Enhancing Lifestyle Through Business Facilities

As one of Asia’s leading direct selling companies, QNET provides a wide range of life enhancing products through its proprietary e-commerce platform to customers and distributors in more than 100 countries. To learn more about their modus operandi and activities in the Middle East, we got talking to Khaled Diab, Regional General Manager, QNET MENA.

1- Please give us some background about QNET.

QNET was founded in 1998 and is headquartered in Hong Kong. The company is an active member of the Direct Selling Association of Malaysia, Singapore, and the Philippines and is also a part of the Hong Kong Health Food Association and the Health Supplements Industry Association of Singapore among others. 

We are very active in sports sponsorships around the world. We recently signed a three-year partnership with Manchester City Football Club (MCFC), as the official direct selling partner. Previously, we supported sports events such as Formula 1, football, badminton and similar.

2- What differentiate you from other marketing/ direct selling companies?

One of the things that differentiate us from our competitors, is the depth and range of our product offerings. We offer hundreds of products classified into 9 different product categories, with the primary aim of enhancing and enriching the lives of our customers. Our product focus is on promoting and encouraging a healthy lifestyle.

Another unique concept that we advocate is known as ‘In Service’. QNET’s management team advocates the concept of being In-Service as an important characteristic of leadership. Our founders have instilled a very strong culture of service above self, in both the employees and the network, believing that serving others with humility is the true hallmark of a leader.

Diversity, is an important characteristic within our company. The leadership team and employees are drawn from more than 30 different countries. Our distributors and customers are present in more than 100 countries, making us a veritable united nations of network marketing.

3- How do you assess the Middle Eastern market as a place to do business?

The last five years have seen a fundamental shift in many of the old certainties – economic, political and regulatory in the Middle East. Over the last 2 years, eight of 20 economies in the MENA region have implemented at least one regulatory reform to ease the process of doing business here. According to the World Bank report, the UAE has the region’s highest ranking on the ease of doing business, at 23 out of 189 economies.

It is interesting to note that the direct selling business is making inroads into many emerging economies in the MENA region, demonstrating the solid economic and entrepreneurial opportunities in direct selling offers to people from all walks of life.

This is good news, as there is tremendous potential for growth here. However, regulation is key for any industry to flourish. Together with several other players in the industry, we are advocating for legislations in several countries for the direct selling industry.

The MENA region is very important to QNET. In the last financial year, it contributed to around 38% of our global revenues. The UAE was one of our top 5 markets in the region over the last few years. I am pleased to say that the UAE is the number one market for us in the region in the first half of 2014. 

4. Which modus operandi do you adopt to satisfy your customers in various markets?

We try to provide solutions to common lifestyle challenges faced by our customers in different regions. We pay close attention to lifestyle trends and try to understand and predict the needs of the market and work with experts to create products that will fulfill those needs.

For example, in many countries in the MENA region and Asia, air and water quality are considered to be a serious issue affecting citizens’ health. Hence, we worked with scientists and experts to develop exclusive air and water purification systems. These systems not only purify what we breathe or drink, but also provide added benefits. HomePure, our water purification system range helps alkalize your drinking water to balance the body’s acidic pH levels. AirPure, purifies the air in your home or office, and uses a proprietary technology to energize the air you breathe.

Recently, we found that our customers in the Central Asia region were trying to learn English in order to expand their business into other non-Russian speaking regions. They had realized the importance of English in doing business. So, we introduced an e-learning course titled ‘English as a second language’ developed by professionals from the Swiss eLearning Institute.

Our aim is to be a lifestyle enhancing company that provides products and services that customers can incorporate into their lives to lead healthy, happy lives.

5. What is your opinion about the growth of e-commerce in the MENA region?

The region has witnessed a significant increase in internet usage. It comes as no surprise that the internet is quickly becoming the cornerstone for business and communication. E-commerce is one of the key drivers for the economy in today's closely connected global environment, and is rapidly expanding the region.

Global financial services company Visa published a report last year, which stated that e-commerce is on a massive upward trajectory in the MENA region. MENA experienced a 45% increase in e-commerce during 2012, with transactions soaring from $10 to $15 billion year-on-year, making it the fastest growing region in the world.

The UAE dominates e-commerce in the Middle East, where online consumer spending reached $2.9bn in 2012, according to the PayPal-Ipsos study. This figure is forecast to grow to more than $5.1bn in 2015, according to estimates from Ekos Global.

However, with growing sales there are more concerns about online security and retailers needed to tackle this. The MENA region has a cultural issue with online transactions. 79% of e-commerce transactions are paid for with cash on delivery (COD). COD has an impact on logistics and returns. The return rate can be as high as 23% as the customer is more likely to return something if they haven’t already paid for it.

As technology, e-commerce, and globalization become more intertwined, buyers and sellers are increasing their connectivity and the speed with which they conduct sales transactions. The rapid growth of e-commerce has also altered the practice, timing, and technology of business-to-business (B2B) and business-to-consumer (B2C) commerce. It has affected pricing, product availability, transportation patterns, and consumer behaviour in developed economies worldwide. Increased smartphone usage among consumers has led to merchants developing mobile applications and mobile-friendly websites. This will result in a larger role for e-commerce over the years.

6. Why is this activity considered as imperative to your operations?

QNET is a relatively young company in the industry of Direct Selling that is dominated by many American conglomerates that have been around for decades. While Direct Selling as an industry in its modern form has been around for more than 50 years, the global connectivity provided by the Internet changed the industry drastically. QNET was one of the early adopters of e-commerce in the direct selling industry in Asia. This helped the company reach out to customers all over the world and presence outside Asia, particularly in the MENA region in a relatively short span of time.

We have invested significantly in providing a secure platform for our customers to ensure their online shopping experience with us is safe and enjoyable. We have COMODO Hackerproof Security Accreditation and use a Cloud-based Data Center with 3 Tier Multi Layer Security. Additionally, we have also secured DDOS protection to combat any attacks on our e-commerce portal efficiently without affecting our customer experience.

We have been operating for 16 years, but have quickly become one of the leading companies in the industry in Asia with the power of e-commerce fuelling our growth.

7. According to you, which sector in the UAE is attracting investors the most?

Investors in the hotel and recreation sectors have been seeing a rise with the growth of tourist and business travelers to the UAE.  Driven by the expansion of Emirates Airline and Etihad Airways, visitor numbers have been increasing steadily. Last year, Dubai attracted 11 million travelers, while in Abu Dhabi 2.8 million people checked into hotels.

Investment related to travel and tourism in the UAE touched Dh21 billion last year, or 6.2% of the overall investments, according to the Geneva-based World Travel and Tourism Council. The figure is expected to rise by 9.7% this year, and by 5.1% annually over the next 10 years to Dh37.8bn in 2024.

The UAE’s hotel sector is one of the top categories to receive foreign direct investment (FDI) apart from oil and gas, power and water, construction and IT. With FDI inflows and increased investors’ confidence, a number of stalled hotel and hospitality projects have been revived. More developers are announcing hotel projects, and in the run up to Expo 2020, a number of new recreational projects like the theme park complex in Jebel Ali and the Saadiyat Island in Abu Dhabi will continue to drive tourism.

This is good news for us at QNET since our holiday and vacation membership products are seeing an increase in sales with more people from South East Asia and CIS (Commonwealth of Independent States) countries exploring vacation options in the UAE.

8. Where do you see room for growth in the local market?

There is tremendous potential for growth in social entrepreneurship. The UAE is already ahead of its Middle Eastern neighbours in supporting social enterprises. Several groups are working together to encourage the development of this sector. Social enterprise is a powerful tool for entrepreneurship in the region and can amplify the development of sustainable breakthroughs for social and environmental problems without having to rely on charity or public funding.

9. How do you plan to strengthen your CSR initiatives through your recent partnership with MCFC?

Manchester City FC’s focus on giving back to the community through football finds resonance with QNET’s philosophy of RYTHM which is “Raise Yourself To Help Mankind”.  We have just signed this partnership and are planning a number of joint initiatives for the next 3 years. Many of these will be focused on developing and building football talent among youth in a number of our key markets. We will make a formal announcement once our plans are firmed up.  

10. What are your future plans?

These are exciting times for QNET. This year, we opened a new agency office in Russia and launched our European operations. We have launched incredible new products related to Home Care and Personal Care in harmony with our philosophy of promoting a healthy lifestyle. We have also been focussing on expanding our warehouse capabilities in the UAE to serve more countries in the MENA region from here. This will help us triple our shipping output in the region.

Overall, I see great opportunities for QNET in the MENA region. The World Bank Group’s latest regional economic update projects growth in the MENA region to accelerate from an average of 2.6% in 2013 to 4.6% in 2015. With the global economy set for a rebound, 2014 seems hopeful and 2015 could be a turning point for countries in the MENA region as they will start to benefit from stronger external demand in the high-income economies.

I see our business greatly aligned with this growth as we share that regional confidence. We are also in the process of appointing more agents to represent the company in some of the emerging markets in the region. Therefore, I am personally very excited and confident about the future business development in this region.

About Khaled Diab

Khaled Diab is the Regional General Manager of QNET MENA. He has more than a decade of experience in managerial roles in sales, marketing and operations at logistics multinational FedEx. He is also a certified six sigma black belt professional with extensive experience in the area of management methodology for quality improvement process. Khaled holds a Finance degree with a major in Accounting from Cairo University, Egypt.