I suspect that rather like Germany Japan thought it would only be fighting a short 'blitzkreig' war and that any longer range requirements would be covered by the aircraft carrier. Hence the production of medium bombers only.
Another point is they were relying on operating from conquered or 'friendly' territory (eg Siam) so again a medium bomber would suffice.
IMHO the biggest mistake the Japanese made in WW2 (apart from the tactical success but strategic error par excellence, the Pearl Harbour attack) was to allow hubris to set in after the early victories against a hard pressed foe. The caused them to expand beyond their original plans and that well know military disease overstretch contributed to their inevitable defeat.