The Australian has overseen small green shoots of success since taking over in 2012, recording victories over Italy and Wales and helping local players get playing opportunities in the Southern Hemisphere Super Rugby competition.
But he told Kyodo News that major obstacles remain in the set up of the 2019 World Cup hosts after seeing an under-20 Japan side concede more than 200 points in three lopsided defeats to the A sides of Canada, Fiji and Tonga.
"The Japanese players are not prepared to play rugby. It's not the result of the coaching they are getting with the under-20s," he told the outlet after the 60-24 defeat to Tonga on Wednesday.
"The strength and conditioning programs at schools and universities are not good enough and the players have been exposed badly.
"The mindset of many players here is simply to be successful in Japan. But there is a huge difference between being successful at domestic level and international level.
"We need to make players understand what is required to play at international level."
Japan will enter a Super Rugby side from next year but Jones questioned if the country, ranked 11th by World Rugby, would be able to produce a team to compete with the best from South Africa, Australia and New Zealand.
The former Australia head coach is under pressure to claim Japan's second World Cup victory after their 1991 win over Zimbabwe when the tournament takes place in England later this year, but warned the system was not geared up for success.
"Super Rugby will hopefully enable the players to set a higher benchmark, but the problem is the whole structure," he said.
"Look at New Zealand. How is it, a country of five million can be the number one rugby playing nation for so long?
"It's because they have the right structure whereby every tier is producing players and coaches who are good enough for the next level up.
"You go from club rugby to ITM Cup to Super Rugby and if you are good enough to succeed ultimately to test rugby."
Jones said the 16-team Japanese top league, which has risen in profile in recent years with the arrival of many of the sport's top names on short lucrative contracts, was too big.
He said less teams would mean more competitive matches and queried why Japan had such a big top league compared to other nations.
"England... have 12 teams in their Premiership. New Zealand has five (Super Rugby) sides and a Tier 3 level competition (ITM Cup) and South Africa has six and the Currie Cup is of Tier 3 level. Japan has 16 sides in the Top League. That's too many."
(Writing by Patrick Johnston in Singapore; Editing by John O'Brien)
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