The diffusion of solar photovoltaic (PV) systems in Japan after introducing the feed-in tariff (FiT) scheme resulted in the import of Chinese PV products into its market, which has challenged Japanese PV manufacturing. In this chapter, we explore two research questions: how the increased imports of Chinese and foreign PV products into the Japanese market affected the PV industry, and how the above impacts have affected Japan’s renewable energy-related policies. We collected numerical data from industry associations and information from news articles and traced the response of the five major Japanese PV firms. We also conducted interviews with Japanese government officials and analyzed the major characteristics of its policy-making. We find that the penetration of Chinese products caused the Japanese firms to retreat from cell or module manufacturing and redirect their business focus. The Japanese government, instead of protecting the PV industry, applied a long-term vision and a holistic energy policy principle: a search for the next energy technology and energy security. These resulted in adjustments in energy policy, which now emphasizes technology self-sufficiency and diversification of energy sources, and a larger ratio of renewable energy in the power supply.