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Sunday, June 20, 2004

Valley-based firm triumphs in Mexico

Valley-based firm triumphs in Mexico

MEXICO CITY - While dozens of Arizona companies have been pondering doing business south of the border and state government has been actively promoting it, Rex Maughan has happily hauled ever-increasing bags of pesos to the bank.

That's because Maughan, president and CEO of Scottsdale-based Forever Living health-care products, took a chance 15 years ago against all the conventional advice.

Now, he employs more than 20,000 salespeople throughout Mexico selling tens of millions of dollars annually of products ranging from pricey aloe gel drinks to aloe makeup kits to bee pollen. Exact sales figures in Mexico were not released but Maughan said that the country ranks fourth in sales worldwide among the more than 100 countries where Forever Living products are sold.

"Everyone told us to stay away from Mexico because it is so poor and that we would never make it," said Maughan of his company, which had announced sales of more than $2 billion last year, a nearly 14 percent increase over 2002. "But what they didn't understand is that there is an aggressive, underemployed work force in Mexico dying to make good wages."

The secret for success? Really nothing, Maughan said.

"If you have a foundation of honesty and integrity and try to make friends before you try to make sales, the rest falls into place," Maughan said.

Like Forever Living's impressive downtown Mexico City headquarters, a century-old towered building that locals refer to as "the castle," replete with marble staircase, a dome and a huge chandelier.

Outside, bees buzz around the flowers of aloe vera plants, a member of the lily species that resembles an agave cactus. The aloe gel is taken from aloe vera leaves at plantations in south Texas and near Tampico, Mexico, to make Forever Living's products.

Employees and potential workers are brought to the headquarters from throughout Mexico and given motivational speeches and sales training. But the biggest motivation is buying wholesale from the company and selling at the suggested retail price, which is 43 percent profit for the sales force, Maughan said.

There's a huge demand for jobs, said Guadalupe Callejas Hernandez, a sales administrator for Forever Living's Mexico operation.

"So many people are working three or four jobs here and they need extra work to fit into odd hours. This job allows them to do that," Callejas said.

Callejas also said that there's a natural market for the aloe vera gel because rural Mexicans have used the plant for years for medicinal purposes and many legends about the curative power of aloe vera are deeply embedded throughout the country's culture.

Rams├ęs Acosta Reyes, administrative director for Forever Living in Mexico, said that the company's products are all brought to Mexico City, primarily by truck, where they are distributed to salespeople throughout the country.

"NAFTA has been good for our business because there are no import taxes," Acosta said. "But the Mexican Department of Health has made it more difficult for business because of stricter regulations on imports. That's also made it tougher on potential competitors who are considering this as a start-up business."

But Maughan doesn't see any dampers on future growth south of the border, where Forever Living has business operations in the majority of Latin American countries.

"I think there's a general recognition that products which give health are better than drugs, which give more problems than they are worth," Maughan said. "Our aim is to give financial freedom throughout the world and many Mexicans are working hard to achieve that through our products."

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