This is sort of a multi faceted question, so I'll try to answer in a few parts. I'm largely going to focus on the typical bolt action rifles, but the same can be said largely for handguns and machine guns, though it's pretty hard to effectively cover each of these topics in one response, other than to say, Japanese machine guns and handguns were effective enough.

1. Japanese rifles were not inferior:

Japanese small arms design wasn't particularly lacking. The Type 99 (and even the older Type 38) were very well designed weapons. When compared to other countries small arms at the time, they were on par or even superior in certain aspects. The action on the Type 99 is often considered one of the strongest military bolt actions ever made (according to Hatchers Notebook). Many magnum sporting rifles have been built on these actions and they function quite well. In addition, they were one of the first rifles to use a chrome lining to increase barrel life, reduce corrosion and make cleaning easier. Early on in production, they included anti-aircraft sight leafs, a monopod to shoot off of, and a dust cover over the action. Here's a good photo by C&Rsenal : http://i.imgur.com/DBsruZy.jpg

Japanese wood was not as strong as American walnut and beechwood, so the wood stock was designed so that the grain was parallel to the slope of the bottom, keeping the wood grain from being exposed and easily damaged or split. I suspect that this also allowed smaller sections of wood to be used for making rifles.

2. Propaganda promoted the inferiority of Japanese rifles, especially later in the war with "last ditch" alterations. This is true of German weapons as well

As the war progressed, Japan still had a need for small arms and their resources for procuring resources was limited. This is when the last ditch rifles started being producted. Some typical modifications included using a wooden buttplate in place of steel, changing the adjustable rear sight to a simple fixed rear sight, removing the dust cover and monopod, and modification of several other parts to either save time machining or save materials.

There is a myth out there that these last ditch rifles were not safe and this was perpetuated by the firing (and subsequent exploding) of Japanese training rifles that look identical to the Type 99 but were not marked as such. These trainers did not have rifling in the bore and the receivers were not heat treated properly to handle the pressure of firing. Unfortunately they will chamber rounds which allowed folks to blow them up.

3. Compared to other nations, Japanese small arms were about on par.

While this is somewhat subjective, Japanese small arms were comparable to the majority of other nations at the outbreak of WWII. With the exception of the United States (which often did still issue bolt action 1903 rifles to the USMC early on), the rest of the world issued mainly bolt action rifles to its troops.

While each of these nations used many different patterns of rifles and often did issue semi auto rifles or machine guns, this is typically what each Nation issued their troops:

• The Russians used their M91/30 Mosin Nagant rifle and variations thereof.

• The Germans used a K98k rifle

• The British used their Lee Enfield No. 4 as did the Canadians as well as older SMLE rifles

• The Italians used the Carcano rifle

• The French used the MAS 36 rifle as well as older Lebel and Berthier rifles

• The Chinese used a copy of the K98 often called the Chan kai shek rifle as well as a copy of the Gew 88.

Arguably these rifles are all about as effective as the next, although others were better made and more advanced. It's worth noting that not only did the Japanese simplify their designs as the war progressed, but each nation did essentially the same. Nearly every nation made simplifications in production that either reduced cost or increased production speed. This was often a simplification in small parts or involved fewer cuts on receivers.

To name a few:

• The Russians modified their M91/30 receiver as the war progressed, removing less material from the receiver. They also quit adding metal to the sling loops to reduce metal usage. The quality of bluing is also noticeably different in pre-war vs wartime rifles.

• The Germans did a lot as the war progressed. I couldn't even begin to cover their small arms development throughout the war. There are hundreds of books detailing these changes in each rifle produced. There were even dedicated programs to making simplified weapons for production and issue to civilians. Google the Volkssturm and the rifles designed for their use.

• The British modified their No. 4 series of rifles as well as their handguns (noted with a * after the model designation). It typically involved a change in small parts to be cheaper and quicker to manufacture. They also contracted Savage in the US and Long Branch in Canada to produce rifles for them. Lend lease rifles manufactured in the US are marked US property.

• The Italians made changes to their Carcano rifle throughout the war, changing variations and even cartridges, eventually reverting to their older design and cartridge as they failed to completely adopt the new technology.

• The United States M1 Carbine development changed throughout wartime production with changes improving the functionality or durability of the rifle and some aiding in production by switching to stamped metal parts instead of forged or milled parts.

While each nation made changes, its definitely more evident in the loosers of the War. Desperation often leads to cutting corners, especially when it comes to cosmetics of the rifle.

A good recourse that I often reference and suggest would be Forgotten Weapons and C&Rsenal. Both are also fellow redditors active on /r/guns.