The fact that Japan is not giving back some islands it borrowed from China in World War II is causing some problems for TV maker, Sharp.
Troubled Sharp had been hoping that China Electronics would come to the party and save its bacon with a planned cooperation pact.
The pair would align to make the world's most advanced LCD panels.
But the state owned China electronics chairman Rui Xiaowu told Reuters that while the cooperation on the production of the 10th generation LCD panels has already obtained approval from China's top economic planning agency, everything has been put on hold by the purchase of the islands by the Japanese government.
Japan's move to nationalise two disputed islands in the East China Sea, known as the Diaoyu in Chinese and the Senkaku in Japanese, triggered violent protests and calls for boycotts of Japanese products across China.
Sharp's former President Mikio Katayama has confirmed that cooperation with China Electronics had stalled because Chinese authorities were only prepared to approve a 10th generation plant rather than the 8th generation facility earlier agreed.
Sharp only wants to give away some of its more elderly LCD technology.
Sharp is not the only one which is suffering from the island crisis. Japanese car makers have reported a slide in sales in China.