The 2020 live-action remake was shot in New Zealand and China, and the film is directed New Zealand director Niki Caro (Whale Rider).
Reed told the publication Collider that they split Li Shang into two characters to make the character relationships more appropriate in the wake of the #MeToo movement.
"I think particularly in the time of the #MeToo movement, having a commanding officer that is also the sexual love interest was very uncomfortable and we didn't think it was appropriate," he says.
"We split Li Shang into two characters. One became Commander Tung who serves as her surrogate father and mentor in the course of the movie. The other is Honghui who is [Mulan's] equal in the squad."
New Zealand actor Yoson Honghui told Collider he thinks his character is honorable and observant.
"As they [Honghui and Mulan] progress through the training together, they kind of have this unspoken bond about it because they recognise each other's warrior spirit.
"That's how they kind of build their friendship up, to begin with, through the training and acknowledging each other."
The #MeToo movement was sparked after widespread allegations came out against Hollywood mogul Harvey Weinstein in 2017, which led to several high profile celebrities speaking out about their experiences of sexual harassment and assault.
Last week Weinstein was found guilty of sexual assault and third-degree rape following a criminal trial in New York City.
Some fans have criticised Disney's decision on social media and argued Li Shang was an important character.
One labelled Shang a "Bisexual legend".
The user wrote: "Li Shang would never use his position as her commanding officer to pressure her into a relationship.
"It isn't until after Mulan leaves the Chinese army that Shang pursued her."
Another says his character arc portrays an important message.
"Li Shang's entire arc is about realising that Mulan isn't lesser than because she's a woman, he learns and grows because of her."
Mulan is played by Chinese-American actress Liu Yifei in the 2020 film.
Mulan is Disney's most expensive live-action remake to date, according to the BBC.
The movie was filmed in part of the Ahuriri Valley in the South Island's Waitaki District.
Mulan is released in New Zealand cinemas on March 26.
