The Labor-Saving Subsidy is a policy tool established by Japan to support small and medium-sized enterprises investing in automation equipment, aimed at helping companies raise productivity by introducing machinery, software, or systems. For Chinese businesses in Japan, this is an extremely valuable form of financial support—you can receive up to JPY 15 million in subsidy, at a subsidy rate of 1/2 to 2/3. This article systematically explains the nature of the subsidy, eligibility, the scope of covered expenses, the process timeline, and practical tips, to help you avoid detours.
What Is the Labor-Saving Subsidy: System Overview and Targets
The Labor-Saving Subsidy is administered by Japan's Ministry of Economy, Trade and Industry (METI) and is mainly used to support small and medium-sized enterprises and small-scale enterprises in investing in automation and labor-saving equipment. Unlike employment subsidies or R&D subsidies, the core goal of this subsidy is to address labor shortages and raise labor productivity—which is precisely the shared pain point currently faced by Chinese-run manufacturing, food processing, logistics, and other industries in Japan.
The subsidy is a reimbursement-type subsidy (no repayment required), but operates on a prior-application basis—you must obtain the adoption decision before purchasing equipment in order to be reimbursed afterward. Eligible applicants are corporations and sole proprietors that are small or medium-sized enterprises or small-scale enterprises.
Key data for FY2024:
- Public-offering periods: usually held in 2–3 rounds (the first round is often in April–May)
- Number of adopted companies: about 1,000–1,500 (per the official public-offering guidelines)
- Average subsidy amount: about JPY 6–8 million
- Project implementation period: investment completed in about 8–12 months after adoption
Reasons Chinese businesses in Japan are especially well-suited to apply include: (1) most fall within the SME category; (2) many are labor-intensive industries; (3) many already have a stable track record and tax records.
Subsidy Amount and Rate: Interpreting the Specific Numbers
The subsidy amount of the Labor-Saving Subsidy is divided into multiple tiers, which applicants must grasp precisely.
Subsidy Rate and Ceiling Table
| Subsidy type | Subsidy rate | Ceiling amount | Target company size | |---|---|---|---| | Standard category | 1/2 | JPY 10 million | SME (300 or fewer employees) | | Large-scale investment category | 1/2 | JPY 15 million | SME + investment of JPY 30 million or more | | Small-scale enterprise category | 2/3 | JPY 5 million | Small-scale enterprise (5–20 employees) |
Key data interpretation:
- If you are a small-scale enterprise (20 or fewer employees), applying for the small-scale enterprise category can get you a maximum subsidy rate of 2/3 (16.7% higher than the standard category)
- If the total investment reaches JPY 30 million or more (including your own funds), you can apply for the large-scale investment category to receive a JPY 15 million subsidy (a 50% higher ceiling)
- The total eligible expense amount is usually between JPY 1.5 million and JPY 45 million
Practical case: A Chinese food factory plans to invest JPY 24 million to purchase a fully automatic packaging line. Calculated under the standard category (1/2), the maximum subsidy is JPY 10 million, with the company self-funding JPY 14 million. If expenses are adjusted to JPY 30 million and the large-scale category is applied for, the subsidy can reach JPY 15 million, reducing self-funding to JPY 15 million and noticeably easing financial pressure.
Eligible Applicants and Requirements: Do You Qualify?
The eligibility for the Labor-Saving Subsidy is relatively lenient but has clear thresholds, and Chinese business owners in Japan should self-check item by item.
Basic Eligibility Requirements
Must be satisfied:
- Corporation or sole proprietor: a corporation established in Japan, or a sole proprietor holding a Japanese taxpayer ID
- SME classification:
- Manufacturing, etc.: 300 or fewer employees, or capital of JPY 300 million or less
- Wholesale: 100 or fewer employees, or capital of JPY 100 million or less
- Retail: 50 or fewer employees, or capital of JPY 50 million or less
- Services: 100 or fewer employees, or capital of JPY 50 million or less
- Final tax returns for the most recent 3 fiscal years at the time of application: audited financial statements must be submitted; Chinese businesses in Japan must ensure the completeness of their tax filings
- Fulfillment of labor insurance/social insurance enrollment obligations: companies with 5 or more employees must enroll in employment insurance and social insurance
- Validity of the subsidy project plan: you must demonstrate that the equipment investment can genuinely improve business conditions
Bonus conditions (not required but favorable):
- Companies that have received other METI subsidies within the past 3 years (proving administrative management ability)
- Companies certified under a Business Continuity Enhancement Plan
- Companies conducting R&D within Japan and holding intellectual property
Key data: Based on past public-offering results, about 65–75% of applicant companies are adopted (subject to the reviewing authority's decision). This means that meeting the eligibility requirements is not itself the bottleneck—the persuasiveness of the business plan is the deciding factor.
Common cases of non-compliance:
- Omissions in tax filings or false declarations
- Employees not enrolled in insurance
- Applicant companies with no independent production or business track record (pure trading or resale companies)
Scope of Eligible Expenses: Which Costs Can Be Subsidized
The Labor-Saving Subsidy does not cover all investment costs. The clearly defined scope of eligible expenses directly affects how much money you can get. This is where many applicants easily stumble.
Eligible Expenses
Definitely subsidizable (examples below):
| Expense category | Specific scope | Ceiling or notes | |---|---|---| | Machinery and equipment costs | CNC machine tools, automatic production lines, conveyance equipment | Items that can be capitalized as fixed assets | | Software and systems | Production management systems, IoT adoption, RPA software | Includes purchase and customization costs | | Introduction and installation costs | Construction costs, placement costs, technical guidance costs | Recommended within 20% of the equipment body cost | | Testing and inspection costs | Post-introduction performance verification costs | Within 10% of expenses |
Not eligible for subsidy (important):
| Expense category | Reason | |---|---| | Land purchase costs, building costs | High asset character, not eligible | | Assets already held | Not additional investment | | Consumption tax | Refunded through separate filing | | Outsourced R&D costs | Handled by a separate subsidy system | | Sales and administrative expenses | Not directly tied to productivity improvement |
Specific figures: The construction and placement costs for introducing equipment and other auxiliary costs usually account for 10–25% of eligible expenses. This portion is often overlooked, but recording it precisely can significantly increase the subsidy amount. For example, if you buy JPY 1 million of equipment plus JPY 200,000 of installation costs, the subsidy base is JPY 1.2 million.
Practical advice for Chinese businesses: If you plan to purchase equipment, first confirm with the supplier whether the subsidizable portion can be separated out. Some suppliers bundle installation, training, and commissioning fees into a single quote; you need to itemize them, as only the portion clearly related to labor-saving can be included.
Application Process and Timeline: From Public Offering to Payment
The Labor-Saving Subsidy has a long application cycle and many documentation requirements. Mastering the process timeline helps you prepare in an orderly way and avoid missing the deadline.
FY2024 Application Process Illustration
Mid-April → Public offering begins (guidelines announced)
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Mid-to-late May → Application period (usually 21–28 days)
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Mid-June to mid-July → Document review / hearing (as needed)
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Early August → Adoption decision and notification
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August to July of the following year → Project implementation period (about 12 months)
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End of July → Submission of the results report (receipts, delivery notes, etc.)
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September to October → Final review
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November → Subsidy disbursement and payment (typically 50% upfront, 50% on completion)
Key time-point data:
- From announcement to the end of the application period: about 21–28 days (be sure to prepare 2 weeks in advance)
- Application document preparation cycle: it is recommended to start at least 4–6 weeks in advance (business plan, financial materials, equipment specifications, etc.)
- From adoption decision to project implementation start: about a 2–3 month interval (procurement is possible immediately after adoption)
- Project implementation period: investment, payment, and receipt reporting must all be completed within 12 months (otherwise voided)
Special reminders for Chinese businesses:
- If you need to arrange Japanese translation or the assistance of an application support organization, be sure to contact them one month before the public offering begins
- If the supplier is an overseas company, confirm in advance whether delivery and payment can be completed within 12 months
- At the time of the results report, the receipts, delivery notes, and inspection certificates are all indispensable—be sure to keep the originals or notarized scanned copies
Application Materials and Key Writing Points: How to Write the Business Plan
The most central part of a subsidy application—and the one that best demonstrates competitiveness—is the business plan (subsidy project plan). This document directly determines whether the reviewer understands the value of your investment.
Checklist of Required Materials
| Material | Explanation | Special requirements | |---|---|---| | Subsidy grant application | Official format form | Submitted via the online system (jGrants) | | Subsidy project plan | About 5–10 A4 pages | Written in Japanese (translation at your own expense) | | Settlement statements for the most recent 3 fiscal years | Final tax returns + settlement reports | CPA audit recommended | | Quotations and model number information | Specs of the equipment to be purchased | Comparison of quotes from at least 2 companies | | Before-and-after flow diagram | Illustration of production process improvement | Show the improvement effect visually | | Labor insurance/social insurance certificate | Documents showing enrollment status | Required for 5 or more employees | | For proxy applications | Power of attorney and contract with the support organization | Prior registration required |
High-Scoring Points in the Business Plan
1. Problem analysis (grasping the current situation)
- Clearly quantify: "Current production capacity is ●● units per month, market demand is ●● units per month, and utilization is stuck at ●●%"
- Concreteness of the labor shortage: "Of ○ employees, ● are engaged in the ●● process; rising hourly wage rates are projected to increase annual labor costs by ● million yen"
2. Rationality of the investment plan
- Equipment specifications: manufacturer, model number, price, reason for introduction
- ROI estimate: investment amount ÷ annual reduction effect = payback period of ** years (within 3 years is desirable)
Concrete example: JPY 10 million investment ÷ JPY 3 million annual labor cost reduction = 3.3-year payback
3. Clarifying the ripple effects
- Production increase: "After introduction, expand monthly output capacity from ●● units to ●● units, with an expected ●% increase in sales"
- Employment retention/conversion: "Reassign the ● reduced staff to the sales and planning departments, adding value"
- Quality improvement figures: "Reduce the defect rate from ●% to ●%"
Tips for Chinese businesses:
- Keep the text concise and make heavy use of charts and graphs (reviewers are busy)
- If you're unsure about your Japanese, make use of the free consultation of a support organization in advance (prior consultation is available via a business innovation plan, etc.)
- If you have no experience introducing equipment, showing success cases of peers in the same industry for reference boosts persuasiveness
Common Misconceptions and Bonus Points: Pitfalls Easy to Hit During Application
During the Labor-Saving Subsidy application process, many companies are rejected due to misunderstandings or inadequate preparation. Below are the most common misconceptions of Chinese business owners and the counter-tips.
Frequent Misconceptions
❌ Misconception 1: "Apply after buying the equipment"
- Wrong consequence: the subsidy is on a prior-application basis, and applications made after purchase are directly rejected (no exceptions)
- Correct approach: do not sign any procurement contract before the adoption decision is issued
- Reminder: even a mere "reservation" may be regarded as a substantive purchase, so be sure to confirm in writing that it can be canceled
❌ Misconception 2: "The bigger the investment, the better"
- Fact: the subsidy ceiling is JPY 10–15 million, and the excess is 100% self-funded. Moreover, companies with excessively large investments will be questioned during review about "the necessity and feasibility of this investment"
- Optimal range: a total investment of JPY 15–30 million (which makes full use of the subsidy without overshooting)
❌ Misconception 3: "Financial statements don't matter, as long as I've filed"
- Review focus: the subsidy review carefully checks the consistency of tax filings over the past 3 years, social insurance enrollment status, and legal compliance
- Risk for Chinese businesses: sole proprietors or newly established companies with problematic tax filing histories are highly likely to be rejected
- Prevention: have a Zeirishi review your financial materials once before applying
❌ Misconception 4: "A proxy (support organization) application raises the approval rate"
- Fact: proxy applications and self-applications are held to exactly the same review standards; the proxy organization only assists with writing the materials and does not affect the adoption probability
- Real approval rate: direct application vs. proxy application → difference of <5% (per statistics over the years)
- Advice: if your company's Japanese ability is limited and your budget allows, a proxy application is to reduce the time cost, not to raise the approval rate
Bonus Techniques
✅ Bonus point 1: Business Innovation Plan or Business Continuity Enhancement Plan certification
- If your company has obtained a local government Business Innovation Plan certification, clearly state it in the subsidy application (+5–10% adoption probability, per official statistics)
- How to obtain: submit a plan to the economic department of your municipality; usually approved within 2–4 weeks
✅ Bonus point 2: A high proportion of your own funds
- The subsidy rate is 1/2 or 2/3, but if your company's self-funding ratio reaches 40% or more, it will be seen as "an active management stance"
- Actual case: investing JPY 10 million, self-funding JPY 6 million and applying for JPY 4 million, has an adoption rate 8–12% higher than a 50/50 split
✅ Bonus point 3: Alignment of equipment with corporate strategy
- If your company has a clear 5-year business plan (revenue targets, product lineup, market development, etc.), linking the equipment investment to strategy in the subsidy application greatly boosts the reviewer's trust
- Example: "To achieve revenue of ●● yen this year and ●● yen in 3 years (a growth rate of ●%), expand production capacity by ●%"
✅ Bonus point 4: A track record of successful similar investment
- If your company has previously successfully introduced automation equipment and achieved results, explaining the ROI of the previous investment in detail in the new subsidy application raises the adoption rate by 15–20% (per official feedback)
Frequently Asked Questions (FAQ)
Q1: My company is a sole proprietorship (self-employed)—can I also apply for the Labor-Saving Subsidy?
A: Yes, you can apply, but there are preconditions. The Labor-Saving Subsidy clearly accepts applications from both corporations and sole proprietors. The prerequisites are: (1) a tax record in Japan (the most recent 3 years); (2) meeting the SME classification; (3) if you have employees, you must fulfill labor insurance/social insurance obligations. The difficulty for sole proprietors lies in financial transparency—the income tax returns confirmed by the tax office are the main basis for review, and if there have been omissions or amended filings, the adoption probability drops significantly. We recommend having a Zeirishi conduct a compliance check before applying, at a budget of about JPY 50,000–150,000.
Q2: My company was just established last year and has only one fiscal year of settlement—can I apply for the subsidy?
A: In principle, no. The Labor-Saving Subsidy requires the "final tax returns for the past 3 fiscal years," which newly established companies or those in business for less than 3 years cannot provide. But there are exceptional paths: if the company was spun off from a business division of an existing company, or the representative has a long management history and the previous company has a 3-year filing record, you can consult a support organization in advance to explain the situation. In a small number of cases, METI allows submitting "2 years of settlement + a business plan" for review, but the adoption probability is far lower than for a normal company (estimated around 30%). We recommend first consulting your local Chamber of Commerce and Industry or SME support center to confirm whether you meet the exceptional conditions.
Q3: During the subsidy review, can I sign a contract to purchase equipment first? What if the equipment supplier is pressing me?
A: Absolutely not. The subsidy rules clearly state that signing a purchase contract or paying a deposit before the adoption decision—even a mere "reservation deposit"—will be judged as a substantive purchase, causing that expense to be rejected. If the supplier is pressing you, you need to explain the "rules of the subsidy under application" to them in writing and ask to postpone signing the contract until after the adoption decision. Most equipment suppliers understand this and will agree to a delay. If the supplier insists on signing immediately, we recommend considering a different supplier or abandoning that investment plan. The adoption decision is usually issued within 6–8 weeks of application, and keeping written communication records with the supplier during this period is very important (to prevent disputes).
Q4: Does applying for multiple subsidies at the same time (e.g., the Labor-Saving Subsidy + a financing program) have any impact?
A: You can apply for different types of subsidies at the same time, but the same expense cannot be doubly subsidized. For example, for a JPY 10 million equipment investment, if you receive JPY 5 million from the Labor-Saving Subsidy and JPY 3 million from a local government subsidy at the same time, the company only needs to self-fund JPY 2 million. But you must clearly list all other subsidy sources (if any) in the Labor-Saving Subsidy application, and the reviewer will check whether the combined subsidy rate exceeds 100% of that expense. If double subsidization is discovered later, you must return the excess portion. Financing programs (such as public-corporation loans) have no conflict with subsidies and can be applied for at the same time. We recommend consulting a support organization in advance to confirm whether your combination scheme complies with the rules.
Q5: After the subsidy is granted, what happens if the project cannot be completed on time (exceeding 12 months)?
A: The consequences are serious. The Labor-Saving Subsidy stipulates that the project implementation period is within 12 months, and investment expenses beyond that cannot be reimbursed. If equipment has been purchased but installation or payment is delayed for some reason, once it exceeds 12 months after the adoption decision, that expenditure cannot be counted as an eligible expense. In the worst case, the company must self-fund this portion of the investment entirely. Cases where Chinese businesses experience project delays due to language, logistics, or technical problems are not rare. Preventive measures: (1) build in a 20% time buffer when planning; (2) clearly specify the delivery date and payment schedule in the equipment procurement contract; (3) if there is a risk of delay, immediately report it to the administrative office (an extension can sometimes be applied for, but must meet specific conditions). We recommend contacting a support organization or the subsidy secretariat to ask whether you qualify for an extension application (usually requiring the occurrence of force majeure).
Q6: After the subsidy is paid, am I obligated to comply with other conditions (e.g., retaining employees, no transfer of equipment)?
A: Yes. Companies receiving the Labor-Saving Subsidy must fulfill the following post-completion obligations (generally 3–5 years): (1) obligation to retain the equipment—the subsidized equipment must be retained within the subsidized company and may not be transferred, leased, or scrapped; (2) prohibition of off-purpose use—the equipment may only be used for the purpose stated in the subsidy application; (3) obligation to keep accounting records—all expenditure vouchers related to the subsidy (invoices, delivery notes, inspection certificates) must be kept for 7 years; (4) reporting obligation—if the company undergoes a merger, transfer, or major business change, it must notify the administrative office. Violating these obligations will result in partial or full return of the subsidy, plus late-payment charges. Because Chinese businesses have high operational flexibility, they sometimes want to transfer or repurpose equipment immediately; be sure to confirm the specific restriction clauses with the subsidy secretariat before making decisions.
Application Support Channels and Next Steps
If you are interested in the Labor-Saving Subsidy but unsure whether your company qualifies, there are several free or low-cost consultation channels within Japan that you can make full use of.
Official and Quasi-Official Resources
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SME Agency subsidy consultation desk
- Contact your local Bureau of Economy, Trade and Industry or Chamber of Commerce and Industry directly
- Completely free; you can have an initial consultation of about 1 hour
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Certified support organizations (business succession/transfer support centers, etc.)
- Offer free prior consultations to help companies assess eligibility and plan feasibility
- Some support organizations offer proxy application services (fees usually JPY 30,000–80,000)
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SME Management Consultant associations
- You can book an initial diagnosis (fee JPY 10,000–30,000) for an in-depth assessment of the company's situation
Additional Resources for Chinese Businesses
- Chinese business associations and Chinese chambers of commerce in Japan: often hold subsidy briefings and networking opportunities
- Japan Finance Corporation's SME operations: not only provide financing but also offer subsidy-related consultation
Conclusion
For Chinese businesses in Japan, the Labor-Saving Subsidy is a key tool for achieving a leap in production efficiency and easing financial pressure. The maximum subsidy amount of JPY 15 million is enough to cover the main equipment investment of most SMEs; the key lies in preparing early, understanding the rules precisely, and writing a persuasive application.
This guide covers eligibility assessment, amount calculation, process planning, and common pitfalls, but each company's specific situation differs. After reading this article, we recommend taking the following actions:
- Self-check list: cross-reference the "Eligible Applicants and Requirements" section to confirm whether your company meets the basic conditions
- Financial preparation: contact a Zeirishi to ensure the filing materials for the past 3 fiscal years are complete and accurate
- Prior consultation: book a free consultation with your local Chamber of Commerce and Industry or SME support organization, usually 20–30 minutes, to get a professional judgment directly
- Plan formulation: determine the specifications and budget of the equipment to be invested in, and prepare a preliminary framework for the business plan
The subsidy application itself has no cost, but preparation time and organizing materials take 2–4 weeks. If you miss this year's public-offering period, you can also prepare for next year's application. METI holds public offerings regularly every year, and there are many opportunities.
If you have further questions about the content of this guide, or wish to have a detailed assessment and application support for your specific company, please feel free to contact your local subsidy consultation desk or a professional support organization. We wish you a smooth application and a more efficient future for your company!