The Chinese-born player who has lived most of the last eight years in Yorkshire came through 18-21, 21-12, 21-13 after his 40-hour journey to get to the Olympics.
Chen had been stranded in his home province where he had been preparing for the Olympics and only arrived two days before playing.
Chen, playing in his first and last Olympics at the age of 36 and expecting to retire at the end of this week, made mistake after mistake to slip to 8-17 but pulled back with some clever defending to 18-20 before an Olaleye counter-looping forehand snatched the first game.
Brilliant serving took Chen from 6-4 to 11-4 in the second game and then he got on top. There was a mini-revival when Olaleye attacked his way back from 2-9 to 8-10 in the deciding game but the British player produced two good serves and two heavy forehand follow-ups to get to 12-8, and was always in charge after that.
Carl Prean beat Stephen Hylton of Jamaica 21-8, 21-7.