Money and Bargaining
Chinese currency is called renminbi or RMB. A basic unit of RMB is called yuan or kuai, the colloquial term for yuan. A unit of currency (yuan) is called jiao or mao, the colloquial term for jiao. The current exchange rate is $1.00 is equal to just about 7.0 RMB; one RMB is about 14 cents. If you memorize the conversion rate, it will help you to determine the "value" of your money.
Bargaining is the accepted way of purchasing in China in the open markets; less so in department stores and state-owned gift shops. Bargaining is a social experience and not the kind of behavior one might exhibit in American-style bargaining with unions or plea bargaining in court. If the occasion permits, it is okay to compliment the women as charming and the men as handsome. It is a good way to disarm them a bit. In markets Chinese vendors will have small calculators to punch in their offering price. You might want to bring a small calculator yourself. In the open markets you may want to buy a scarf but you really don't want to let vendors know you really want it. Behave as if you really don't need it even thought you really want it. The opening offering price may be 50 yuan for the scarf. Based on U.S. prices that might be a great bargain but if you go for it in the silk market, you will be just another foreign sucker. And, you will have set the market price for the rest of us! Your response should be to offer 5 yuan. It is ridiculous and they will let you know it. Laugh and agree but behave as if you are still disinterested. They may come back with an offer of 40 yuan. You might offer 10 yuan. The next step I use is to let them know I want more than one scarf. My counter offer is to ask for 5 scarves for 20 yuan. You keep going until you come to an agreement. You have now set the price for purchasing scarves.
If you want more, you can tell the next vendor what you paid, and they may simply give you the deal without any discussion, especially if you have already paid too much! They might even try to switch a high quality scarf for a lower quality one. If you catch them doing it just laugh and switch the scarf back. They may even throw in an extra scarf if you have made a large purchase and the social experience has been a good one. The next offer might be .... "Would you like a -----, the name of a very popular watch?" They are out of sight and underneath the scarves. The diamonds are coated with plastic but they do run. If you pay more than $12, you need to go back to bargaining school.
A member of our Fulbright-Hays Delegation in 2002 did an ethnography at the silk market. After extensive interviews and calculations (assuming everyone was honest), our paid purchase price for 20 participants was 27% of the opening price offering. I would say that was very good for novices. The vendors know you are from America and loaded with cash. You will need to be patient in your bargaining to approach Chinese prices. Another way of looking at it is to realize that the whole process is a good lesson in economics. You personally get to establish the market price -- the fundamental concept in a market or free enterprise economy.
The famous silk market next the U.S. Embassy in Beijing was closed down in January 2005. It was a tourist icon for many years and could be found in most guide books on Beijing. A new market opened with the same vendors is in an indoor three story complex. The atmosphere is the same but it can get unnerving when you have 6 to 8 vendors yelling at you at the same time and you can't see the sky for an escape route. If you linger too much, they may grab your arm and gently hang on to you so you won't leave. In time it actually becomes fun and a very good way to get to know the Chinese. When they find out that you are an educator, you become an honored market guest.
Bargaining is the accepted way of purchasing in China in the open markets; less so in department stores and state-owned gift shops. Bargaining is a social experience and not the kind of behavior one might exhibit in American-style bargaining with unions or plea bargaining in court. If the occasion permits, it is okay to compliment the women as charming and the men as handsome. It is a good way to disarm them a bit. In markets Chinese vendors will have small calculators to punch in their offering price. You might want to bring a small calculator yourself. In the open markets you may want to buy a scarf but you really don't want to let vendors know you really want it. Behave as if you really don't need it even thought you really want it. The opening offering price may be 50 yuan for the scarf. Based on U.S. prices that might be a great bargain but if you go for it in the silk market, you will be just another foreign sucker. And, you will have set the market price for the rest of us! Your response should be to offer 5 yuan. It is ridiculous and they will let you know it. Laugh and agree but behave as if you are still disinterested. They may come back with an offer of 40 yuan. You might offer 10 yuan. The next step I use is to let them know I want more than one scarf. My counter offer is to ask for 5 scarves for 20 yuan. You keep going until you come to an agreement. You have now set the price for purchasing scarves.
If you want more, you can tell the next vendor what you paid, and they may simply give you the deal without any discussion, especially if you have already paid too much! They might even try to switch a high quality scarf for a lower quality one. If you catch them doing it just laugh and switch the scarf back. They may even throw in an extra scarf if you have made a large purchase and the social experience has been a good one. The next offer might be .... "Would you like a -----, the name of a very popular watch?" They are out of sight and underneath the scarves. The diamonds are coated with plastic but they do run. If you pay more than $12, you need to go back to bargaining school.
A member of our Fulbright-Hays Delegation in 2002 did an ethnography at the silk market. After extensive interviews and calculations (assuming everyone was honest), our paid purchase price for 20 participants was 27% of the opening price offering. I would say that was very good for novices. The vendors know you are from America and loaded with cash. You will need to be patient in your bargaining to approach Chinese prices. Another way of looking at it is to realize that the whole process is a good lesson in economics. You personally get to establish the market price -- the fundamental concept in a market or free enterprise economy.
The famous silk market next the U.S. Embassy in Beijing was closed down in January 2005. It was a tourist icon for many years and could be found in most guide books on Beijing. A new market opened with the same vendors is in an indoor three story complex. The atmosphere is the same but it can get unnerving when you have 6 to 8 vendors yelling at you at the same time and you can't see the sky for an escape route. If you linger too much, they may grab your arm and gently hang on to you so you won't leave. In time it actually becomes fun and a very good way to get to know the Chinese. When they find out that you are an educator, you become an honored market guest.
posted by Daniel at
12:21 PM
