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Tata BlueScope Steel JV shows how Australian manufacturers can tap new markets overseas

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article image An Overview of the Manufacturing Facility in Jamshedpur

The joint venture between Australia’s BlueScope Steel and India’s Tata Steel shows the way forward for Australian manufacturers to find new markets and revenues overseas.

While BlueScope Steel’s origins are firmly rooted in Australia, the company has, through a string of successful global partnerships taken Australian innovation, technology and expertise to diverse markets such as North America, Saudi Arabia and India, where the company established a joint venture in 2005 with the Tata conglomerate.

Tata BlueScope Steel has three business divisions in India offering premium brand steel products for building and construction. The company has four state-of-the-art manufacturing plants, supported by a network of sales offices, and is governed by a board comprising of representatives from both companies.

BlueScope chose the JV route in India because of Tata’s local brand recognition, corporate values, and strong growth ambitions, as well as a marketing and branding ethos similar to BlueScope.

Tata BlueScope CFO, Shyamsunder, an Australian national, says the move into South Asia has helped BlueScope increase revenue, though operating in an economy of rapid growth yet poor infrastructure initially posed a few challenges.

Shyamsunder explains the Indian market is highly price sensitive, with premium pricing achievable only after a product has proven its value, which can take a long time. He adds that having a global brand does not guarantee acceptance by the local market. The company had to first build brand value, which is why it was important to have a strong, well-recognised local partner.

India’s strong business culture, which Shyamsunder says is different from other South-East Asian countries, is often misunderstood or underestimated. He says English literacy, numeracy, and engineering skills are strong in India, giving the country an edge in business and entrepreneurialism.

That India has a strong, confident business culture; even people at the corporate leadership level are entrepreneurial; and Indian companies are prudent about investments, are some of the key takeaways for Shyamsunder.

He notes that the country has a hierarchical and paternalistic management style where subordinates, even highly qualified experts, consult with the boss on every decision. Protecting intellectual property, careful use of language, and respect for cultural and religious sensitivities are important considerations while doing business in India.

According to Shyamsunder, to succeed in India, one must first ensure that entering the Indian market is a strategic fit to their longer-term business plans, and then prepare for a very long haul. One should avoid the temptation to enter India just because it is a fast-growing economy.

One must take the time to understand each market, become a local operator, and develop enduring relationships, which will require perseverance and patience. Determining a sustainable competitive advantage, be it with cheaper access to raw material, a lower cost base, or strong relationships, is also important.

Frequent review of business performance and maintaining high standards are advised. Making any change to the work culture and systems will need to be done without alienating the local management and partner. ‘Think local’ is a significant message from Shyamsunder who believes management must support the local business and have strong allegiance to local communities, given that India has a highly unionised labour force.

He concludes by saying that a well led and adaptive Australian company can overcome these issues and create important new markets and revenue streams in India.

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