With the modernization of China's industry, how to introduce and diffuse advanced technology is the problem that must be faced. By the method of historical analysis, this paper analyzes Japanese auto industry development and experiences, in hope for providing reference to China's technological and economic development. Investigating Japanese auto industry development as the analysis shows that, in the process of technology introduction and diffusion, improving social and economic systems, formulating strategic economic development policies, promoting indigenous technology and management innovation, those are necessary conditions for international competitiveness. Improving technical education of labor force, especially in the areas such as operation management, production management, and quality management, it is important for China in terms of promoting technological absorption and improving innovation capability of the whole society, as well as enhancing the whole competitiveness and maintaining sustainable economic development.