To establish management criteria for watershed forests, basic studies on sugi (Cryptomeria japonica) plantation forests were performed at Okinoshima, Shimane Prefecture, Japan. Fourteen forests were surveyed. In nine forests, which had not been thinned in over 10 years (not-thinned forest), the relative yield index (Ry) was >0.8 and stand density was high. In two forests, which had been thinned in the past 10 years (recently thinned forest), Ry was <0.7 and stand density was low; these values were consistent with the yield table for the San-in region (western part of the Japan Sea littoral zone). In two other recently thinned forests, Ry was >0.7 and stand density was high. In the remaining recently thinned forest, Ry was >0.9 and stand density was very high, despite being thinned recently. Stand density was high after thinning because (1) the forest owner had no clear production target, (2) the forest was thinned only to meet criteria for financial support from the government, and (3) stand density was extremely high before thinning. A definition of thinning is to thin trees to achieve a production or management target; however, with no clear target, the thinning of very dense forests is not for maintenance, but simply to cut some of the trees. Criteria for obtaining financial support from the government involves the ratio of cut trees to total trees before thinning; thus, very dense forests can still remain dense, even after thinning. Therefore, criteria for acquiring financial support from the government must be reconsidered.