The comprehensive alliance with JSW Steel of India (2009)

The author’s view

JFE’s overseas strategy had the character of an inversion born of a weak hand. Where Nippon Steel built breadth of branches by cross-holding shares with national champions, JFE answered with thickness — mother material supplied from Japan, downstream work done by the local joint venture. The JSW alliance was an extension of that thinking: avoid the heavy investment of building one’s own blast furnace in an emerging market, and instead lever high-grade steel technology and semi-finished product, the things JFE actually had, into a growth market. It was a decision that re-read isolation as agility.

That said, it is early to say the optimism of the tie-up — that supply creates demand — bore out as stated. The doubt present from the start, how far Japanese-grade steel would be adopted in an Indian market dominated by low-price cars, is one that no Japanese steelmaker has answered cleanly since. For JFE, India settled into something closer to a loose partnership of raw-material sourcing and technology licensing than an integrated manufacturing base backed by equity. How much fruit the isolation-as-agility strategy produced in emerging markets remains a question for the longer view.