Shifts in Japanese procurement raise questions over new subcontracting rules
By Genta Nakanishi ( October 16, 2026, 02:21 GMT | Insight) -- Japanese companies switching to purchases through trading companies in response to the SME Transactions Act may remain subject to the law depending on who sets product specifications and how involved the trading companies are in the manufacturing arrangement. As authorities examine emerging changes in supply chains, lawyers say such factors could determine whether the act applies. Separately, the deemed application rule, or the “tunnel company” rule, which is designed to prevent companies from avoiding the law by routing outsourcing through certain subsidiaries, has also been expanded.Japanese companies switching to purchases through trading companies in response to the SME Transactions Act may remain subject to the law depending on who sets product specifications and how involved the trading companies are in the manufacturing arrangement....
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