The film is set in Foshan, China sometime in the late 19th century during the Qing dynasty. Liu Yongfu, the commander of the Black Flag Army, invites Wong Fei-hung on board his ship to watch a lion dance. Some sailors on board a nearby French ship hear the sound of firecrackers and mistakenly think that Liu's ship is opening fire at them, so they return fire and injure the dancers. Wong picks up the lion head and finishes the performance. Liu comments about the perilous situation China is in, and then gives Wong a hand fan inscribed with all the Unequal treaty signed between China and other countries.
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