China uses free trade zones extensively. This means that some items a moved in bulk to domestic staging areas, so not everything is leaving from China, I believe that there are requirements that they be postmarked from China due to import export rules.
Second, China's postal system is a social system of a communist state, it is heavily subsidized and therefore much of the costs are hidden in the system.
- The Free Trade Zone seems to be related to customs (which, by the way, I was never asked to pay…).
- Even if China's postal system is heavily subsidized, there's a part of the shipping that is handled by non-chinese people (once the package is in the customer's country). So who would be paying for that part?
Honestly, I think $99 is a steal for all you get considering the music streaming alone costs you more than $99 a year on Google Play or Apple Music.