The key to winning this fight is to prevent Bai Ze from using its Darkbreath/Vulcanbreath attacks at the end of each round. The way to do this is to use Hexers and try to paralyse it (which will also stop Predation) or to keep your Morale Bar very high by Flanking, healing, Critical hits etc. Having Sheryl in the team is a great help when you have been hit by one of the breath attacks as she will keep Bai Ze deadlocked whilst you revive and/or heal. Her deadlock will also allow any other union that is on the flank to stay there. My characters are still using the initial weapons they started with except for Rush who still has the Defender I picked up in the Aquaducts.