In the latter half of the nineteenth century the adherents to the Panthay cause, chiefly Hui migrants from Dali, Baoshan, Shanning, Menghua and elsewhere in southern and western Yunnan, were persecuted by the imperial Manchus in China.

Many fled with their families across the Burmese border and took refuge in the Wa States where, about 1875, they set up the exclusively Panthay town of Panlong, becoming the de facto rulers of the area as their wealth and power increased.

[3] According to Sir George Scott, at least 15 years after the collapse of the Yunnan Muslim Rebellion, the original Panthay settlements had grown to include numbers of Shan and other hill peoples.

He further mentioned that there was scarcity of water in Panglong while describing the town:[4] It stands at a height of four thousand six hundred feet above sea level, in a hollow surrounded by abrupt low hills, or rather cliffs, with a singularly jagged outline.

By the time Scott visited Panglong – at least 15 years after the collapse of the Yunnan Muslim Rebellion – the original Panthay settlements had grown to include numbers of Shan and other hill peoples.

Harvey, by 1926 this uneasy situation erupted into the local "Wa Panthay War", in which the latter were victorious and as a result of which Panlong threw off its vassalage to Phankham and reinforced its dominance over the trade routes of the region.

[8] In addition to legitimate trading, by this time the Panthays of Panlong were securely established as 'the aristocrats of the opium business' in the region now commonly designated the Golden Triangle, leaving the Petty and risky business of peddling this highly profitable commodity locally to Shan and Han Chinese dealers, and instead running large, well-armed caravans in long-distance convoys far into Siam, Laos, Tonkin and Yunnan.

When Harvey visited Panlong in 1931 he found that Panthay numbers had risen to 5,000 ('including local recruits'), that they were financed by Singaporean Chinese, had 130 mauser rifles with 1,500 mules, and exported opium by the hundredweight into French, Siamese and British territory, each muleload escorted by two riflemen.

Numbers of Panthay restaurateurs and innkeepers, merchants and traders settled in the urban centres of upland Burma – chiefly at Lashio, Kengtung, Bhamo and Taunggyi – to service the needs of these miners, passing caravaneers and the local inhabitants, whilst other settlements largely devoted to trade with the indigenous Shan and Karen populations sprang up along the Salween River.

Chiefly, however, beyond the urban centres of the Burmese lowlands, the Panthays continued their involvement in the caravan trade with Yunnan, transporting silk, tea, metal goods and foodstuffs, including eggs, fruit, nut and even the renowned Yunnanese hams (doubtless for consumption by their Han fellow countrymen) from China to Burma, and carrying back European manufactured goods, broadcloths, specialised foodstuffs (edible bird's nests, sea slugs) and above all raw cotton, to Yunnan.