Driven to revenge by the death of his family at the hands of Dù Tiān-Fēng, Zōngwǔ turned evil and began to train in the Hokuto Ryūka Ken arts. Pro-war, he believes that it is a good opportunity to cleanse evil from the world. Later he joined the Nazis as a Lieutenant in the Waffen-SS even though he was Chinese. He had the chance to kill Adolf Hitler but didn't because he felt Hitler was too pitiful. Edmund Heckler brings him to Shanghai during the Battle of Shanghai. Zōngwǔ survives an attempt on his life after Dù Tiān-Fēng asks for Edmund Heckler to organize the hit.
Zōngwǔ desired to kill Kenshirō Kasumi in order to prove that Hokuto Ryūka Ken was superior than Hokuto Shinken. After killing Dù Tiãn-Fēng and finally avenging his parents' deaths he renounced his evil ways and became a monk. It can be assumed that he passed his fighting style to Jukei.
Semi-historically, one of the unlikely, but possiblle reasons that Liú Zōngwǔ could have become a German Nazi officer despite being Chinese was that during the early 20th Century, China was in a pre-war semi-alliance with Germany which ended prior to the war, where both countries relied heavily on each other for exchanging raw materials from China while Germany provided advisors and technology. The use of C96 guns and the Potato Masher hand grenades can be seen throughout Souten no Ken. In reality, the war put an end to all Sino-German cooperartion, and the possibility of a Chinese ranking Nazi officer would be a near impossibility, as Germany allied with Japan, and Japan attacked America and joined the war on Germany's side. Chiang Kai-Shek's son, Chiang Wei-Kuo, was also officially a graduate of the German Wermacht.