Network marketing in Kazakhstan began its development back in the 1990s. Today, the direct sales market in the country continues to actively grow. While traditional stores and shops still hold a strong position in Kazakhstan, the share of network marketing companies increases annually.

Currently, over 50 foreign and domestic brands in the Kazakhstani market utilize network marketing to promote their products. In this article, we explored how global trends influence the MLM market in this region and whether it is worth starting a network business in Kazakhstan at present.

Economic dynamics in Kazakhstan

Kazakhstan ranks 9th in terms of size among all countries in the world. It is located in Central Asia and is characterized by stable economic development. Currently, the main source of favorable changes is the utilization of its resource potential. Industry and trade also play a significant role, contributing to 46% of the country's GDP.

Despite the challenging global economic situation, Kazakhstan experienced confident economic growth of 3.2% in 2022. The driving forces behind this growth were oil exports and a 7.9% increase in investments, reaching 15.1 trillion tenge.

Positive transformations are noticeable in all sectors of the economy. Compared to the previous year, there was significant growth in the trade sector (+19.4%), information and communication (+18.1%), and construction (+12.5%).

In 2022, the country's GDP reached 220.5 billion US dollars, the population increased to 19.7 million people, and the GDP per capita amounted to $11,494.3.

Kazakhstan experiences a high level of inflation, but there is also a noticeable positive trend. The annual inflation rate has started to decline and currently stands at 16.8%, which is 1.3% lower compared to the previous period. This factor should also be taken into account when setting prices and developing marketing plans.

The World Bank has positive forecasts for the economy of Kazakhstan, with expected growth of 3.5% in 2023 and 4% in 2024. This creates favorable conditions for business development or launching MLM in Kazakhstan. In 2022, according to the WFDSA, there was a 2.1% increase in the volume of network trades, amounting to 15.8 trillion tenge, and these indicators continue to grow.

The Influence of Global Trends on MLM Business in Kazakhstan

The world and the needs of humanity are constantly changing under the influence of numerous challenges and technological progress. These changes create new MLM trends that affect business operations, including network marketing in Kazakhstan.

#1. Relocation of Network Businesses

Geopolitical tensions stimulate many corporations to relocate their offices to countries with a more favorable business climate. MLM companies often choose Kazakhstan for relocation due to its stable economic situation and sufficient level of legal regulation for network sales. There are also opportunities to find partners in the local market or join the Direct Selling Association of Kazakhstan. The banking, legal, and jurisdictional advantages of the country, along with a high level of foreign investment, allow not only to preserve MLM businesses but also significantly expand them.

The complex situation and imposed sanctions have led to a rapid exodus of businesses from Russia to Kazakhstan. A major perfume network, "L'Étual," is preparing for relocation in the near future. Due to the departure of international companies, small businesses, and population migration, over 217 billion dollars flowed out of Russia in 2022. A significant portion of these funds found their way to Kazakhstan. As a result, the MLM market in the country is experiencing rapid growth in the number of companies and entrepreneurs.

#2. Integration of Artificial Intelligence in MLM

The use of neural networks allows businesses to develop and stay ahead of competitors. Artificial intelligence tools play a significant role in automating labor-intensive processes, including data collection and analysis. Market forecasting, automated chatbots and sales funnels, personalized marketing, and rapid distributor training are the primary opportunities for AI in network companies.

For example, the corporation Faberlic has launched a clothing selection service on its website using AI. With the help of this technology, the company managed to reduce returns by approximately 20% and increase conversion rates by 5-10%. MLM companies in Kazakhstan, utilizing neural networks, can attract more potential customers and enhance their competitiveness.

#3. Digitization of Business

The Covid-19 pandemic has led to a significant increase in online purchases and brought about a transformation in businesses. Competing in the market is now impossible without a presence on internet platforms, social media, and having a dedicated website.

In Kazakhstan, the digitization of business is at a high level compared to other CIS countries. The number of internet users in the country reached 16.4 million in 2022, and there were 12 million social media users during the same period. The government supports online business operations and e-commerce, and it is projected that the market volume will exceed 3 trillion tenge by 2024.

#4. New Wave of Internet Users

The job market is undergoing rapid changes due to economic tensions worldwide, immigration, and business relocations. In such conditions, another wave of freelancing and remote work is observed. Today, numerous internet users are searching for job opportunities that allow online work, even without experience or in foreign companies.

Remote employment formats are becoming common in Kazakhstan as well. Due to a high level of inflation, people are forced to seek new sources of income. Additionally, around 2.9 million Russian citizens entered the country in 2022, and the majority of them are still searching for employment. This allows for the quick attraction of distributors and active network expansion.

#5. Relocation of Major Network Leaders from Russia

Due to imposed restrictions within Russia and international sanctions, Russian network leaders are relocating in search of new opportunities. The main countries for networkers' relocation are Turkey and Kazakhstan.

Most of the largest leaders choose Kazakhstan for relocation, and it's not surprising considering that the country is geographically closest to Russia and offers a range of advantages. Language is a significant factor as well since over 85% of Kazakhstanis speak Russian. Moreover, there is a shared mentality with which Russian network leaders have been working for a long time, along with connections to local leaders and a reputation among local networkers. Relocating MLM entrepreneurs to Kazakhstan opens up opportunities throughout Central Asia, allowing for significant growth and expansion of their structure.

Summary

Kazakhstan is a country with growing economic indicators and favorable legal regulation of network business. The government is taking all necessary measures to stimulate MLM entrepreneurs in Kazakhstan to conduct honest and open activities. As a result, the country's network market becomes more transparent and inspires greater trust among consumers and potential partners.

Currently, there are favorable conditions for the effective launch of an MLM company in Kazakhstan. However, it is important to conduct a detailed and high-quality analysis to determine the potential success of your business idea. Choosing the best product, implementing the right marketing strategy, and having quality software are among the essential components of efficient operation and the creation of a network business.