Mortal Kombat 1/General Shao/Strategy

Kameos at a Glance

When picking a kameo for Shao, the main considerations are:

Being able to turn Axe F2 into a full combo
Giving a safe combo confirm from B3 and B1
Maximizing the damage from Axe 22
Giving an answer to enemy projectiles
Covering the Power Strike (DF4) cancel gap
An attack to use with the lengthy animation of Reverse Treechopper (DF2)
A low cancel to complement his overhead enders
A safe, hopefully gapless ender for his midrange pokes and advancing normals
An armored reversal to use in places where Devastator would be insufficient.

This may seem like quite the laundry list, but make no mistake - Shao is highly kameo versatile, and any kameo that fulfills even a few of these requirements is a strong choice. A brief summary of how every kameo in the game works with Shao:

Kung Lao

Currently the most popular kameo, General Shao has excellent synergy with Lao.

Low Hat fulfills quite a few of the above criteria by itself. While it is no longer plus on block, being a safe low still allows it to be used with his overhead enders and midrange pokes, and from afar it's superb for counterzoning and getting in - deploy Low Hat on the ground, and then approach from the air with Axe J2. Holding Low Hat also lets him use it to cover the Power Strike gap.
Spin, while not the best armored reversal, is still a usable alternative to Devastator and can be applied in situations where Devastator would whiff. From an Axe 22 confirm, Spin lets Shao continue the combo with J12 > 22 for better damage and corner carry.
Away We Go (teleport) will let Shao get full combos from Axe F2 while giving him an additional tool (albeit a slow one) against zoning, though the Motaro teleport is generally better for these purposes.

Shao also has numerous opportunities to end combos with Low Hat for dangerous oki situations. These are amplified in Unarmed Stance, where Shao can armor break with held Low Hat into F2 and then continue the combo with B32 for significant damage. Kung Lao kameo works with everyone, and Shao is no exception. If you're okay with going with the flow instead of charting new waters, Kung Lao is a great choice.

Stryker

Stryker is a highly versatile choice, suiting Shao for nearly any situation. Shao's health also helps to offset the health penalty.

As always, the grenades are the main reason to pick Stryker. The main uses of the grenades (blockstrings, pickups, covering gaps, etc.) are all still there, but Shao gets specific uses out of them: for instance, Shao can give an Axe 22 confirm a bit of extra height, allowing him to combo into B32 for a much more dangerous route. The high hitbox of the grenades covers the sky during Death Quake zoning, and being an ambush makes it much easier to apply for this role. Shao can call Stryker grenades during Reverse Treechopper, letting him armor break with B1 on oki. Shao's high health and long range also lets him turn steal with the grenades much more effectively, taking proportionately less health in the exchange and getting easy pickups once the grenades land.
Stryker's baton attacks are wonderful cancel options, letting him safely cancel his midrange normals while simultaneously mixing up the enemy and giving him plus frames. While the other kameo lows are reactable by aware enemies, Stryker having both an overhead and a low baton option lets him do a no-mixup-mixup with his overhead enders that makes Shao +6 even if they block correctly. On hit, the knockdown from the low is long enough for Shao to safely hit the axe buff and still meaty the enemy, and the overhead will let him meaty with Axe B2. The attacks are greatly weakened when used as armored reversals, but the options are still there.
Stryker's cuffs are helpful for snagging enemies just outside of Axe range, and the hit advantage is long enough to B2. In Unarmed stance, ending the combo with the cuffs gives him an exceptionally dangerous three-way mixup between F2, Reverse Treechopper, and B3, while giving him enough advantage to jail into a 224.

Stryker, perhaps as atonement for Challenge Tower #269, has become one of Shao's most useful allies.

Motaro

(Currently reevaluated following the December 2023 patch - his cooldowns were vastly improved, and Low Tail Shot is absurdly juiced now) The most natural canonical pairing for Shao, Motaro is hampered by exceptionally long cooldowns. Beyond that weakness, Motaro emphasizes unique utility with Shao.

Centaurian Warp is the main reason for Shao to pick Motaro. On top of giving the best reward from Axe F2 and being fast enough to properly contest projectiles, Shao can use it to skedaddle after unsafe options and catch the enemy's punish attempt. Shao can also interrupt Reverse Treechopper with the teleport to hit the enemy with a reset, with Shao being able to choose between an unarmed stance outcome or an Axe stance outcome depending on how early the teleport was done. Centaurian Warp can be caught and punished by patient enemies, but against overeager opponents it can be difficult to contest.
Low Tail Shot is Motaro's primary projectile and armored option. It can be applied as a plus low attack from his midrange pokes, or used in tandem with his overhead enders to create 50/50s. As an armored reversal it allows Shao to continue his offense when blocked, though the armored frames on the attack are somewhat spotty. The projectile knocks down the enemy, though it is much too short ranged to be used for counterzoning.
Reflect isn't the best anti-projectile option, consuming lots of meter while not giving Shao a definite way in. He can put up the reflect and then try to zone with Death Quake, but without a high projectile to cover the air it is very easy to avoid. Probably the least useful of Motaro's moves.
Shao can easily set up Tail Turret with F4, and once up it can let Shao enter Unarmed Stance safely or convert from B3.
Motaro's Fatal Blow startup attack is a godsend for Shao, finally letting him confirm into super from more than one combo.

Shao is one of the best users of Motaro, uniquely fitting his moveset. If not for the long cooldowns, he would probably be the best overall choice.

Sareena

Sareena doesn't have lows or plus attacks, instead emphasizing Shao's zoning and safety while giving him much better damage on confirms.

Demonic Dance (flipkick) is probably the best kameo reversal in the game, and is Shao's premium pick for a Devastator replacement. The cancel is gapless from his go-to midrange normals, making it a fully safe cancel choice. In the corner, Flipkick can be continued with 2 > 22, giving him a safe confirm from his B3.
Old Moon (FK) gives Shao a superb conventional projectile with lightning fast recovery, high enough to cover the air against Death Quake and greatly improve his fullscreen gameplan. Up close it can be used as a safe, gapless ender at -3 on block, and on hit it gives enough standing hitstun to jail into Axe B2.
Kia's Blades, the infamous boomerangs, give Shao superb damage from his 22 confirms by letting him combo into Axe B2. On block, it can be used as a semi-safe midscreen pseudo-confirm from B3 (generally the worst you'll get is a D4).
Jataaka's Kurse can be used with the long animation of Reverse Treechopper to deny a significant amount of meter, though the drain does not work at all points in the animation. In Axe stance, Shao can use the hex to incentivize the enemy to move, while staying behind Sareena to let her absorb a hit.

Sareena suits a more defensive Shao that stays in Axe stance longer, giving him better screen control and greater reward from confirms. Opening up the enemy is harder, but he can rely on Unarmed stance for that.

Jax

The 1200 HP team, and with much more to offer on top of its high health.

1200 HP by itself is massive - it's another two throws compared to the common 1000 HP, another four projectiles, and an entire extra combo confirm for most characters. Although timeouts are measured by percentage instead of value, the massive health pool still firmly puts the clock in Shao's favor.
Of the three moves, Energy Wave is the most useful for Shao. In its immediate usage, it's a safe special that leaves no gap with most of his cancel options, while creating enough distance to contest space with Axe normals. It's one of the most functional kameo armored reversals that Shao can pick, nearly as reliable as Sareena Flipkick. In the corner, Shao can pick up after it with a D1 into a combo, giving him a safe confirm from B3 and B1.
Backbreaker vastly improves Shao's corner combo damage, with his midscreen combos seeing lesser but still significant benefit. Most importantly, being able to backbreak into Unarmed B32 gives him new, high-gravity routes that can be used for resets or Devastator pickups.
While Shao lacks ways to deny the Ground Pound crouch block protection, he still has plenty of ways to use it for guaranteed damage. Many of these will involve Shao getting hit as well, but trades are much less troublesome due to his vast health pool.
While Shao can already punish upblock with B3, Jax's EX grab gives him an entirely unbreakable option to support his mixups and jump-in game.

The Jax kameo gives Shao the health and tools to simply outlast the enemy in close quarters. D1 pickups from Energy Wave are difficult, but highly rewarding.

Sub-Zero

(Not yet updated for the current patch.) The most obvious choice for fighting zoners, and with a quicker and higher damage freeze than Frost.

The ice armor is decently self-explanatory; hit it, and ignore (most of) your enemy's projectiles. Despite his quick speed, Shao's massive stature and lack of fast fullscreen options make him uniquely vulnerable to zoning, and Ice Armor is the most straightforward way to resolve that.
Kold Shoulder is safe, exceptionally active, creates tons of distance on block, and covers a huge area. It can be used as a special cancel from his Axe normals, a preemptive attack in neutral to smother space, or as a highly plus meaty in the corner. Not the best armored option due to its slower startup, and the lack of additional reward on hit can be troublesome, but for putting a wide, active mid onscreen it's one of his best options.
Iced Out vastly improves Axe 22, letting him confirm into the freeze, hit the Dark Energy buff, and continue the combo with B2 for substantial damage.

Like Sareena, Sub is more helpful to Axe stance than Unarmed.

Sektor

The most common early pick, Sektor has been largely superseded by Stryker in the present day.

Missiles have worse air coverage than Stryker Grenades and are a little harder to apply, but can still fulfill a similar purpose of covering gaps, stealing turns, and providing combo height when necessary. Probably the easiest choice to apply with Reverse Treechopper oki. Missiles will also OTG on a non-EX Devastator, giving him new meterless combo routes. At the end of a route, use Homing Missiles to help close out the enemy bar.
Tele-Punch is a great move for fullscreen space control, but being unable to combo from 22 makes it a somewhat disappointing starter. Still, it is useful against zoning, and Shao can pick up from most ranges with a quick B2.
Flame Burner is a reliable cancel option from B3, F4, and Axe B1. While less rewarding than a full combo, the high damage and restand on hit are still useful. Also a solid armored wakeup option, as its greater range can catch enemies trying to outspace Devastator. A bit harder to apply as a combo ender than Stryker's restand due to its slower speed and the greater pushback on hit.

Sektor is still a good choice for Shao as a more defensive counterpart to Stryker, though Shao should be aware to play to the kameo's strengths.

Frost

Sonya

Scorpion

Perhaps the least versatile out of all the kameo choices, Scorpion provides absolutely no pressure or mixups on block and is instead laser-focused on bolstering Shao's footsies and reward on hit.

Hell Blades is the undisputed best option for S2 buffer OS. S2 buffered into Hell Blades is absurdly difficult to whiff punish, only -2 on block with pushback, and gives a full combo on hit. Shao's gameplan is already mostly centered around Axe S2, but with Hell Blades available he rarely needs to do the second hit of the string at all, rendering himself even more difficult to outneutral. Hell Blades also lets Shao confirm from B1 and B3 from anywhere onscreen. While the cancel creates a gap that is big enough for an upblock, the natural overhead string enders will leave no upblock window and discourage the enemy from attempting it.
Once the hit is landed, Flame Breath gives Shao all kinds of new, extremely high damage routes to pick and choose from. Foremost among these are the late EX Devastator routes, which move the EX Devastator from the front of the combo to the end to maximize unarmed time and fully utilize its gravity-resistant capture state hit reaction. Flame Breath also lets Shao combo from Treechopper, giving him a plus advancing mid combo starter with armor on EX.
Spear Pull is a fantastic escape tool and a reliable supplement to EX Devastator - when not cornered. While the general idea of Spear Pull is that you deal no damage (and thus lose the damage trade that most armored moves typically win) in exchange for near-guaranteed escape on oki, Shao's superior health offsets this. Once successfully pulled, Shao can return to a neutral-centered gameplan. When cornered, Spear Pull becomes nearly useless and Shao must fall back to using EX Devastator.

Scorpion punctuates the distinctions between the stances. For patient players with the execution necessary to take full advantage of Flame Breath, he is an excellent choice.

Darrius

(Not yet updated for the current patch.) An odd pick with recent attention, though yet to be fully proven.

Tornado Kick is the entire reason to pick Darrius, giving Shao gigantic combos from his command grab and safe confirms from all his overhead and low options - for a massive cost in meter. While the Tornado Kick on block is a solid option against highly respectful enemies, accurate mashing can stop Darrius dead in his tracks before the attack, wasting a tremendous amount of meter for Shao and entirely removing the kameo's utility on block.
The rekka simply isn't very useful for Shao. In Unarmed stance Shao can get better pressure on his own, and Axe stance doesn't need an up close rekka. Also, keep in mind that the third hit for both the spin (BK) and the double kick (FK) can be punished on flawless block, though the timing is different.
Shao has no ways to set up the flip on hit. The closest is from a 12 special cancel, but even that isn't airtight on oki.

Darrius is even more meter starved than Motaro, while being easier to interrupt and deny. Getting safe midscreen confirms from Axe F2 and B3 is very strong, but he should only be picked against enemies that you are certain will not mash.

Tremor

The best choice, and also the most difficult by a mile. What happens when you combine the most versatile kameo with the most kameo-versatile character, and then add a 100HP boost on top of that?

(aftershock)
(metallic)
(crystalline)

(tbc)

Scouting: Axe Stance

In Axe stance, the primary goals are to scout the enemy's behavior in neutral, determine the most suitable way to enter Unarmed stance, and to whiff punish and antiair them.
S2 is your best friend for this, having next to no commitment and superb range.
Play footsies around Shao's disjoints.
Shao has options to close the gap and play aggressively in Axe stance, but for the most part he does not need to overcommit.

Neutral and Footsies

Unless your enemy is someone like Raiden who has an advancing confirmable low profiling option, S2 is generally incontestable in footsies.
Use Shao's speed to bait and whiff punish the enemy. Whiffing an S2 is your best bait option.
If your enemy is also playing footsies (and thus not committing to a block), use S2 with a buffer OS to vastly improve the reward from stray hits.
D3 is generally the better crouching poke option at midrange, though the pushback of D4 can be used to reset to neutral.

Buffer OS

Buffer OS is an important technique in nearly all fighting games.
In MK, like in most fighting games, normals cannot be cancelled into specials unless they make contact with the enemy - on both block and hit. Buffer OS takes advantage of this by throwing out a low-recovery move in neutral with its special cancel inputs behind it. If the attack contacts the enemy it immediately cancels into the special, and if it whiffs it incurs no additional recovery.
Shao's S2, with its supreme range, lengthy cancel advantage, and brief recovery, is godly for buffer OS.
Buffer into a combo starting special or even into Fatal Blow if you are certain that the enemy will not block, or buffer into a safe special to contest space.
Safe kameo combo starters, like Jax Energy Wave, can accomplish both at the same time and as such are premium choices for the buffer OS.
The Power Strike buffer allows Shao to enter Unarmed in footsies situations while being mostly safe.
S2 buffer OS is obviously more unsafe than confirming with 22 against enemies who are prepared to block, but it also makes Shao much harder to whiff punish. Generally the buffer OS is better for defensive play, while 22 is more suited to offense.

Antiairs

S1 remains the most applicable antiair. Hits exceptionally high up due to Shao's stature, and can easily be followed up with 22 ~ EX Devastator.
S2 can whiff against enemies that are too close, but from a little farther away it becomes the antiair of choice. It requires a bit more of a dash-up to continue with 22, but the disjoint will allow it to successfully contest short ranged jump-in normals.
EX Devastator has a favorable angle and a wide aerial hitbox. On EX, it can armor through especially dangerous jump-in options. Being a special move, it requires a longer input than S1 or S2, while requiring an immediate meter commit to continue the combo, so it should generally only be used if the enemy is breaking your antiair jabs with heavy jump-in attacks.
D2 will cover a huge area, and the superb range and speed of S2 will make pickups easy. Being a D2 it is a large commit, so be cautious about using it against enemies who can alter their jump arc like Kitana, Tanya, or Quan Chi.

Approaching in Axe Stance

While Axe stance mostly centers around neutral, Shao still gets strong options to close the distance.
J2 is long ranged and difficult to antiair, especially with an ambush kameo to provide cover. Jail into 22 on block to confirm.
B2 will make Shao plus and give meterless combos on hit, while creating enough distance for most D1s to whiff. Unless the enemy has a significantly ranged D1 or a fast D4, there's little need for Shao to check with a D1 of his own.
F4 is faster and more versatile on block, while giving lower reward on hit. Combine with a plus kameo summon for instant pressure.
A simple forward dash ~ S22 or F122 is easier to be stuffed out than the above options, but it can be confirmed into a combo.

Blockstrings and Pressure

Fast recovery, low pushback, and natural followups for S2 make it his best stagger option.
Use backdash ~ B1 for a spacing trap. Cancelling B1 into a Power Strike leaves a substantial gap, but nets solid reward on hit. Finish the string into B12 to be mostly safe.
B4 is fast enough to stop reckless mashing in most turn situations, and will create enough space to return to neutral on block.
Shao's back throw puts him at a favorable distance, and certain kameo throws will allow him to oki in the corner.
F122 gives Shao his best chip and corner carry in Axe stance on block. F12 can be confirmed into F122 ~ Power Strike for a full meterless combo, and on block F12 ~ Power Strike has a gap but cannot be upblocked, making it ideal for entering Unarmed stance on turn.
50/50s with B3 vs. F2, while still important to represent, are not the foundation of Shao's offense unless Shao has a kameo to either maximize the reward or minimize the risk.
With a low summon kameo attack, 50/50s from B1 and B3 on block are a safer though less rewarding way to apply mixups.
End blockstrings with Power Strike to be mostly safe.

Grappler Jump

A grappler jump is a well-spaced empty jump meant to bait and punish the enemy's antiair. These are most commonly associated with dedicated grappler characters, who often have dangerous jump-in attacks and threatening options once they land in exchange for poor grounded mobility.
Shao is not a dedicated grappler and does not have poor grounded mobility, but much of this still applies with Axe J2 establishing dangerous point-blank mix once Shao has landed.
Axe J2, while excellent for jump-ins, is also perfect for grappler jumps - the long horizontal range gives him a natural distance to space the empty jump, and while the startup is long, the visual element of the axe sweeping downwards does not happen until late in the startup, making the empty jump difficult to react to.
Once landed, B3 will punish most of the enemy's options including upblock, but it cannot be confirmed in most situations. It is safer to either cancel B3 into a safe special, or attempt a whiff punish with Axe 22 and accept the block pressure if it fails to punish.

Entering Unarmed Stance

There are three primary methodologies to enter Unarmed stance: on combo, on blockstring, and in neutral.
On combo is obviously the safest option, though it sacrifices stance time. This methodology relies entirely on Axe stance for both neutral and block pressure.
On blockstring will give the best possible time while being next to the enemy, but entering the stance can be punished on upblock, and on regular block Shao must surrender his turn. With a suitable kameo the option becomes far more attractive, allowing Shao to either cover the upblock gap or make himself plus after Power Strike for continuous offense. On blockstring also provides neat separations for the two stances; Axe for neutral, Unarmed for pressure.
In neutral is the riskiest by far, as Power Strike relies on its lengthy blockstun to be mostly safe on block - on whiff, it is very punishable. Covering the space with a kameo can make it harder to punish, but it still leaves the space between the fighters for Shao to close. Surrendering the neutral normals of Axe stance is of dubious strategic worth in most matchups, and as such should only be done if the Shao player sees that the enemy is being entirely overwhelmed by the Unarmed options and is certain that he can outneutral them with less range and no disjoints.

Escalation: Unarmed Stance

Once in Unarmed stance, Shao's objective is to apply mixups of every kind to beat them into submission.
If necessary, continue to push them to the corner - the ultimate goal is to have the enemy cornered with the axe immediately below.
F2 immediately becomes your most dangerous option. Apply it whenever possible.
While throws are not the most immediately rewarding option, they can hit with surprising regularity when used alongside Shao's enormous suite of dangerous normals.
Shao has no disjoints in Unarmed stance, and as such should play from a closer distance than Axe stance. However, 224 can still be used for whiff punishing with its exceptional range.
Stay grounded in Unarmed stance. Shao can outbrawl nearly any character on the ground, and his air normals in Unarmed have next to no range.

Have No Doubt, F2 It Out!

F2 is nothing less than the best overhead in the game; safe, starts combos, and with excellent reach.
Representing the threat of F2 will open up the enemy to the rest of Shao's options, while netting him strong meterless damage and corner carry in the process.
Even if you think the enemy is aware of Unarmed F2, do it first before going for the rest of his options.
F2 can be applied with near impunity on Power Strike kameo blockstring setups. Going for it on oki is risky and can be punished with delayed getup, but Shao can stance switch to framekill for delayed getup timing.

Part 2: Overhead-Low Mix

Once F2 is properly established, Shao can assess risk-reward for his next options.
B3 cancelled directly into Klassic Kahn will give the most immediate reward from establishing the overhead, but it is obviously exceedingly risky. Despite the risk, the reward is substantial enough to be an important consideration, especially when on the backfoot, but try to avoid it unless absolutely necessary. With a kameo low B3 becomes a much better option, letting Shao support the first layer of mix with a second layer, and a safe kameo launcher (either by itself or from Treechopper) will minimize the risk.
At 10 frame startup and +3 advantage on block, B4 is probably Shao's best overall option to complement F2. Shao can continue offense on block with his arsenal of offensive options, including another B4, and with the axe nearby he can fully disrespect enemy armor. The only problem is that B4 doesn't have the greatest immediate reward on hit and gives them a window to play the getup game, but Unarmed Shao already has solid oki. Can be continued into a combo with the right kameo usage, but the timing is difficult.

Part 3: Big Mids, Big Grabs

With a suite of dangerous mids and Reverse Treechopper, Shao can also enforce a mid vs. grab gameplan.
Reverse Treechopper (DF2) is a fast, advancing command grab with armor on EX that can tick from his D1 and D3. While a massive threat by itself, the gambit that Reverse Treechopper presents is ultimately "honest": it will catch the enemy if they try to defend against any of Shao's other Unarmed options, but it immediately ends the stance and gives the enemy some breathing room. Where it becomes dishonest is when combined with the traditional grab-extender kameos (Tremor, Darrius, etc.), which allow Reverse Treechopper to absolutely nuke the enemy's bar with 600+ damage combos in the corner that end with a stance time reset. Beyond extender kameos, lengthy ambush attacks like Jax Ground Pound will also have more than enough time to be set up.
B1 is Shao's fastest combo starting mid by itself. With nearly the same speed as his regular grab and Reverse Treechopper, it is the option of choice against enemies who are prepared to fuzzy DF2 vs. B2 (though B2 being +3 will give a better situation on block and should not be discarded entirely). Surprising advancement also makes it his best tool for spacing traps, mostly with B4 but also with plus kameos like Motaro Low Tail.
B2 is a fantastic pressure reset that also gives massive reward on hit. The only issue is its short range - it can be difficult to force the enemy to block it on a midscreen knockdown. Giving better combos than F2 (especially midscreen) and better block advantage than B1, it is Shao's premiere choice for a DF2 complement in most situations.
Treechopper is a disjoint, plus, and highly advancing mid swing. Shao's premiere armored option in Unarmed stance, especially on wakeup. Like Reverse Treechopper it will immediately end the stance, but being +3 on block will allow Shao to continue pressure. A bit too slow to be used as part of a D1 vs. tick throw mixup, but it will force the enemy to accurately fuzzy while retaining Shao's frame advantage. Pairs gloriously with a combo extending kameo, fully transforming the move into a plus armored combo starter and letting him confirm B3.
Regular grabs may seem overshadowed by the cornucopia of Unarmed offensive options, but they gain a distinct purpose as a grab that doesn't immediately end stance. As VGY puts it, the enemy will generally be so concerned with defending against the overhead-low and plus mid options that the grab is nearly guaranteed to land, and unlike the command grab you stay in stance. The grab does use significant time, though - Shao will generally only have enough time for a single Unarmed mixup after the grab ends if they end up in the corner, and throwing midscreen will usually be impossible to follow up in-stance.

Neutral in Unarmed Stance

Shao will not always find himself at point-blank in Unarmed stance. Neutral in Unarmed is more difficult than Axe, lacking B1, S2, and J2, but it is still doable.
Unarmed 2 (and especially Unarmed 22) has similar range to Axe 2 but is much more committal. As such, it is riskier for buffers and space covering.
Shao's Unarmed air normals are trivial to antiair compared to Axe J2. Air approaches should only be used against committal ground options, like a slow fireball or Scorpion B3.
Shao maintains all his unusual movement speed in Unarmed stance. If in a neutral situation, don't just use his speed to sprint towards the enemy - also use it to play cautiously.
Unarmed B2, while a dangerous mid for pressure and combos, doesn't have nearly the range of Axe B2. In its place, F4 becomes a more important option as an advancing mid in neutral.
In neutral situations, Axe Quake (DB4) can be used similarly to Death Quake, having similar issues of being slow and easy to punish on jump. However, Axe Quake has the added advantage of being doable while the axe is offscreen, potentially giving it far greater surprise factor.
As always, remember that neutral has to lead somewhere. While Unarmed stance can get away with staying around footsie distance for longer, Unarmed Stance wants to apply its devastating close-range options. Don't squander your Unarmed stance time by playing neutral for neutral's sake, have a goal in mind for when neutral is won.

The Enemy's Options

While Axe stance has strong neutral, its up-close defensive options are severely lacking.
Unarmed stance's defensive options are exceptionally strong when the axe is nearby, but without that his defense is only mildly better.
Shao's vast HP gives him more time to block and play patient.
The best defense is winning the neutral interactions that could lead to a bad defensive situation. Antiair, contest space, and stay out of range of their most dangerous options.

Enemy Mashing

Shao's D1 is unremarkable and functional, if a bit short ranged. As always, use it to abare and punish the enemy's D1 when up close (certain D1s with good reach, like Sub-Zero and Johnny Cage, will fail to be punished).
Many of Shao's strings have a natural frametrap gap, but Shao must entice the enemy to mash by staggering - a risky option that potentially surrenders his turn at best and condemns him to combo punishment at worst.
EX Devastator and EX Klassic Kahn are fast, but being highs they will whiff entirely if they attempted a crouching poke. Do not rely on them for turn stealing, unless against an enemy like Sento Kenshi who does minimal crouching pokes.
Sweep is a usable defensive option, being his fastest standing mid (low, technically) while creating space. If you think that the enemy is going to bait a D1 but want to take less risk than a standing string, go for the sweep.
From block situations that create space, backdash into Axe B1 to avoid and whiff punish their poke.
EX Treechopper will armor right through their poke, and can be continued into a substantial combo with the right kameos.
Being a high, EX Reverse Treechopper will be low profiled by crouching pokes.

Enemy Spacing

Shao is typically the one doing the spacing, but depending on your opponent and the character matchup, he can still find himself at a disadvantage in the neutral spacing game.
B2 and F4 are fantastic for approaching - as long as you don't whiff. Cancel a forward dash into them to make it less likely, or deploy a kameo to cover your advance.
Characters looking for a defensive spacing situation will often be ready to antiair. Fortunately, Shao's J2 is exceedingly difficult to antiair and will usually force the enemy to attempt a risky upblock to punish.
Bait them back. Step a bit forward and whiff S2, and then backdash to see if you can punish their whiff punish attempt. Alternatively, dash forward and do a neutral jump into J2. If the enemy is doing large, committal ground attacks like Reiko's B3 or Sindel's F1 to try to whiff punish, the jump will avoid their attack and the J2 will catch them on the way down.
Take the opportunity of their defensive stance to hit a Dark Energy axe buff.
Shao can generally enter Unarmed stance without fear of punishment in footsies situations. While abandoning all your disjoints may seem like the last thing you'd want to do, the Axe Quake can make it worth it in some situations. Between the overhead hitbox on the axe, the instantaneous shockwave travel time, and the lower recovery, Axe Quake is much better for keeping the enemy at bay than Death Quake, and it can turn a footsies situation into a zoning situation.

Enemy Zoning

Shao is very tall. As such, while he can still duck high grounded fireballs, he is uniquely vulnerable to ambiguous-angle fireballs like Motaro's Tail Turret or Sindel's air fireballs.
Dashblocking is the fundamental way of approaching zoners in every fighting game, avoiding the jump that the zoner is looking to antiair. Apply Shao's excellent blockdashing speed.
Death Quake causes a full screen knockdown, allowing it to halt enemy zoning. The issue arises in its 40 frame startup. The common thing to do is to call an ambush that puts the kameo in front of you (i.e. Tremor, Scorpion) when you input the move, causing them to absorb the projectile and (hopefully) landing the attack without you getting hit. EX Death Quake can also be followed up at any distance with an F4.
In Unarmed stance, the forward advancement of EX Treechopper can allow it to close the crucial last distance between you and the zoner, potentially giving you a combo as well.
Don't be afraid to switch to an anti-projectile kameo. You are allowed to switch kameo on loss, regardless of the gamemode, and Shao works with every kameo anyways.
As always, be patient. The goal of a zoner is to entice you into doing something predictable by sapping your patience. Don't play into their gameplan.

Sir, You Are Being Oki'd

An very bad situation in Axe stance, a much less bad situation in Unarmed when the axe is nearby.
A simple crouching poke or other low profiling move will entirely avoid EX Devastator, and recover in time for full combo punishment. Normally the enemy respecting your armored getup means that you have a window to take your turn with getup normals, but because of this, that is not an option. The enemy can still meaty you, even when trying to respect your getup.
However, an ambush kameo to cover yourself after an EX Devastator remains an effective tactic.
Make sure to use delayed getup, and make sure to vary it - don't simply use delayed getup every single time you get knocked down, you'll only be giving the enemy more space.
A kameo reversal can be a godsend, as long as it's a usable one. Premium choices include Sareena Flipkick and Sektor Flameburner. Once a proper armored mid getup is established, Shao can play around the common oki game with getup throw or getup normals. If it's available, don't forget to apply it - you don't want your enemy getting away with a needlessly easy oki situation.
All of the above still applies in Unarmed if the axe isn't nearby.
With the axe nearby, Unarmed stance Shao has much less to fear on getup.
EX Treechopper becomes your primary armored option; mid, plus on block, and able to start combos even when it absorbs an attack.
Despite EX Reverse Treechopper being a high like Devastator, the presence of a powerful getup mid can allow Unarmed Shao to turn a simple getup into an extremely dangerous 50/50 for the enemy.
As always, test if the enemy's oki is real and practiced by occasionally mashing on getup.
Once again, be patient. Shao's 1100 base HP allows him to play more carefully and patiently than most fighters.