Quick Takeaways
- Regulatory enforcement intensifies scrutiny on unfair subcontracting practices in Japan’s automotive supply chain.
- Repeat violations signal rising compliance expectations for automotive component manufacturers operating in Japan.
On December 24, Japan’s Fair Trade Commission issued a formal recommendation to Toyodenso Co., Ltd., citing violations of the Japan Subcontract Act related to unfair treatment of subcontractors. The action highlights renewed regulatory scrutiny over subcontracting practices in Japan’s automotive components sector, particularly involving product returns and tooling management.
Japan Subcontract Act Violation Raises Compliance Concerns
The Japan Subcontract Act violation centers on Toyodenso’s handling of parts supplied by subcontractors. Between December 2023 and the end of April 2025, the company deemed products from multiple subcontractors defective without conducting proper acceptance inspections. These parts were returned without compensation, shifting financial responsibility to suppliers.
Unfair Product Returns Without Inspection
According to regulatory findings, 27 subcontractors were affected by these returns. Toyodenso required them to accept returned goods and absorb associated logistics and handling costs.
Key impacts identified include:
The total financial impact from returned goods, associated fees, and shipping costs reached approximately JPY 5.63 million.
Forced Storage of Metal Dies Without Compensation
Another major Japan Subcontract Act violation involved tooling storage practices. Since at least December 2023, Toyodenso required subcontractors to store metal dies for parts with no active production plans. These storage obligations were imposed without payment, despite long-term inactivity of the tools.
Scope of Tooling-Related Violations
Regulators confirmed that 57 subcontractors were affected by this practice, collectively storing 907 metal dies. In some cases, subcontractors were additionally charged retrieval costs when dies were requested back. This compounded the financial strain and further breached fair subcontracting standards.
Repeat Offense Draws Regulatory Attention
This recommendation marks the second time Toyodenso has faced enforcement action under the Japan Subcontract Act, following a similar case in 2019. The recurrence underscores the regulator’s expectation for stronger internal controls and compliance mechanisms within automotive supply chains.
The JFTC has instructed the company to implement corrective measures and ensure such violations do not recur, reinforcing the importance of fair subcontracting relationships across Japan’s manufacturing ecosystem.
Japan Subcontract Act Violation Raises Compliance Concerns
The Japan Subcontract Act violation centers on Toyodenso’s handling of parts supplied by subcontractors. Between December 2023 and the end of April 2025, the company deemed products from multiple subcontractors defective without conducting proper acceptance inspections. These parts were returned without compensation, shifting financial responsibility to suppliers.
Unfair Product Returns Without Inspection
According to regulatory findings, 27 subcontractors were affected by these returns. Toyodenso required them to accept returned goods and absorb associated logistics and handling costs.
Key impacts identified include:
- Returned products without formal inspection
- No compensation for product value or shipping
- Financial burden transferred to subcontractors
The total financial impact from returned goods, associated fees, and shipping costs reached approximately JPY 5.63 million.
Forced Storage of Metal Dies Without Compensation
Another major Japan Subcontract Act violation involved tooling storage practices. Since at least December 2023, Toyodenso required subcontractors to store metal dies for parts with no active production plans. These storage obligations were imposed without payment, despite long-term inactivity of the tools.
Scope of Tooling-Related Violations
Regulators confirmed that 57 subcontractors were affected by this practice, collectively storing 907 metal dies. In some cases, subcontractors were additionally charged retrieval costs when dies were requested back. This compounded the financial strain and further breached fair subcontracting standards.
Repeat Offense Draws Regulatory Attention
This recommendation marks the second time Toyodenso has faced enforcement action under the Japan Subcontract Act, following a similar case in 2019. The recurrence underscores the regulator’s expectation for stronger internal controls and compliance mechanisms within automotive supply chains.
The JFTC has instructed the company to implement corrective measures and ensure such violations do not recur, reinforcing the importance of fair subcontracting relationships across Japan’s manufacturing ecosystem.
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