What Is the Asia-Pacific Economic Cooperation (APEC)?

The Asia-Pacific Economic Cooperation (APEC) is an economic group of 21 members, formed in 1989, with the primary goal of promoting free trade and sustainable development in the Pacific Rim economies.

Understanding the Asia-Pacific Economic Cooperation (APEC)

APEC’s principal goal is to ensure that goods, services, capital, and labor can move easily across borders. This includes increasing custom efficiency at borders, encouraging favorable business climates within member economies, and harmonizing regulations and policies across the region.

The creation of APEC was primarily in response to the increasing interdependence of Asia-Pacific economies. The formation of APEC was part of the proliferation of regional economic blocs in the late 20th century, such as the European Union (EU) and the (now-defunct) North American Free Trade Agreement (NAFTA).

Nations Comprising APEC

The founding members of APEC were Australia, Brunei, Canada, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and the U.S. Since its launch, China, Hong Kong, Taiwan, Mexico, Papua New Guinea, Chile, Peru, Russia, and Vietnam have joined its ranks.

APEC refers to its members as economies rather than as states due to the focus on trade and economic issues rather than the sometimes delicate diplomatic issues of the region, including the status of Taiwan and Hong Kong. The People’s Republic of China (PRC) refuses to recognize Taiwan because it claims the island as a province under its constitution. Hong Kong, meanwhile, functions as semi-autonomous regions of China and not a sovereign state.

Official observers of APEC include the Association of Southeast Asian Nations (ASEAN), the Pacific Economic Cooperation Council (PECC), and the Pacific Islands Forum (PIF).

The Asia-Pacific Economic Cooperation’s (APEC) Actions and Goals

At a landmark summit meeting in 1994, APEC announced a lofty goal of establishing free trade and investment regimes in the Asia-Pacific region by 2010 for members with developed economies. The group hoped to achieve those same goals for its developing economy members by 2020.

In 1995, APEC adopted the Osaka Action Agenda, a program designed to facilitate business activities, liberalize trade and investment and promote economic and technical cooperation. However, progress on these efforts has somewhat slowed, due to APEC’s culture of making all decisions by consensus. While some decisions are unanimous, they are not legally binding on the member governments.

Sub-Groups of APEC

APEC maintains a policy support unit to provide research and analysis to support the organization’s goals for the region, as well as special working groups to explore and promote various issues and components of economic development. These groups engage in multiple micro causes that aim to advance policy and awareness. Examples of these sub-groups include:

• Gender Issues: APEC sponsors a policy partnership on women and the economy to advance the economic integration of women. An estimated 600 million women are currently in the region’s labor force.
• Intellectual Property Rights: APEC’s Intellectual Property Rights Experts’ Group (IPEG) studies and exchanges information regarding the enforcement of intellectual property rights protections in the region. It promotes and facilitates cooperation to implement the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
• Emergency Preparedness: APEC’s Emergency Preparedness Working Group (EPWG) promotes business resilience, public-private partnerships, and information sharing among members to help build the region’s capacity to deal with emergencies and natural disasters. Economies along the geologically and climatologically active Pacific Rim are subject to events such as tsunamis, typhoons, earthquakes, and volcanic eruptions.

What Is Advertising Budget?

An advertising budget is an estimate of a company’s promotional expenditures over a certain time period. More importantly, it is the money a company is willing to set aside to accomplish its marketing objectives.

Understanding Advertising Budget

An advertising budget is part of a company’s overall sales or marketing budget that can be viewed as an investment in a company’s growth. The best advertising budgets—and campaigns—focus on customers’ needs and problems and on providing solutions to these issues, not company problems such as an overstock reduction.

When creating an advertising budget, a company must weigh the value of spending an advertising dollar against the value of that dollar as recognized revenue. Before deciding on a specific amount, companies should make certain determinations to ensure that the advertising budget is in line with their promotional and marketing goals:

• The target consumer — Knowing the consumer and having their demographic profile can help guide advertising spend.
• Best media type for the target consumer — Mobile or internet advertising, via social media, may be the answer, although traditional media, such as print, television, and radio may be best for a given product, market, or target consumer.
• Right approach for the target consumer — Depending on the product or service, consider if appealing to the consumer’s emotions or intelligence is a suitable strategy.
• Expected profit from each dollar of advertising spending — This may be the most important question to answer, as well as the most difficult.

Advertising Budget Levels

Companies can determine their advertising budget levels in several different ways, each of which has its positives and negatives:

1. Spend as much as possible — This strategy, which sets aside just enough money to fund operations, is popular with startups that see a positive return on investment on their advertising spend. The key is anticipating when the strategy will start showing diminishing returns and knowing when to switch strategies.
2. Allocate a percentage of sales — This is as simple as allocating a specific percentage based on the previous year’s total gross sales or average sales. It is common for a business to spend 2% to 5% of annual revenues on advertising. This strategy is simple and safe but is based on past performance and may not be the most flexible choice for a changing marketplace. It also assumes that sales are directly linked to advertising.
3. Spend what the competition spends — This is as simple as adhering to the industry average for advertising costs. Of course, no market is exactly the same and such a strategy may not be sufficiently flexible.
4. Budget based on goals and tasks — This strategy, wherein you determine the objectives and the resources needed to achieve them, has pros and cons. On the upside, this can be the most targeted method of budgeting and the most effective. On the downside, it can be expensive and risky.