How Many Quotations Are Required for Subsidy Applications? The Ultimate Guide to Competitive Bidding and Price Reasonableness

What Are Quotations and Competitive Bidding in Subsidy Applications?

A quotation (見積書) is a formal price document issued by a supplier to a purchaser, clearly specifying the name, specifications, unit price, total price, and validity period of goods or services. In subsidy applications, quotations serve to prove that purchased equipment or outsourced services are priced at reasonable market rates, preventing applicants from artificially inflating procurement costs to claim higher subsidies.

Competitive bidding (相見積) refers to the practice of obtaining quotations from multiple suppliers. Most Japanese subsidy programs—particularly those led by the Ministry of Health, Labour and Welfare or the Small and Medium Enterprise Agency—explicitly require in their public offerings: when purchasing goods or services above a certain amount, applicants must obtain quotations from two or more suppliers and submit these quotations as supporting materials in the application. This ensures transparency in subsidy use and effective allocation of funds.

For Chinese business owners in Japan, understanding the mandatory nature of competitive bidding and how to execute it is a prerequisite for successful subsidy applications. If you submit quotations from only one supplier due to unclear requirements, the reviewing authority may not only note 「incomplete materials」 but might exclude that entire expenditure category from subsidization, directly reducing your final subsidy amount.

Mandatory Requirements for Competitive Bidding: How Many Quotations Are Needed?

The answer to 「how many」 depends on the specific subsidy program and purchase amount. Official public offering guidelines are authoritative, but general principles are as follows:

Typical Standard Requirements:

• Smaller purchases (specific thresholds vary by program public offerings): may require only one quotation or be exempt from competitive bidding requirements
• Purchases reaching a certain scale: typically require quotations from two or more suppliers
• Very large purchases or custom services: may require three or more quotations

Key Points in Practical Implementation:

1. Review the public offering guidelines in advance: Each subsidy program's competitive bidding requirements are specified in official public offering documents. You must clarify this before applying; requesting supplemental materials after submission causes delays.

2. Selection of quotation suppliers: Suppliers should be actual market participants capable of genuine competition (for imported equipment, authorized dealers or sales agents are acceptable). Do not select obviously non-competitive suppliers merely to meet quotation counts.

3. Consistency in quotation timing: All quotations should have close issuance dates (typically within the same month) to reflect market prices in the same period.

4. Attention to validity periods: Quotations must clearly state their validity period. If a quotation's validity has expired, it must be updated before submission.

Price Reasonableness Review: Which Quotation Determines Subsidy Amount?

Many applicants mistakenly believe: After submitting multiple quotations, the subsidy will be calculated based on the cheapest option. In reality, competitive bidding's purpose is not to force selection of the lowest price, but to verify reasonable price ranges through transparent comparison.

The reviewing authority's typical evaluation logic:

1. Compare price variance among quotations: If several quotations differ only slightly (typically within ±10–15%), prices are considered reasonable; if one quotation is notably higher or lower, it warrants scrutiny.

2. Consider supplier credibility and service scope: Different suppliers may offer different service ranges, warranty periods, and technical support. The reviewing authority evaluates comprehensively rather than mechanically selecting the lowest price.

3. Applicant's rationale for price selection: If you ultimately select the second-lowest or higher-priced quotation, you must clearly explain your reasoning in the application (for example, 「This supplier provides free 2-year maintenance」 or 「Shortest delivery time」). You cannot select a notably expensive quotation without legitimate justification.

4. Subsidy amount determination: The subsidy authority determines the project expense based on the selected quotation, then multiplies by the subsidy rate to calculate the subsidy amount. If a quotation is deemed unreasonable, that expense may be reduced or excluded entirely.

Common Quotation Submission Errors and Compliance Standards

Pitfall 1: Submitting Only One Quotation, Hoping It Goes Unnoticed

The Problem: Even when regulations require competitive bidding, some applicants submit only one quotation, hoping the reviewing authority won't notice.

Consequence: The application authority will issue a supplementation request, delaying the review timeline. If supplementation is requested after the submission deadline, that expense category may be excluded from subsidization.

Correct Approach: Before beginning procurement, clearly identify requirements and proactively request quotations from at least two suppliers.

Pitfall 2: Quotation Suppliers Are Too Closely Related

The Problem: Some enterprises request quotations from different divisions of the same parent company or from multiple 「shell companies」 actually operated by the same team.

Consequence: The reviewing authority will recognize this as superficial 「competitive bidding」 and refuse to accept it, deeming it inconsistent with the program's intent.

Correct Approach: Select genuinely independent, real suppliers with authentic market competitiveness.

Pitfall 3: Quotation Content Is Vague or Incomplete

The Problem: Quotations lack clear product names, specifications, unit prices, total prices, or validity periods.

Consequence: The reviewing authority cannot verify the quotation's authenticity or validity, and the material will be deemed non-compliant.

Correct Approach: Ensure each quotation includes complete information, follows proper format, and ideally bears the supplier's company seal or signature.

Pitfall 4: Price Variance Among Quotations Is Unusually Large

The Problem: Three quotations are 1 million JPY, 1.5 million JPY, and 2 million JPY—a 100% spread.

Consequence: The reviewing authority may question whether genuine market research occurred. They may request explanation for your price selection or deem the pricing mechanism unreasonable.

Correct Approach: If quotation variance is genuinely significant, explain it in your application (different configurations, delivery timelines, service inclusions, etc.).

Essential Elements and Standard Format for Quotations

To ensure your quotations pass review without issues, include the following essential elements:

Supplier Information:

• Company name, location, contact information
• Company seal or authorized signature
• Quotation issuance date

Product/Service Information:

• Product name and specifications (must be specific and verifiable)
• Quantity and unit
• Unit price (clearly noting before-tax and after-tax)
• Total amount
• Delivery or performance timeline

Quotation Validity Period:

• Explicitly state 「valid until [date]」
• Typically at least 30 days

Other Potentially Required Information (varies by program):

• Warranty terms
• Technical specifications or performance metrics
• Payment conditions

Common Best Practices:

If a supplier's original quotation lacks sufficient detail, request supplementation. If the supplier cannot supplement (e.g., small vendors), you may attach a 「Price Confirmation Statement」 to the quotation copy, with both you and the supplier signing to confirm details.

Competitive Bidding Operational Process and Timeline

From identifying procurement needs to final submission, the competitive bidding process typically requires 2–4 weeks. Here is the recommended workflow:

Step 1: Identify Procurement List and Budget (Weeks 1–2)

• List all equipment and services to be purchased
• Per public offering guidelines, clarify which items require competitive bidding
• Make preliminary cost estimates

Step 2: Identify Potential Suppliers and Request Quotations (Weeks 2–3)

• Confirm at least 2–3 suppliers via industry associations, online platforms, trade shows, or referrals
• Provide each supplier the same procurement specifications document with clear parameters and expectations
• Collect formal quotations from each

Step 3: Organize and Verify Quotations (End of Week 3–Early Week 4)

• Compare price reasonableness across suppliers
• Confirm no obvious omissions or anomalies
• Communicate with suppliers for clarification if necessary

Step 4: Determine Final Procurement Plan and Document in Application (Week 4)

• Select the supplier to procure from (typically offering best value, though not necessarily cheapest)
• In the application, explain your supplier selection rationale
• Submit all quotation copies as attachments with the application

Timing Recommendation:

Do not wait until the subsidy application deadline approaches to request quotations. Ideally, begin requesting quotations immediately after the subsidy program opens, allowing ample time for comparison and giving suppliers sufficient response time.

Frequently Asked Questions (FAQ)

Q1: Can I submit competitive bidding quotations if I already purchased before applying?

A: Subsidy programs typically require 「apply first, then purchase.」 If you complete purchases before submitting quotations, the reviewing authority will deem this non-compliant (you cannot prove you conducted market research before purchasing). Even if supplementary quotations are added, that expense may be excluded. Recommendation: Complete all purchases after subsidy approval. Specific requirements are subject to the managing authority's determination.

Q2: Can I get quotations from Chinese suppliers while purchasing in Japan?

A: Yes, but ensure: (1) the Chinese supplier provides formal quotations in Chinese or Japanese; (2) quotations include complete final costs covering import clearance and logistics; (3) quotation authenticity and supplier creditworthiness are verifiable. The reviewing authority may conduct additional scrutiny of international procurement, so it is preferable to select Chinese suppliers with Japanese agents or those providing Japan-based shipments.

Q3: Must quotations be in Japanese? Will Chinese suffice?

A: Japanese is preferable, allowing direct review authority review. If the original quotation is in Chinese, you may self-translate it to Japanese, noting 「translation date」 and 「translator」 (you or your employee) on the quotation. Ensure translation accuracy, particularly for technical specifications and pricing. If uncertain, consult the managing authority before submission about accepting Chinese originals with Japanese translations.

Q4: A supplier says 「this quotation is confidential; I cannot show it to others.」 What do I do?

A: Subsidy applications require you to submit quotations as materials. If a supplier refuses to issue a quotation or demands confidentiality, that supplier cannot actually participate in competitive bidding. Seek suppliers willing to issue formal quotations. Most established manufacturers and commercial suppliers issue standard quotations—this is normal business practice.

Q5: One quotation among several is notably higher. Can I exclude it?

A: Yes, but explain your reasoning in the application. For example: 「Supplier A has the lowest price but longest delivery time and no warranty; Supplier B has mid-range pricing, 3-year warranty, and technical support; we selected B.」 The reviewing authority understands factors beyond price matter. However, if you exclude a quotation without legitimate rationale, the authority may question your price selection logic.

Q6: Can I use last year's quotations?

A: Not recommended. Market prices change, and the reviewing authority needs to confirm quotations were obtained recently before application submission. Use quotations issued 1–2 months before applying. If you must use older quotations, explain your reasoning in the application and preferably confirm with the supplier that pricing remains valid.

Practical Scenario Example (Fictional)

Scenario: A Chinese business owner operating an IT training company in Tokyo plans to apply for a subsidy program and intends to purchase 30 laptops for instructional use. Assume the public offering guidelines specify 「purchases of 1 million JPY or more per item require two or more quotations.」

Operational Flow:

1. Step 1: The company confirms the estimated total for 30 laptops at approximately 2.5 million JPY, clearly exceeding the 1 million JPY threshold, so competitive bidding is mandatory.

2. Step 2: The company requests quotations from three suppliers (a major electronics retailer A, a local IT equipment vendor B, and an online procurement platform C), requesting identical laptop configurations from each.

3. Step 3: The company receives three quotations:

   • Supplier A: 2.5 million JPY (includes 2-year warranty)
   • Supplier B: 2.45 million JPY (includes 1-year warranty, free shipping)
   • Supplier C: 2.6 million JPY (includes 3-year warranty, 24-hour technical support)

4. Step 4: The company analyzes quotations with a narrow variance (6% between highest and lowest), within the reasonable range. The company selects Supplier B (best price and free shipping minimize costs; 1-year warranty aligns with training program timeline).

5. Step 5: In the subsidy application, the company:

   • Submits all three quotations as attachments
   • Clearly states in the 「Procurement Plan Explanation」 section: 「Selected Supplier B because: optimal pricing, free shipping reduces company costs; warranty period aligns with our training program duration」
   • Ensures quotations clearly display product specifications, quantities, and unit prices

Such materials are typically deemed complete, transparent, and reasonable by reviewing authorities, and this expense category ordinarily will not be reduced due to quotation issues.

Official Basis and Verification

This article's content is based on general principles governing Japanese subsidy application compliance. Specific competitive bidding requirements, amount thresholds, submission material specifications, and other details for individual subsidy programs are subject to the latest public offering guidelines issued by each managing authority (Ministry of Health, Labour and Welfare, Small and Medium Enterprise Agency, prefectural governments, etc.).

Before submitting any subsidy application, be sure to:

1. Download and carefully review the official public offering guidelines for that subsidy program
2. Search for sections on 「相見積」(competitive bidding) or 「見積書」(quotations), confirming specific requirements
3. If uncertain, directly consult the recruitment window or certified guidance institutions

Common Public Offering Window Inquiry Locations:

• Ministry of Health, Labour and Welfare Prefectural Labor Bureaus
• Small and Medium Enterprise Agency Website
• Prefectural industrial support organizations and chambers of commerce

Final Recommendations

The competitive bidding system may seem complex, but its essence is simple: 「multiple quotations, transparent comparison, reasonable selection.」 For Chinese business owners in Japan, the critical factor is advance planning. Do not procrastinate until the deadline, and do not gamble on submitting a single quotation.

3 Quick Action Points:

1. Upon receiving public offering guidelines, immediately flag competitive bidding requirements, clearly identifying which procurement items require multiple quotations
2. Immediately request quotations from potential suppliers, giving yourself ample time for comparison and decision-making
3. Carefully document all details on quotations, ensuring materials are complete, authentic, and traceable

If you have questions about competitive bidding requirements for a specific subsidy program, please feel free to consult at no cost. Subsidy application success often hinges on attention to detail—and competitive bidding is precisely one of the most frequently overlooked details.