You are right, but not quite right. Assume that location statistics are based on IP addresses. Here are some possible reasons.
1. In order to improve the speed of network access, many proxy tools used in China can do only part of the network traffic through the proxy, the other part access the network directly. If the network of statistics service is directly accessed (and these services are usually available in China), it will be counted as the mainland of China.
2. Many people don't always turn on VPN in a day, they only turn it on when needed and turn it off when not needed. For example, when installing an extension they open it, and then close it.
3. In China, there are some third-party websites that can download extensions. Some users do not install extensions directly from CWS.
Of course there are other reasons not listed here. So this is a normal thing. Some of my extensions show up to 50% of users from China on the CWS developer dashboard.