Referencing Japan's Super Rugby franchise the Sunwolves, who made their debut in 2016, he said some of Japan's top players have really improved.
"With the Sunwolves playing, I've been watching them recently, I thought their win over the Bulls was super.
"Some of their stand out players have really come on further and further."
Schmidt's side will face Japan long before they meet in the World Cup, with two tests scheduled for June in the upcoming summer internationals.
The two sides will face off on June 17 and 24, and Schmidt is likely to have a young team take the field with 11 Irishmen having been selected to represent the British and Irish Lions against New Zealand this summer.
Schmidt highlighted that the June tests will be all the more relevant after the draw.
"I think June will be complicated for us. I think it's probably a good indication of what will come in two years times as well."
2019 Rugby World Cup draw