Lao Che was a powerful crime lord in Shanghai in 1935, who owned a nightclub called Club Obi-Wan. His two sons, Kao Kan and Chen, helped him run his businesses, and he kept an American singer named Willie Scott as his moll. Supposedly the descendant of Nurhachi, the first emperor of the Manchu Dynasty, Lao Che sought to possess his ancestor's cremated remains. To this end, he hired Indiana Jones to obtain it for him, in return for a rare diamond Lao Che had in his possession, the Peacock's Eye.
Although Jones succeeded in acquiring Nurhachi's ashes, Lao Che doublecrossed the archaeologist, putting poison into his drink during their meeting at Club Obi-Wan. He offered to give Jones the antidote to the poison, if Jones would return the Peacock's Eye. Instead, Jones took Willie hostage and threatened to kill her unless Lao Che gave it to him. Unimpressed, Lao Che simply said, "You keep the girl, I find another."
A fight subsequently broke out after Chen shot and killed Jones' companion Wu Han, with Jones retaliating by killing Lao Che's oldest son and taking the antidote. An enraged Lao Che ordered his henchmen to eliminate Jones. He, Willie and the boy Short Round escaped to the airport with Lao Che, his surviving son Kao Kan and their henchmen in pursuit. Jones boarded a plane with the help of Earl Weber, and before taking off, called to his enemy, "Nice try, Lao Che!"
The plane, as it turned out, was owned by one of Lao Che's front businesses. The pilots knew just what to do, and Lao Che chuckled darkly knowing his eldest son's killer would not get away so easily.