The status reflects the state of China: the Chinese are pursuing their individual goals and fighting among themselves instead of uniting to drive out the overbearing foreign powers and regain sovereignty of their country.

While earning a living as a coolie and rickshaw puller in Shanghai, Chan saves Yi-kiu, a famous singer, from some gangsters and receives an invitation to join the notorious Green Gang.

Meanwhile, Takeda takes charge of the Black Dragon Society's activities in Shanghai, including sabotaging the Chinese military in preparation for the Japanese to launch a future invasion of China.

After discovering that Takeda is planning to release a deadly virus in Shanghai and allow the Japanese to use that as an excuse to invade China, Chan breaks into the Black Dragon Society's base and takes down every fighter who stands in his way.

Takeda commits suicide in humiliation after his defeat; Yumi, who was caught up in the fight and gravely wounded, dies of her injuries after Chan brings her back to Ching-mou School.