Japanese gov't to enable smaller firms to transfer costs to bigger companies

The Japanese government unveiled steps to enable small and midsize companies to pass on costs from higher raw material prices and pay hikes to bigger firms.

The government aims to prevent big firms from taking advantage of their relative superiority in setting unfairly low prices when transacting with subcontractors through stronger monitoring.

Such a practice, which is illegal in Japan, often squeezes profitability at small and midsize companies.

The plan is to double the number of government investigators checking issues with subcontractors from 120 to 248 in the next business year.

The investigators are tasked to interview over 10,000 small and midsize companies a year.

The Japan Fair Trade Commission and the government agency for small and midsize companies would compile a report on unfair practices by June.

A new website will also be set up to enable subcontractors to anonymously submit information on bigger companies that conduct illegal practices.

Three sectors where big companies appear reluctant to allow smaller firms to transfer higher costs will be bu subjected every year for intensive on-site inspections.

During the first three months of every year, Japan will intensify efforts to address issues faced by small and midsize firms as annual wage talks between management and labor unions go into full swing.

Kishida said during a meeting with business leaders that they would arrange for small and midsize companies, which support employment in local economies, to be able to properly pass on costs with business leaders.

Representatives from 27 organizations attended the meeting, including the Japan Business Federation and the Japan Chamber of Commerce and Industry.