In Shenmue IV, Ryo puts up a better fight against Lan Di, but the real bad guy is revealed in possibly a cliffhanger.
Chi You chose him long ago, someone close to the last dynasty, an imperial envoy, who would have the resolve and resources to be a reliable agent. Chi You has made age him a bit slower, so he can live longer to carry out his task. Zhu/Tentei in fact about 100.
Zhu sent Ryo the letter late on purpose, he told Lan Di Iwao had one Mirror, so he can begin 'the game'. Ryo opens the letter written in ancient characters. Zhu is very old and cultured. Ryo follows the first bread crump to Master Chen, and learns about a second mirror (because Zhu purposely divulged that to Chen) Chen eventually gives in and provides Ryo the means to reach to China and Chen proves to be a reliable pawn. Ryo meets the distinguished master, Xiuying, who resides in the hills of Wan Chai, he finds the Wullishu, and finds another bread crumb, the Chawan sign placed in Zhu's book. This leads him to Zhu's agent Zhang, there Ryo becomes an enemy of the Yellow heads, and Ryo is lured further into the underworld and becomes closer to his target Lan Di.
Eventually Ryo reaches Kowloon and enters the ghost hall building, looking for Zhu. Ryo places 4 keys in a statue, that resemble the sigils of the 4 leaders of the CYM. Within the secret room, 'the ghost' the shadow leader who rules over the 4 rulers, Yuanda Zhu/Tentei awaits.
Zhu is kidnapped, taken to the other Yellow Heads/grunts of the CYM, they don't know who he really is, he's a ghost/master mind within the heart of CYM, only a few know who he is. Ryo rescues him, Lan Di arrives on the helicopter, and recognises his crazy mentor as Yuanda Zhu "fuck him, I'm out of here, not another one of your games old man" lol, Zhu another persona, 5 corp, a front company.
Zhu tells Ryo about the treasure map, and tells him Lan Di is in Guilin. When Ryo/Shenhua reaches Niaowu, Zhu asks Zhang to keep track of their progress and head there. Ryo meets him in again, Zhang/Zhu uses Ryo to deal with a conflict between the Blue Spiders (grunts likely hired by Lan Di to rummage Bailu Village) and Tentei/Zhu's personal network of agent.
What does he want? I guess he's trying to manipulate Lan Di by giving him misleading information, assigning his spies and setting up proxies, and he has been leading Ryo, Lan Di, Shenhua towards fulfilling his own foreseen prophecy. I imagine a scene, where at one point he drops his meek veneer. Eventually Tentei finishes arranging all the pieces of the board, and triggers a climactic event. The treasure was just a distraction, the last dynasty wanted a way to preserve their legacy, but Tentei was given the designs to hand to the stone masons, he's in a position of power, to interject with the mirror's creation. In the final battle in the series, Tentei is able to fully harness the power of Chi You. He rejuvenates himself and becomes younger. Ryo and Lan Di fight a formidable Tentei, who demonstrates an array of technique featured the Wulinshu. The ultimate boss battle. Whilst he's distracted, Shenhua takes the sword of 7 stars and destroys his source of power, the Mirrors.
That's my crazy theory (fan fiction ok...)