Gao Peng certainly couldn't understand Japanese, the Nihon language. He could only understand the most basic phrases—some short ones that were known by most of the villagers in the Huaxia region.
But for the ghouls, mouths and ears weren't essential in communication. This was why the Ghoul-type monsters from all different dimensions of the world were able to communicate with each other.
So Gao Peng let Dumby ask on his behalf. Although Dumby couldn't understand the language of these fishermen, it could comprehend the meaning of these words through the Soul Wave they produced as they were expressing themselves verbally.
Some powerful living creatures could conceal their Soul Waves, but it was harder for weaker monsters. The reason why many Ghoul-type monsters in the legends were able to read humans' minds was that they could perceive humans thoughts through Soul Waves.
"Where is this place?"