Japan Subcontract Act 2026: Lessons from Toshiba Mold Storage Order
Mar 03, 2026UP!
- Blog
- Japan Compliance
- JFTC
- Legal Reform 2026
- Manufacturing
- Mold Storage
- Subcontract Act
- Supply Chain Governance
- Toshiba
The Japan Fair Trade Commission (JFTC) has issued a recommendation to two Toshiba Group companies, signaling a definitive end to the industry practice of “unpaid mold storage.” Under the Act on Promotion of Subcontracting (Subcontract Act), which will see stricter enforcement from January 2026, imposing unfair burdens on subcontractors will face rigorous penalties.
The Core of the Recommendation: Subcontractors are Not “Free Warehouses”
Conclusion: The JFTC has ruled that the free storage of molds with no definite future orders constitutes an “unjust request for economic benefits.” It explicitly criticized the lack of parent company governance, treating the issue not as a clerical error but as a structural failure within the corporate group.
The JFTC’s concern lies in “unconscious exploitation by giant procurers.” They have raised two critical points:
- Illegality of “Leaving it as is”: Rejecting the practice of occupying a subcontractor’s space for free under the vague pretext that the mold “might be used in the future.”
- Parent Company Governance Responsibility: Noting that violations at the operational level often stem from inappropriate guidelines or contract templates provided by the parent company.
Expert Commentary: This recommendation marks a significant elevation in the JFTC’s evaluation standards compared to previous enforcement of the Act against Unjust Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (下請代金支払遅延等防止法).
Historically, “unpaid mold storage” in the manufacturing sector was often a gray area tolerated because orders might resume, subcontractors didn’t explicitly object, or storage fees weren’t formally invoiced. However, the JFTC now ignores these “customary silences.” The act of making a subcontractor store molds for free without ongoing orders is evaluated as a direct violation.
Summary of the Recommendation to Toshiba Group Companies
Conclusion: Two subsidiaries, Toshiba Industrial Products Systems and Toshiba Hokuto Electronics, were found to have collectively forced the free storage of 1,993 molds. Despite some partial payments, the JFTC determined that organizational rectification was mandatory.
1. Toshiba Industrial Products Systems
Scale of Impact: 1,510 molds stored for free across 47 subcontractors.
Violation: Since February 2024, molds were left without future orders, neither returned nor scrapped, and without storage fee payments.
2. Toshiba Hokuto Electronics
Scale of Impact: 483 molds stored for free across 14 subcontractors.
Violation: Though 390 molds were later collected or scrapped, this was viewed as proof they were unnecessary. A partial payment of 2.09 million JPY was deemed insufficient for a full settlement.
Implications of the “Request” to the Parent Company (Toshiba Corp)
Conclusion: The “Request” (申入れ) made to the parent company—which was not the direct violator—suggests that the group-wide contract templates were inherently flawed. The JFTC is demonstrating that it will not allow parent companies to escape responsibility for the systemic failures of their subsidiaries.
To maintain compliance, companies are now “obligated” to take the following actions:
- Thorough Inventory: Identify the exact number of molds for which no future orders are planned.
- Retroactive Storage Payments: Calculate past unpaid storage periods and provide monetary compensation.
- Board Resolution for Improvement: Ensure systemic changes are made via board-level decisions, rather than simple verbal warnings.
2.026 Compliance Roadmap: The New Era of Fair Trade
Conclusion: As of January 1, 2026, the regulatory framework has evolved. Monitoring of “Transaction Optimization” for small and medium enterprises (SMEs) is significantly intensified.
Future governance should prioritize:
- Operational Reality: Know exactly how many molds have been inactive for over a year.
- Ensuring Consideration: Explicitly state in contracts who bears the cost of storage rent and labor.
- Redefining Education: Ensure procurement staff are fully trained on the 2026 standards of the Subcontract Act.
At Akasaka International Law & Accounting Office, we view the recent Toshiba recommendation as a definitive turning point where “customary silence” in trade structures will no longer be tolerated from 2026 onward. In particular, the risk that your own internal guidelines or contract templates may inherently violate the law varies significantly depending on individual circumstances, which is why we recommend an early consultation before issues arise.
The moment a company decides they can “handle it internally” based on past practices is often when significant financial loss begins. If the JFTC initiates an on-site investigation, you may face mandatory retroactive payments, public naming-and-shaming, and required board resolutions.
Early-stage consultation is significantly less costly than post-violation remediation. Most Subcontract Act compliance questions can be scoped in a single session.
We are fully available to communicate in English — from initial inquiry through to engagement. Please feel free to reach out in English at any time.
Schedule a 30-minute compliance review.
If any of the following applies to your organization, we recommend a compliance review:
- □ Have you ever left molds with a subcontractor for over a year without placing a new order?
- □ Are you unable to state the exact number of molds currently stored at your subcontractors’ sites?
- □ You cannot currently answer whether your storage rules have been updated to reflect the 2026 regulatory changes.
- □ Have you ever assumed that because a subcontractor hasn’t complained, your storage arrangement is legally safe?
If one or more apply, please contact us for an initial consultation.
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