Failed to materialize may be stretching the truth a little. The story is that management was sent to China to negotiate the routes and they made some fundamental errors. Instead of hiring a professional to assist in the negotiations, they decided to do it on the cheap and managed to offend the locals big time. The CEO, who should have been involved to begin with, traveled out to smooth things over and only managed to make things worse. As a result they were invited to leave China via the shortest route available.
With no contract, there's no use for two brand-new Boeing 767s ordered specifically for the Asian runs and pilot jobs are at risk.