As prices continue to rise in Japan, particular attention is being paid to the issue of appropriate pricing, or price shifting.
Due to the deflationary mindset that has been ingrained in the Japanese economy for the past 30 years, both the ordering side and the receiving side have developed an awareness that it is natural to lower transaction prices each year through efficiency improvements.
At first glance, price shifting may seem to lead to a decline in competitiveness, but in the new economic environment where prices and wages are expected to rise, there is a growing realization that maintaining the supply chain, which is essential for manufacturing, over the medium to long term is necessary to build a strong industry.

Efforts to ensure proper transactions are also closely linked to the operation and revision of the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (Subcontract Act).
The “Overall Picture of New Measures to Ensure Proper Transactions” announced by the Japanese government in January 2025 focuses on transactions around Tier 2 to 3, which are the main targets of the Subcontract Act.
It is essential that more upstream transactions also become more appropriate in order to realize appropriate transactions, and a change in awareness by companies at the top of the supply chain, such as automobile OEMs and major Tier 1 companies, is required.

The model for the “Partnership Building Declaration” to be revised in June 2025 will include a statement that “companies at the top of the supply chain will make pricing decisions that take into account not only their direct business partners but also their business partners beyond them.
In addition, industry associations such as the Japan Automobile Manufacturers Association (JAMA) and the Japan Auto Parts Industries Association (JAPIA) have also established guidelines to promote appropriate trade practices throughout the industry.

The Act against Delay in Payment of Subcontract Proceeds and the “Seko Plan” are not merely measures to help the weak, but are intended to realize a fair trading environment. For example, small and medium-sized subcontractors have pointed out that they are unable to request price increases because they are afraid of losing orders, and that they find it difficult to disclose all the details of their business when negotiating prices.
In response, the government takes the view that “it is important to increase one’s own competitiveness and understand one’s strengths,” and that knowledge and information possessed by management and those in charge is the key to advancing negotiations to an advantage.

In this book, “Current Status and Issues for Optimization of Parts Transactions in the Japanese Automotive Industry,” we analyze the progress and issues of optimization of transactions in the Japanese automotive industry, focusing on Tier 1 and Tier 2 companies, from the viewpoints of both the ordering and receiving sides. The report summarizes the actual status of transactions, including price negotiations, based on interviews with key persons, as well as the government’s recognition and efforts through interviews with policy authorities. In addition, the report provides recommendations on negotiation methods and best practices for SMEs to achieve appropriate price shifting and transactions.

The book also provides detailed explanations of the latest legal revisions that promote appropriate transactions, including the first major revision of the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors in 20 years and revisions to the standards of the Act for the Promotion of Small and Medium-sized Enterprises to which Subcontractors are Entrusted. We hope that this publication will be a useful reference for both the ordering and receiving sides to negotiate appropriate prices and terms of business, and to build good business relationships.