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This is possible. Japan has pretty solid infrastructure and is geographically close together. Bandwidth isn't really a problem for most modern games that aren't trying to cheat and do P2P. Realistically, most companies probably only do testing within the country for net code. Unless they're actively simulating lag and trying to deal with it, they probably think that their code is fine.
Which gets right up my nose. See the Street Fighter V net code bollocks when GGPO exists. Unfortunately, there's no real off the shelf solution for racing games that I'm aware of, and very few games have done what I would call a very good job, let alone an acceptable one. I think racing games have a unique problem in that it requires fairly spectacular prediction and correction software to give what looks like a smooth race even through a couple hundred ms of latency. It's very not easy, but at the same time it has to be done.
For an online focused game I think it has to be top priority. The net code development should get whatever resources it takes, even if that means running with GT6 assets and physics. If the game is primarily online, it doesn't matter how good everything else is if the net code makes it miserable to race.
And at the risk of being stereotypical, I'll throw out the idea that possibly a lot of games are still designed primarily with the local market in mind. That shouldn't be true of AAAs, but developers don't start as AAAs so perhaps it's an engrained culture thing. If you're a Japanese indie 10 or 15 years ago, as long as your net code worked nationally that was more than good enough.
