Nucor-Yamato Steel: entering North American H-beams (1987)

On the other side’s ground, and as a minority holder

What stands out in this decision is that Yamato Kogyo did not take control of the market it entered. The side with the technology stopped at 49% and sat down beside the side that knew the market. Had it chosen to buy and control, decisions would have come faster, but it would have had to carry local commercial custom, local people and local price negotiation on its own. What President Inoue Hiroyuki chose instead was an exchange: offer up the technology of a single product, H-beams, and in return borrow the ground of a partner who understood the American steel market. It had something to offer precisely because it had already integrated back to the raw material at home.

The other side of a minority joint venture is that management judgement is shared with the partner. The venture’s results appear not in consolidated operating profit but in non-operating income, so swings in steel prices and the exchange rate pass straight through to recurring profit. Recurring profit hit a record ¥99.2 billion in the year to March 2024 and fell back to ¥54.4 billion the next — an amplitude decided somewhere apart from the parent’s own output. A company that owns mills, yet takes much of its profit from mills it runs jointly with others: Yamato Kogyo occupies a distinctive position for thinking about what to own abroad, and what not to.