Technically the
"Great Wall" is a series of walls built by different dynasties over thousands of years. Some of them connect, some are isolated, many are abandoned. We don't know what part of the wall Ryo and team are on, but even assuming the most southern part, it is still very far north in what could only be considered Northern China. Certainly far north of Guilin.
We needn't assume that they won't necessarily return somewhat south, but it feels like parts of the story may have been excised/compressed at this point to get it further along and have the remainder of the story be the latter 'chapters' taking place in the north. Only Shenmue 4 will tell for sure though.
This still doesn't explain why it has to be a fictional city in Guilin though. Kowloon was fictionalized but still based on a real place in proximity to Hong Kong. Why does Shenmue 3 need to take place in Guilin (completely changed from real life) other than Bailu? Why couldn't Niaowu actually be a fictionalized version of Fenghuang? It's not that I care that much, it's just a nitpick considering Shenmue always used real life locations.
I assume this is the case because Fenghuang was never a location of the VFRPG and its inclusion was made up for Shenmue 3. Still I thought there might be an in game explanation why this has to be Guilin especially since the ending takes us so far north anyway.