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Master Li is the Chinese counterpart of John Kreese in the original Karate Kid trilogy. Master Li was teaching some kids to break bones but Dre and Han interrupt about the Kung Fu tournament and Master Li tells him to train and not be late for the tournament. Later, Master Li tells one of his students to break Dre's leg and said student succeeded in doing so but got disqualified. Master Li congratulates Han for getting Dre back on the tournament and Cheng challenges Dre. In the end, Master Li lost all his students to Han after losing to him in a fight.
Deleted Scene
Master Li was angry at Cheng for tolerating failures but Han fights Li and subdues him to make him calm (mirroring the ending of the original movie). Master Li was resting angrily, but Dre's mother punched him at the end of the movie.
Trivia
Though Cheng is Dre Parker's bully and arch-nemesis, Li is true main antagonist because he is Cheng's master and had bigger plans than Cheng.