Hawaii.From 2007 and 2012, Qnet's direct
sales increased by 70%.[The company's operations as QuestNet and GoldQuest were shut down in India by
police in 2009.

From 2009 to 2012, Qnet was an official sponsor of the Asian Football Confederation during the AFC
Champions League. In 2010, the company started a partnership with Virgin Racing.[25] Qnet received the
TRUSTe Privacy Certification in late 2012.[26] In 2013, Qnet announced its intention to shift its manufacturing
operations to India and to open an office in Russia.[27][28] The company's QI Tower in Malaysia received the 2013
Building and Construction Authority (BCA) Green Mark Gold Award.[29] In 2014, Qnet started a three-year
partnership with Manchester City football club to become the club's official direct selling partner.[30]

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.[8]

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

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.

Products

Under the names GoldQuest and QuestNet, the company primarily sold gold numismatic coins.Qnet expanded
its products to include travel and leisure vacations in 2002. By 2006, Qnet had transitioned to marketing and
selling "aspirational products", which claim to boost energy, health and nutrition for buyers.[5] According to
Eswaran, these types of products account for 30% of Qnet's sales through its business model.[2] The company
has also introduced "life-enhancing products" such as a portable water filtration system and air purifier, which
Qnet claims can fix pollution issues in homes.

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".[34] The Amezcua Bio Disc has been evaluated by research facilities in Germany, India and
Japan.[35]The product has received scrutiny from various scientists, media commentators and watchdogs.

The company partnered with former professional tennis player Martina Hingis in September 2015 and
announced her as its Brand Ambassador of Qnet products and representative of the brand in India Eswaran
serves as a motivational speaker to those selling Qnet products, holding sessions that feature "lasers, dry ice,
pyrotechnics".

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.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, said GoldQuest was "a hundred percent fraud." The Sri Lankan
government banned GoldQuest in 2005, claiming that the company had caused 15 million dollars to leave the
country.[12][14][43][44] In 2005, the Iranian government also banned GoldQuest, after prosecutors found that company
activities had "led to the exit half of a billion dollars from Iran."[

In 2007, APLI, the direct selling Association of Indonesia, called GoldQuest a pyramid
scheme,[9] and Interpol arrested Vijay Eswaran and other company officials for fraud.[46] QNet responded that the
allegation is unfounded.[47] After three weeks, Indonesian courts released Vijay Eswaran and dismissed the
charge soon afterward.[2] QNet continues to operate in Indonesia.[48]

In 2008, around 3,000 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.[49]

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.Questnet appealed and
was granted relief on condition that it follow the country's laws in the future.

Also in 2009, the Sudanese government banned QuestNet after allegations were made relating to poor product
quality and the and non-receipt of products.[54][55] The same year, the Syrian Ministry of Economics shut down
QuestNet for violating its commercial registration, stating that the company had operated a pyramid scheme in
Syria and withdrawn billions of Syrian pounds from the country, while also paying few taxes.[56] The shutdown
also applies to other agencies of the company.[57]

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.[58] In 2011, the Turkish Trade Ministry investigated QNet following
complaints that it was a rebrand of Questnet.[59] In 2011, QI Group resumed operations in Turkey with the
acquisition of the Dögan Hotel in Antalya.[60][61]

The governments of Egypt, Saudi Arabia. Indonesia, and India have accused QNet of operating a product-based
pyramid scheme.[ 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 In 2010 the Saudi Arabian Ministry of Commerce and
Industry banned Qnet, accusing the company of theft, falsification, and failure to register, and warned citizens to
avoid involvement in fraudulent schemes, mentioning QNet specifically.

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.[70]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. QNet has advocated for the regulation of Indian multilevel marketing companies
and for the banning of pyramid schemes in India.

Donald Frazier, a writer for Forbes who focuses on Asian businesses, said in 2012 that the charges against
Qnet "tend to originate in apocryphal, anonymous or debunked sources".[75] In 2014 the Economic Offences Wing
(EOW) of the Mumbai Police filed a First Information Report against QNet and its Indian subsidiary Vihaan and
barred them from holding workshops and training sessions.

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