DS-MLM Industry is passing through a rough phase: Ajay Chanam

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Bangalore, March 11: Direct-selling multi-level marketing (DS MLM) industry has been passing through a rough phase primarily because of the archaic PCMCS (Banning) Act, 1978, one of the leading brands in this industry. QNET believes that DS/MLM firms have been levelled with unsubstantiated media-related allegations over the past five months.

Ajay Chanam, spokesman for QNET in India, described the year 2013 as perhaps one of the worst for the almost two-decade-old DS/MLM industry in India.

"Not only did the overall growth head southwards, but it also saw some of the industry's big names, including 'QNET' face rough waters and this has brought the industry back into the limelight, but not necessarily in a positive way," Chanam said.

"QNET has been levelled with various unfounded allegations, which have obviously damaged its reputation. Pick any media story, and one invariably finds the statement '425 Crore QNET Scam', whereas, the truth is that the matter is still under investigation. The Rs.425 crore is merely sum of the total turnover of QNET's Indian franchisee and associated companies, with the company already having provided over 25,000 pages of documents supporting all its claims," offered Chanam.

Emphatically insisting that the DS/MLM model is a genuine symbiotic business and self-employment opportunity for all, and specifically for those who have no other avenue left to earn a respectable income, Chanam is candid enough to state that whatever is allegedly happening with QNET "was only waiting to happen."

"The ecosystem is alive with all ingredients required for such a catastrophe to strike just about anyone. DS/MLM companies offer plausible self-employment opportunities to individuals who do not have any other avenues left for generating respectable incomes, and the resulting marriage between the two, is not only instant, but also extraordinarily strong. So, when you place this, genuine symbiotic business opportunity in a larger business environment that is devoid of any legislative framework or regulation, it provides a perfect breeding ground for fraudulent companies to set up shop and dupe unsuspecting citizens," he maintains.

Chanam describes the PCMCS (Banning) Act 1978 as a catalyst that has made an already volatile business environment worse.

"What we get is a combination of genuine value (provided by genuine companies) and real threat (posed by fraudulent companies) and a lack of clarity on differentiating between the two," he adds.

He identifies three principal root-causes - lack of legislation, existence of fraudulent companies and a resulting identity crisis. "We need clear policies and a legislative framework to regulate and govern the industry. Policing can only then be effective," he says.

He also maintains that as opposed to the traditional way of doing business with the help of wholesalers and retailers, the DS/MLM model has a clear and concise value proposition of facilitating a more direct interaction between the producer and consumer, reducing possible points-of-failure and awarding marketing traditional overheads as commission to the consumer.

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