The Digital Transformation Subsidy: Chinese Enterprises in Japan Can Get Subsidies for Systems and Websites Too

According to statistics from Japan's Ministry of Economy, Trade and Industry (METI), as of 2024 the digital transformation rate among Japanese SMEs was only around 35%, and among Chinese enterprises this figure is even lower. But government subsidies can cover up to 75% of DX investment costs, which means that if you invest 2 million yen in building an ERP system and an official website, you can receive up to 1.5 million yen in subsidy. This article will tell you in detail how to seize this opportunity.

The Basics of the DX Subsidy: Four Key Points You Need to Know

What Is the Digital Transformation Subsidy

The Digital Transformation Subsidy—known for short as the "DX subsidy" or "Digitalization Promotion Subsidy"—is a policy support program established by the Japanese government to help SMEs achieve business digitalization. The core aim of this subsidy is to push Japanese enterprises to shake off their reliance on paper documents and build modern information systems.

For Chinese enterprises in Japan, this subsidy is especially valuable. Many Chinese-run wholesale trading companies, restaurant chains, logistics enterprises, and manufacturing plants have long hesitated to undertake digital reform because of the large upfront investment. The DX subsidy fills precisely this funding gap.

Eligibility and Basic Conditions

Who can apply?

• Japan-registered SME corporations (including foreign-capital enterprises)
• Sole proprietors and partnerships
• Enterprises with between 5 and 300 employees (adjusted by industry)
• A certain level of revenue over the past 3 years (typically an annual revenue of no less than 5 million yen)

Key point: Chinese wholly owned enterprises whose owners hold Japanese residency status, joint ventures with Japanese partners, and companies where a Chinese national serves as the representative director all qualify to apply, as long as they are formally registered Japanese corporations. Japanese nationality is not required.

Subsidy Amount and Rate

• Base subsidy amount: 500,000 yen to 5 million yen
• Subsidy rate: up to 75% for SMEs (up to 80% in specific regions and industries)
• Self-funded portion: enterprises must bear 25%–20% of the cost

Here is a concrete example: if you plan to invest 3 million yen to build an ERP system, construct a corporate website, and purchase servers and related IT infrastructure, the subsidy can cover 2.25 million yen, and you only need to put up 750,000 yen yourself.

Application Cycle and Time Planning

• Application deadline: usually one round each in March and September every year (specific dates adjusted annually)
• Review period: about 2–3 months
• Subsidy period: generally complete the project within 1–2 years
• Fund disbursement: after project completion, an inspection is conducted; it usually takes 3–6 months to receive the full subsidy

What the DX Subsidy Can Be Used For: Typical Use Cases for Chinese Enterprises

When Chinese enterprises in Japan carry out a digital upgrade, the DX subsidy can be flexibly applied across multiple areas. The investment directions listed below are all proven ones recognized by the subsidy review authorities.

Building Enterprise Management Systems

This is the most-applied-for category with the highest approval rate. Typical investments include:

Financial and accounting systems: using a cloud ERP (such as Yayoi Accounting or freee) or a custom-built system to replace traditional Excel-based reporting. Because Chinese enterprises involve business across both China and Japan and multi-currency settlement, they often need customized financial modules. The subsidy can cover the full cost of system purchase, custom development, employee training, and more.

Inventory management systems: aimed at import-export trading and wholesale/retail enterprises. A Chinese enterprise in Yokohama running a daily-goods trading business invested 3 million yen in a WMS (warehouse management system) through the DX subsidy and had 2.25 million yen approved. After the system went live, stocktaking efficiency rose by 80% and inventory costs fell by 15%.

Customer relationship management (CRM): used for sales tracking and organizing customer data. Especially for enterprises with multiple sales teams that need remote management, the return on this kind of investment is significant.

Building Official Websites and E-Commerce Platforms

Corporate website upgrades: Many Chinese enterprises in Japan have websites built 5–10 years ago—outdated in function, not mobile-friendly, and with poor SEO rankings. Through the DX subsidy, you can invest 500,000–1.5 million yen to rebuild a modern official website, including:

• Responsive design (supporting PC, tablet, and mobile)
• Multilingual functionality (Japanese, Chinese, English)
• Integration of an online ordering system
• Integration of data analytics tools

E-commerce platform construction: For Chinese enterprises in retail, food, handicrafts, and similar industries, investing in building your own e-commerce platform (rather than selling only on third-party platforms such as Amazon Japan and Rakuten) allows you to better control your brand image and profit margins. The DX subsidy can cover the costs of platform customization, payment system integration, logistics system integration, and more.

Remote Work and Collaboration Tools

Since the pandemic, remote work has become the norm. Many Chinese business owners have started investing in:

• Cloud drives and file management systems (replacing USB drives and email transfers)
• Enterprise communication tools (Slack, Microsoft Teams, etc.)
• Remote clock-in and payroll management systems
• Cloud-based meeting room booking systems

Such investments are relatively small (200,000–1 million yen), but they enjoy high recognition in the subsidy review and are usually approved quickly.

Manufacturing Automation and IoT Equipment

For Chinese enterprises operating manufacturing plants and processing factories in Japan, the DX subsidy also supports:

• Smart upgrades of production-line automation equipment
• Deployment of sensors and IoT devices
• Real-time production data monitoring systems
• Quality inspection automation

A food processing enterprise in Gifu (with a Chinese owner) invested 4.5 million yen in a production-line digital upgrade, had 3.3 million yen in subsidy approved, and ultimately achieved a 25% reduction in labor costs and improved product quality consistency.

The Application Process: A Step-by-Step Guide to Getting the Subsidy

Step 1: Confirm Eligibility and Project Feasibility (1–2 weeks)

Before formally submitting your application, you need to confirm the following:

1. Confirm enterprise eligibility

   • Obtain a certificate of registered matters (registry transcript) from the Japan Legal Affairs Bureau
   • Confirm employee headcount and prior-year revenue
   • Confirm whether there are any tax or social insurance arrears (arrears make approval impossible)

2. Sort out the DX project content

   • Identify your current business pain points (e.g., slow order processing, chaotic inventory management, no online sales channel)
   • Decide on the digitalization approach (off-the-shelf software or custom development?)
   • Estimate the total investment
   • Assess the payback period

3. Consult an IT service provider or system integrator

   • Obtain a detailed project quotation (invoice/estimate)
   • Understand the implementation timeline (usually 6–12 months)
   • Clarify the scope of after-sales support

Step 2: Prepare Application Materials (2–3 weeks)

This is the step most prone to problems. Application materials must be written in Japanese and must meet the review standards of the subsidy committee. The main materials include:

Required documents:

• Application form – in the designated format, explaining your DX project in 200–400 characters
• Business plan – describing in detail the current problems, improvement measures, and expected effects, usually 500–800 characters
• The IT service provider's estimate and proposal
• Company profile and organizational structure
• A copy of the prior-year financial statements
• The representative's identity documents and a copy of their residence card

Key material – how to write the business plan:

This document is the most critical. Reviewers use it to judge whether your project is genuine, feasible, and effective. We recommend including the following:

• Current-state analysis (150 characters): Specifically list the digitalization problems in your current operations. Don't say vaguely "poor management"—give concrete numbers, such as "financial reports currently require manual preparation, taking 3 days each month; stocktaking requires 5 people working for 2 days; order entry has a 30% manual error rate."

• Improvement measures (200 characters): Explain how introducing the new system or new processes will specifically solve the above problems.

• Expected effects (150 characters): Describe the improvement outcomes quantitatively, such as "financial reporting time reduced from 3 days to 4 hours; stocktaking efficiency raised by 80%; order error rate reduced to below 3%."

• Investment content (100 characters): Following the IT service provider's proposal, explain what systems you will purchase, what custom development will be done, and what training is needed.

Step 3: Submit the Application to the Subsidy Committee (1 day)

• Submit online (most regions now offer electronic applications)
• Or mail it to the designated Chamber of Commerce and Industry or subsidy administration office
• Keep the submission receipt (acceptance number)

Step 4: Wait for Review and Initial Feedback (2–3 months)

• The subsidy committee conducts eligibility review and project scoring
• Some applications may be asked to supplement materials or undergo an interview
• Final result notification (approved, conditionally approved, or not approved)

Step 5: Sign the Subsidy Grant Decision and Implement the Project (6–12 months)

• Sign the "Subsidy Grant Decision Notice" with the subsidy committee
• Implement the IT project according to plan, keeping all payment receipts and invoices
• Stay in communication with the IT service provider to ensure project progress

Step 6: Submit the Completion Report and Subsidy Claim (after project completion)

• Assemble the project completion certification materials
• Write a project summary report describing the actual improvement outcomes
• Compile all cost payment receipts (VAT invoices, payment transfer receipts)
• Submit the subsidy claim form in order to have the subsidy deposited

Key reminder: From project launch to receiving the subsidy, the entire cycle usually takes 12–18 months. Enterprises must plan their cash flow well, because the subsidy is only disbursed after the project is complete, and the upfront costs must be advanced by the enterprise itself.

Common Application Pitfalls and How to Avoid Them

Pitfall 1: Assuming you can claim IT investments already paid for

Wrong approach: The enterprise already spent 1 million yen last year building a website and now wants to retroactively claim a subsidy.

Correct approach: The DX subsidy must be applied for first, with investment made afterward. Only after the subsidy decision notice is issued can the enterprise launch the related IT investment. Projects already paid for do not qualify for the subsidy.

Pitfall 2: Exaggerating improvement effects or falsifying data

Reviewers spot-check accepted enterprises to verify the actual implementation of the project. If false reporting is discovered, the subsidy will be revoked, the full amount already received must be repaid, and the enterprise will face administrative penalties. It is better to estimate effects conservatively than to exaggerate.

Pitfall 3: Choosing a non-reputable IT service provider

Some unscrupulous IT companies will collude with enterprises to issue false invoices for profit. Such practices are extremely dangerous. You should choose a system integrator (SI company) or IT consulting firm that holds a proper business license and has a good reputation; their quotations will withstand review, and false invoices will be detected.

Pitfall 4: Neglecting project inspection and effectiveness evaluation

After a DX subsidy project is complete, the subsidy committee will commission a third party to conduct an on-site or document-based inspection. The enterprise should prepare:

• Screenshots of the system in actual use
• Records of employee training
• Data comparisons (such as before-and-after comparison of financial reporting time)

If you cannot provide genuine proof of results, the subsidy may be partially cancelled.

Special Advice for Chinese Enterprises in Japan

Language and Cultural Adaptation

Many Chinese business owners have limited Japanese ability. During the application process:

• Be sure to seek professional assistance: Do not rely on Google Translate or an ad hoc translator. Application materials must be reviewed by a professional who understands Japanese business writing.
• The business plan's wording should align with Japanese policy priorities: Emphasize how you will improve productivity, enhance the customer experience, and achieve sustainable development—themes the Japanese government cares about.
• Build a relationship with the Chamber of Commerce and Industry: Most regional Chambers of Commerce and Industry offer detailed guidance on the DX subsidy, and they welcome foreign-capital and Chinese enterprises as well.

The Particularities of China-Japan Business

Many Chinese enterprises in Japan also engage in China-Japan trade. When digitalizing, consider:

• Multi-currency and cross-border payments: The financial system should support automatic settlement in yuan, yen, and dollars
• Bilingual compliance: The website and e-commerce platform must satisfy both Japan's Act on the Protection of Personal Information (APPI) and Chinese regulations
• Logistics integration: The system must be able to connect with logistics platforms on both the China and Japan sides

An IT service provider can help you implement these special requirements, and the costs can be included within the scope of the DX subsidy claim.

Frequently Asked Questions (FAQ)

Q1: My enterprise was only established in Japan a year ago—can I still apply for the DX subsidy?

A: This depends on the specific subsidy policy requirements. Most DX subsidy programs require an enterprise to have been operating for at least one year and to submit proof of the prior year's revenue (such as the previous year's tax return or an accounting audit report). If your enterprise was just established, you usually need to wait until you meet the conditions before applying. However, we recommend consulting your local Chamber of Commerce and Industry or Bureau of Economy, Trade and Industry directly, because some regions have dedicated subsidy programs for startups with potentially more flexible conditions. In addition, if your enterprise is a branch or affiliate of a domestic Japanese company with the financial backing of a parent company, some subsidy schemes may take the parent company's operating history into account. In short, don't give up on applying just because your enterprise is young—consult first, then decide.

Q2: Will applying for the DX subsidy have any adverse effect on the enterprise's taxes or social insurance?

A: Absolutely not. The DX subsidy is support funding provided by the government for a policy objective; by nature it is a "subsidy" (policy subsidy), not a loan, and does not need to be repaid. Receiving the subsidy will not increase the enterprise's tax burden or social insurance costs. It should be noted that the subsidy itself must be treated as income when filing corporate income tax (classified under the "non-inclusion of subsidies, etc. in taxable income" rules), but national policy has already taken this into account and provides corresponding tax preferences for subsidies. The only thing the enterprise needs to do is keep all project implementation records and cost payment receipts for inspection by the tax office and the subsidy committee. As for social insurance, receiving a subsidy does not increase social insurance contribution obligations. However, if the enterprise achieves profit growth or headcount increases through digital reform, this may naturally lead to higher social insurance costs—but that is the result of improved business performance, not a side effect of the subsidy. We recommend consulting your accountant or tax accountant (Zeirishi) before applying; they will give you the most accurate advice.

Q3: What if costs rise during the IT project implementation and exceed the original planned budget?

A: This is very common in IT projects. First, it must be clear that the subsidy amount is fixed at the time the "Subsidy Grant Decision Notice" is issued and generally will not be increased simply because project costs rise. There is, however, some room for adjustment within a certain range. Suppose you originally planned to invest 3 million yen and had 2.25 million yen in subsidy approved. If the actual cost rises to 3.3 million yen (a 300,000 yen overrun), you will need to raise more of your own funds to cover that additional 300,000 yen. The subsidy, however, is still disbursed at 2.25 million yen, unchanged. To avoid this risk, we recommend: (1) choosing an experienced IT service provider at the application stage and asking them for a clear fixed-price quotation (fixed-price contract); (2) clearly defining the project scope and the charges for additional work in the contract with the IT service provider; (3) reserving a 5–10% contingency budget. If project costs do rise substantially (by more than 20%), you can apply to change the subsidy plan, but this requires submitting a change application to the subsidy committee, the approval of which is fairly strict, so it is not advisable to rely on it.

Q4: I want to apply for the DX subsidy, but my company is very small (only 3 employees)—do I qualify?

A: Most DX subsidy programs set the eligibility threshold at "SME," and under Japan's definition, a manufacturing enterprise with no more than 300 employees and capital of no more than 300 million yen qualifies as an "SME." Your 3-person enterprise fully meets this standard. In practice, however, some regions or specific subsidy programs may have an implicit preference for scale—reviewers may lean toward supporting enterprises that already have a certain scale and can more quickly show significant improvement outcomes. But this is not a hard restriction. A 3-person enterprise with a clear, highly feasible digital transformation project and clearly defined improvement effects has every chance of being approved. For example, a Chinese sole proprietor in Tokyo running an online shop and a physical store applied for a 200,000 yen system upgrade subsidy and was successfully approved. The key is that your business plan must clearly explain why you need to digitalize and what specific improvements digitalization will bring to this small team. Don't sell yourself short just because your enterprise is small.

Q5: How long does it take for the subsidy to actually be deposited? Can I advance my own funds to start the project during the application period?

A: This is a cash-flow concern many business owners have. From approval to actual deposit of the subsidy, the entire cycle usually takes 12–24 months, specifically: application–review (2–3 months) – subsidy decision – project implementation (6–12 months) – completion report submission – inspection review (1–2 months) – subsidy claim – final disbursement (2–4 weeks). In total, from application to receiving the money takes at least 12 months and, at the slower end, possibly more than 20 months. During this period, the enterprise must advance its own funds. To cope with this, we recommend: (1) ensuring the enterprise has sufficient liquid funds; (2) considering negotiating staged payments with the IT service provider—for example, 30% at signing, 40% mid-project, and 30% on completion—to ease the pressure of a one-time outlay; (3) some banks or credit institutions offer "subsidy-anticipation guaranteed loans," allowing the enterprise to apply for a loan to advance funds once it has the subsidy decision, then repay the loan with the subsidy. We recommend doing your financial planning well before applying for the subsidy, ensuring a 3–6 month capacity to advance funds.

A Real Case: A Chinese Enterprise's Successful Application Story

Case: A food import enterprise in Yokohama

Company size: 15 employees, annual revenue of about 20 million yen

Original problems:

• Purchase orders, invoices, and receipts were all stored on paper and hard to search
• Inventory management relied on Excel, frequently causing "duplicate ordering" or "stockouts"
• The website was 10 years old, could not display properly on mobile, and had extremely poor Google search rankings
• Preparing financial statements took 3–4 days and was error-prone

DX subsidy application:

Investment content (total of 3.8 million yen):

• Cloud ERP system: 1.4 million yen
• Website rebuild (responsive + multilingual): 1 million yen
• Inventory management system integrated with ERP: 800,000 yen
• Employee IT training: 300,000 yen
• 2 years of system service fees: 300,000 yen

Approval result: 2.85 million yen in subsidy approved (subsidy rate of 75%)

Implementation period: all deployment and employee training completed in 9 months

Actual results (statistics 6 months after project completion):

• Financial reporting time reduced from 3 days to 2 hours
• Inventory turnover increased by 35%
• Website traffic grew 180% year over year
• The share of online orders in total orders rose from 5% to 32%
• Staff work efficiency rose by 40%, freeing up 1 person to take on value-added work

This example shows that the DX subsidy is not just cost support but a systematic opportunity for business upgrade.

Conclusion: Action Recommendations

For Chinese business owners in Japan, the Digital Transformation Subsidy is an excellent policy opportunity. The key action steps are:

1. Act immediately: The next application round is usually in March or September; start preparing now and don't miss the window
2. Consult professionals: Contact your local Chamber of Commerce and Industry or a business consultant for the latest information
3. Sort out your project: Identify your digitalization pain points and improvement plan
4. Assemble a team: Work with a trustworthy IT service provider, accountant, and application consultant
5. Carefully prepare materials: Especially the business plan, which is the focus of the review
6. Plan for the long term: Do your funding and time planning for the full 12–18 months

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Need professional help?

If you have specific questions about the DX subsidy application process, project design, or material preparation, we welcome you to book a free consultation. We have a professional team of Japanese subsidy consultants and IT strategy consultants who can tailor a digital transformation plan for your enterprise and greatly improve your chances of a successful application.

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Don't let the cost of digital transformation become an obstacle to your enterprise's growth—the government subsidy is right there, waiting for you to apply.