ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Saturday, June 10, 2006

Post on Contracting in China

Deborah Post (Touro) sent this intriguing message to the AALS contracts listserve, describing some aspects of contracting in China:

Everybody expects to bargain in China.  At the Great Wall, vendors yell at passing tourists, "tee shirts $1."  But, of course, there are no tee shirts for one dollar.  There are tablecloths, kimonos, place mats, chop sticks, fans, sculptures, bamboo hats, tea pots and all other manner of things tourist for sale.  There are tourists willing to buy, thrilled with the prospect of a real bargain and girded for the contest of wills that bargaining represents. 

Tourists buy souvenirs after they have climbed the Great Wall. Vendors outside the exit from the tram and the base of the steps leading up to the Wall have the advantage of location because the purchase of souvenirs is not an exercise in comparison shopping. The best price is obtained by those with the best skills and the greatest speed.  How low can you go with an offer and get the item you want and still make it back to the bus within the allotted time.

Vendors with booths farther down the hill have a variety of competitive strategies.  Pre- ascent they cultivate consumer loyalty: pressing cards into your hand and yelling after you " I remember you, you remember me..."  Post-assent vendors may resort to physical aggression.  A determined seller will
put his body in your way and block your descent.  The better sales have been, the more likely it is that there will be a kind of feeding frenzy by unlicensed vendors.  With postcards and plastic toys in hand, peasant participants in the market economy pursue tourists across parking lots and,
in the extreme case, right onto the buses. 

Bargaining at the Great Wall probably isn't the best example of what a free market economy really means in China.  Even when shopping at a four story mall in Chaoyang, the expat district in Beijing, bargaining is also the dominant form of commercial intercourse. There are prices posted in all the
stalls but the posted price bears no relationship at all to the actual price at which goods will be sold or even the starting point for negotiations. Calculators, the preferred communication devices for cross cultural cash transactions, are whipped out at the moment you pause to examine a silk scarf
or a leather purse.  Come in, come in, said the spider to the fly.  "Best price for you because you are my first customer." 

The absence of a fixed price is disorienting.  I don't like bargaining.  I worry that I am an easy mark: an American just waiting to be parted from her disposable income. I stopped by the costume jewelry counter in to look at what was obviously fake jade.  You don't get real jade earrings for 90 yuen (
approximately $11 U.S.)  I know that, the sales clerk certainly knew that. Yet she insisted that you could see the "jade flowers" if you held the synthetic jade up to the light, which you could not, and that it would cut glass, which it obviously did not.  What was the point of this patently absurd attempt at deception? 

On the other hand, I worry about hard bargaining on my part.  Selling below cost is not rational, but it might be necessary.  You can't buy dumplings with clothes on a rack. So I want to know what a fair price would be.  I want to know how much the seller has to  charge in order to cover costs and  make
a reasonable profit.  My students react with derision.  "You could have gotten those tee shirts for 30 yuen (about 4 dollars)."   I paid 40 yuen (about 5 dollars).  But 40 yuen was the point where I met what I perceived to be real resistance, a palpable reluctance to lower the price further.  In bargaining I am risk averse.  I do not wish to venture into the realm of human desperation.   

It might all even out in the end.  For every U.S. tourist who drives a hardbargain, there is a person like me, the reluctant participant in a global economy who worries about exploitation.  I want to pay a fair price, but I can't tell what a fair price might be.  I want a fair deal when everyone else is intent on getting the best deal --all of which makes me wonder about a market model for contract doctrine.

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