OK, how many kids in that filled up room?
Have you actually empowered the teacher to do anything to control the class, or is your school so terrified of the parents (ie cash-bearing ultimate customers) that the teacher has no real hope of enforcing basic classroom behavior?

It's possible that the well-educated teacher just doesn't connect well with a classroom full of kids. It's not a common gift; not everyone can do it. The real secret of teaching here seems to be having the students like you...if they like you you can get away with murder, and if they don't like you then you're not going to make it even if you're God's Gift To Teaching. This is true with kids as much as it is with everyone else.

But it's also possible that the class just isn't manageable... at least not by people coming in with Western viewpoints, and especially not by people not trained specifically in teaching kids. An awful lot of kids' classrooms here are just hopelessly chaotic; few Western teachers arrive here knowing how to cope with that. We tend to arrive in China expecting to teach; in many cases teaching gets quickly shoved aside in favor of simple crowd control. It's awfully hard to deliver a good class under such conditions.

So, please don't automatically blame the teacher alone for all the problems. If you haven't already, you might want to think about the classroom environment you're putting the teacher into, also.