Xiao Yao Valley in the Song Mountains

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The old master Wu De gives his powerful magic sword to his student Li Laoquan. He send another one of his students, Zhao Bantian, away because of his unethical attitude. Ethic is, according to Wu De, the foundation of all martial arts. 30 years later Zhao returns to the village. He seems friendly but in fact his primary goals are to make money and be powerful in every way possible.