Let's start with your more straightforward and simpler sentence.
As for Japan, it's a bit expensive....
where it means Japan.
But that's not what the original sentence is saying. The original sentence is
which can be translated as
The Japanese one is a bit expensive,...
There is context that is missing here. There is something that's being talked about. Perhaps it's a nice sweater, セーター, you like and you have a choice between a variety of sweaters one of which is Japanese. So, the sentence could have been
But if it's already understood that you're talking about sweaters, you can omit セーター and just say 日本の, the Japanese one.