(picture courtesy of National Geographic)

There will be lies. You'll never know their true cost of goods. They're always making money no matter how low the price. Being a tourist hurts you. You'll always walk away feeling like you could have paid less. These are things you need to accept when you haggle in China. I always find the experience fascinating. Here are two parties with polar opposite incentives (one to buy at the lowest possible price, one to sell at the highest possible price) with complete uncertainty of information (what's the true cost, how much does he have in his pocket) that have to undergo a delicate process for a transaction to be made.

In my experience, there are two methods to haggling you can employ-- what i like to call the "light" way and the "dark" way.

The dark way means you do whatever you can to get the cheapest price in short term. Most people use this method, because if you're a tourist, you only have the short-term. This is the way the tourist books teach. It's extremely time-sensitive and therefore, also very aggressive on both parties' parts. You're never coming back and you'll never see the seller again, so you want the best price now. Tactics involve pretending to leave, counter-offering with a ridiculous price and scoffing take it or leave it. The risk here is that you actually may not get what you want. In grinding the seller into the ground, there's a point where the seller just won't sell it. And if you're dealing with things that need to be custom-made or a service, you're likely to get an unsatisfactory result even if you do get the price you want.

It can be quite effective, but it has also have some interesting externalities. For one, it further reinforces Shanghai sellers' perceptions of foreign buyers as rude and cheap, making it increasingly difficult for future buyers to get a good deal. So your one good deal creates hundreds of subsequent worse deals. It also creates an environment of escalating aggressiveness because both seller and buyer are reinforced that this is "what works."

On the other hand, the light way means you do whatever you can to get the cheapest price in the long term. First, if you can suggest to the seller that the "game" will be repeated in the future (whether truthful or not), the seller is likely to lower his aggressiveness since he's going to have to deal with you again. It's tiring for him as well. Second, say "I want this item and I don't want to haggle with you."  Not but, and. This establishes important common ground. He wants to sell it to you and he doesn't want to waste time either. This signals your clear intent, that although some haggling is still required it should be realistic on both ends and ultimately, if a deal isn't made, it's because of his being unrealistic-- not you. Change the frame. Instead of just asking for a cheaper price, ask what else he can throw in. Or buy something else too and ask for a steeper discount because you're buying more. Always (politely) remind him of his competitors. If your position is that you can get the identical thing from a seller a few feet away, he's got more to lose than you. Use silence. Pause and don't say anything for a few seconds, the seller will usually want to break the silence first and often that's with a lower price. Lastly, and most importantly, always be smiling. The negotiation should never take a turn toward anger or frustration or you'll risk the seller defending his position more strongly. Accept haggling as a necessary process in China and make it what it is, a game where both parties need each other.

And if you do make the deal, do go back to the same seller in the future. I've found that it just takes two trips and the haggling gets easier and quicker each time. So even if you pay a little more the first time, by the fifth time, you'll usually be paying much less than with another seller and therefore, less in the long-run.

Ed Tsue is a Chinese American New Yorker (though not necessarily in that order) working for a British advertising company in China developing brand strategies.