The other day a British businessman, recently having visited Japan, recounted the words of a leading Japanese ship-owner. "Our ships" said this individual with a sigh, "are going fully loaded to Europe and America but these days coming back empty."
Of course, this oversimplifies, but the message is clear—and for the Europeans it is especially chilling. The Asian world (including notably a reviving Japan, and to a rapidly increasing extent, China, India, Malaysia, Thailand and Indonesia) is supplying more and more of Europe’s and America’s needs, but the West is not reciprocating. The old and cozy image of trade being a two-way beneficial flow between East and West is fading fast.
There used to be a sort of superior view that the West, and Europe in particular, would do all the thinking, innovating and designing, and the East with its cheap labor would churn out the more basic items. In due course, the cheap labor would become more expensive as incomes rose and everything would be evened out again smoothly in the world trade balance.
Most of that theory was shattered long ago as it became apparent that Japan had begun to dominate world manufacturing and that the rest of Asia was following on behind. By the end of the 20th century it had become obvious that there was almost nothing the Europeans could do that rising Asia could not do better—from building motorcars and skyscrapers to the most advanced developments in biotechnology, nanotechnology and the frontiers of industrial and scientific innovation.
Until recently, those in the West seeking reassurance as they saw their markets undermined by Asian competition comforted themselves with one further theory. Manufactures might be going east but in the new age of services and software the main skills and systems would stay in the West and serve rich Western markets. This was supposed to apply in particular to financial services, where London and New York still appear to command the global scene.
But the global communications revolution is beginning to chip away even at this picture. With the dramatic fall in the cost of both voice and picture transmission round the world it is ceasing to matter just where many services are located. Booking services, banking services, credit card handling, help-lines, travel services, all kinds of shopping inquiries, insurance arrangements—all these and many more can be located "offshore" almost anywhere on the globe, as long as there is not much of a language problem and local labor is suitable and willing.