Sunday, April 18, 2010

Time zones and global business: the rise of Asia

Communication technologies have tamed the tyranny of distance. No amount of technological innovation, however, is going to change the fact that everyone needs to sleep. Nor the fact that most people like to party. Nor the fact that the general prejudice is to indulge in these activities at night.

The implications of these facts for global business are profound. Clearly there is an advantage in terms of timely information and communication for anyone whose livelihood involves global markets to live in or near the time zone which is the most significant in the daily global trading process.

The European time zones once saw most of the action. For the last century or so, New York has set the pace for the markets. Only now are the Asian time zones coming into their own, incorporating as they do a disparate range of territories that are either resource rich (like Siberia in the north and Australia in the south) or resource hungry (like China, Japan, India and South-East Asia).

Robert B. Zoellick pointed out in a recent speech that the Asian stock markets have already overtaken the US - they now account for 32% of global market capitalization, ahead of the US at 30% and Europe at 25%. Also China has overtaken Germany as the world's leading exporter.

How convenient or inconvenient are Asian business hours for inhabitants of the US and Europe? Despite Europe's relative proximity and geographical connectedness to Asia, the time zone situation seems to favor the US (at least the western states) over Europe.

In order to operate during Asian business hours, a Londoner would have to start work just after midnight; someone in Washington State, Oregon or California has the altogether more appealing prospect of starting mid-afternoon - albeit on the previous day!

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