With Wakaba in the party, go to the Inn at Crom Village. After the scene, speak to L.C.Chan behind the Item Shop and he will join.
There is an exploit that allows the recruitment of L.C.Chan before Crom. When Teresa accompanies Riou to sign the peace treaty with Jowy in Muse City, before entering Muse, head north to the Muse-Matilda Border, and push the door far enough to get through. With Wakaba in the party, proceed to Rockaxe Town and head to the inn. A cutscene will follow, and L.C.Chan will run out of the inn. Exit to find him hiding behind the inn. Talk to him and he will join.