This is the tip of a very large, complicated subject. Start by reading https://www.nononsenseselfdefense.com/four_focuses.html. Here we have two different ends conflicting. MMA is a sport, along with boxing, K5 and sansho and judo. Many of the Chinese stylists today are carrying on a cultural or demonstration tradition.

From that point of view, a martial arts instructor can be very competent at his job while not producing effective sport fighters. For example, many kids karate schools are very effective daycares. A seniors tai qi club may be an excellent way to get people moving and prevent injuries from falling. An MMA gym is a great place for young men to work through their testosterone driven haze. Why can't a martial arts school be treated like a Go studio or a chess club?

And if you depart from fitness for purpose, then you have problems. SEAL sentry removal techniques taught at an MMA gym or a kids karate school would be a disaster. A sport fighter teaching MMA at a seniors tai qi club is going to find a very uninterested audience. It goes the other way, too. A sport fighter training police is a problem because he is probably unaware of the laws governing use of force.

So what Xu has done is the equivalent of a kid from the boxing club going and beating up the chess club.