http://chinnko.com/index.php?u=/topic/146/strategies-of-bargaining-in-china

follow these tips, you’ll at least avoid being a total chump.

Before starting negotiating, have a mental maximum price in mind. Otherwise, you will get emotionally attached and invested in the process and end up regretting a purchase.

Don’t express too much interest. Even if they can’t understand everything you’re saying, they’re watching your reactions.

Don’t be quick to counter-offer — use silence and see if he drops the price first (also gives you a psychological edge). Be reluctant to state any price and keep working his price down. Eventually, offer a much lower price (somewhere around 20-50% of their first price). In this scenario, let’s say you offer Y100. Don’t be quick to counter-offer or assume you’re getting a good deal just because he’s meeting you in the middle.

Don’t let them “anchor” you with their first price. Sellers love to use this psychological anchoring trick by starting with a grossly inflated price in order to fool customers into thinking that they’re getting a deal after some haggling. For example, if their lowest price is Y50, they’ll start with Y200.

Merchants are professional sellers — they’re haggling with tons of customers every day. Bargaining is second-nature for them (unlike for most Westerners). So don’t get too worked up if you still end up paying more than the Chinese price. Don’t feel embarrassed or guilty for haggling. It’s part of their culture and they fully expect customers — both Chinese and foreign — to drive a hard bargain.

Don’t take any of it personally. They’re also viewing it as a business transaction and are emotionally detached. Sometimes they’ll make a big show about pretending to be offended by your counter-offer — don’t feel bad, it’s all part of the game. Hate the game, not the player.

Think outside the box for other points of negotiation if you’re at a point where there’s no more price movement. For example, if you’re buying a bigger item, ask if they’ll throw in some cheaper gift item.

Your biggest advantage is TIME. No one is forcing you to make a decision on the spot — you’re free to leave and comparison shop (and he/she has to risk whether you’ll come back). Also, you always have the option of coming back later and deciding to buy. So avoid the (above) “one-off” bargaining scenarios, especially for higher-ticket items.

Assuming that you can find a similar item elsewhere — and aren’t leaving town immediately — you can often get a better price by actually walking away in order to “test” his walk-away price (i.e. to get a better idea of actual price). In other words, haggle with a few different sellers by literally walking away to get a better sense of the “local price”.

As you walk out, act casual and give him ample opportunity to continue to drop the price (you can as well say something like, “Okay, tomorrow, tomorrow!”). But make sure to keep your counteroffer sufficiently low, otherwise it might higher than his lowest price and he might accept it!In the same scenario, let’s say the last price he offered as you walked away was Y180 (much closer to his absolute lowest price of Y150). Now you have a baseline price and a better idea of the fair market rate. Then you can use this information to negotiate more intelligently with seller B (say, by sticking to your guns at Y130). If you have the time, repeat this walk-away process with other sellers. After you’ve gathered a few actual walk-away prices, you can feel confident that you got a good price.