Japan hasn't exported any defence equipment in the last 50 years but Defence says that's a risk that would have to be managed if the Japanese Soryu is chosen as Australia's new submarine.
Defence department secretary Dennis Richardson said that absence of exporting experience was certainly one of the risks of dealing with Japan.
He said there were other risks in dealing with the other two contenders for the submarines deal, German firm TKMS and French firm DCNS. Both are proposing new designs for vessels that don't yet exist.
"We are conscious of what we might need to manage in that context. Each of the potential design partners carry different kinds of risks which will need to be managed," he told a Senate estimates committee said
Shadow defence minister Stephen Conroy pointed to an article by a Japanese defence official who said Japan's long absence from the global defence market meant the country would be better off focusing on exporting disaster relief and reconnaissance capabilities.
Mr Richardson said this wouldn't be the first time a government had taken a different view to an official.
"Clearly the Japanese government has taken a decision that it will compete in this process and take on the challenges that are involved," he said.
Defence submarines manager David Gould said it was a political initiative for Japan to compete in Australia's submarines competition.
"Without a political initiative, I don't think Japan would be participating in this," he said.
The Japanese government gave the formal go-ahead to participate on May 18.
Mr Gould said that would allow Australia to now start engaging with Japanese industry through the offices of their defence ministry.
The Japanese government, plus TKMS and DCNS, are now participating in the competitive evaluation process to decide on Australia's new submarines to replace ageing Collins boats.
That will be Australia's largest ever defence procurement, worth as much as $50 billion over the life of the program. A decision is expected early next year.
Defence Minister Kevin Andrews makes his first visit to Japan later this week, meeting Defence Minister Gen Nakatani and visiting the Kawasaki/Mitsubishi Heavy Industries commercial shipyard in Kobe.
Mr Andrews visited submarine builders in France and Germany in April.
The 2009 and 2013 Defence White Papers both said Australia would need 12 new subs to replace the six Collins boats.
But navy chief Vice Admiral Tim Barrett said that was being reconsidered for the new white paper, set for release in 2016.
"We are contesting not just submarines but other surface ships around what is affordable and what is required, and where our strategic circumstances stand right now in 2015," he said.
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