It's about honor, respect, and sportsmanship. When Mr. Xu realized the superiority of his martial art form, he should have behaved himself in a more dignified manner: let his superiority show without giving his opponent a beating.
What you are alluding to is the idea that he could beat him with a hand behind his back so to speak. (Which might be true) but could be perceived as even more disrespectful imo.