After his defeat at the beginning of an earlier episode after a failed attempt to frame Shifu for a crime, the baboon thief named Shang Hai is back, and this time, he's targeting the Land of Prosperity. Fa has grown exponentially since the events of Emperor Lu Kang, and has become the Dragon Warrior of the Land, yet like Po, she has a lot to learn because Sun Bear clearly saw greatness in her. This has been clear since she first encountered Shang Hai, and learned that he was not like the same Shang Hai that Shifu and Sun Bear defeated before. He had stolen several Kung Fu and Chi techniques and has been using them in his thieving career, and used it to create his own criminal syndicate in the form of all the criminals that were defeated in Emperor Ku Kang Part 2 quickly following introduction, including the one whom he thinks of as an adopted son, the shamed Chi master panda Yi-Yi, who did well in giving him the power to defeat his enemies. Thus, Po and the Lodgers are called down to deal with it. But they are in deep trouble when they accidentally reveal Tsin Shu's new Chi-Ki Force under development as several Tanuki from both Japan and China have come to help him create a newfound land, as well as their own valley since they first arrived in Shangri-La eventually building the cities of what will now be Shangri-La City, and like Kai, he threatens to come after them and enslave them just like Masu Shu did, and repeat history. Thus, they need to help prevent that from happening. Thus, while the heroes beat them to Shangri La City (Zhongdian in their time period), they need to plan fast as Shang Hai has proven to be a great match for them.
(When Fa reacts to being called fat, as the scene goes in her own awkwardly-bodacious way, the end result causing significant damage, and in the end, like in the same episode, it bites them in the ass in the same way.)