21. Bargaining Economics

I finally understand why taiwan shopkeepers always fix their eyes on a customer's every movement right from the moment when he walks through the shop door. In the case that a group of customers walk in, I now also understand why the manager would choose to pause the casual conversation with her employees to subtly assign them to look after the customers.

"Eh eh you ren lai le, gan kuai qu kan kan! (Eh eh, some customers are here, quick go have a look.)" she'd say, also picking one of the few customer to lay her eyes on as she assumes her counter position.

This is why.

From the moment you walk into the shop, the shopkeeper has already laid her eyes on you, and she studies you like a diamond. She watches your style in many aspects; intelligence through your eyes, caution through the way you step, stability through the movement of your head etc. From what she gathers, she then makes a decision on exactly how to deal with you. If you watch carefully the shopkeepers of smaller shops, she is always fidgeting with the goods inside the glass. Maybe she is adjusting to the time of day, to the weather, or to you, who has just walked through the door, and is about to be gobbled up by a crocodile without teeth, meaning that you'd come out alive, but sorry.

Some stores do not have price tags on their items, so the shopkeeper can just set her own price according to her observation of the customer. Some stores do have price tags, but they have a ridiculous price blown up to 1000% of cost, and they have a slash through them. Again, that means any price. And if you remember those times, where the shopkeeper says: "Oh you like that? You come just the right time, I have a better one of that. It is in the back, i'll get it for you." Then she goes to the back to get the goods and brings it out and explains to you: "This one from korea, has this - - - - - and this - - - - -. Oh sell so good, my last one now." And you'd be thinking that it looks pretty good, and it does look pretty good for all of the above reasons, but you'd better watch out, because you came in just in time to buy the last one of whichever that sell-so-good.

Here's a joke i read that i found interesting.
A manager of an eye care store says to a new sales recruit: "If a customer comes to you with a pair of glasses and asks for the price, tell him $4000. If his reaction is anything else but surprised, in other words without the slightest piece of concern, quickly add in that $4000 is just the frame, the lenses are $3000. Then, if he still doesn't seem to mind, quickly add in that it is $3000 for each lens, so in total for two lenses it is $6000."

You could roughly guess the cost price of an items in a shop in taiwan. Because marking up prices by a few hundred percent is the only way to survive the taiwanese bargaining culture, which involves more and more buyers becoming crocodiles that clamp their teeth together so tight that you'd need a tool to open it up. Thus by far, simply not giving money is the best way to 'win', and the pay-off is sometimes interesting.

I remember the story about J Paul Getty. He was one of the firsts in the world to hold a fortune of $1 billion. One day his son John was kidnapped and a ransom of a few million dollars was demanded.
When interviewed by the media, he answered: "I'm not paying, not even 1 cent I'm am paying."
His family and friends were shocked at his words and said to him: "What? You value money more than you value the life of your son?"
He replied: "If I paid the ransom today, when is the next time one of my many other children will be kidnapped?"
And he said firmly: "Today I oath that I will not pay even one cent, but I also oath that if the kidnapper does any harm to my son, I will use all my power and wealth to go after the kidnapper and make him miserable for the rest of his life."
Eventually, Getty didn't pay one cent, and the kidnapper let his son go and disappeared. Why? Because the kidnapper does not wish to hold something that is of no value to him, in exchange for a life time of unrest. In the same way, shopkeepers would rather get rid of items of no practical value in exchange for any accumulation of wealth and a better tomorrow.

But.

After spending time wandering on the streets, browsing night markets, and talking to owners in the stalls, I realized that sometimes it is not really about 'winning' or 'losing'.

Owners of these small stalls are people like you and me. They have fathers and mothers to feed, toys to buy for their children, gas and electricity to pay, and they may be in a lot of debt after borrowing money to send their kids to school. If you ever say 'that store price too high, i can get better at my uncle's factory', then you're probably right, because all of these stalls need to mark up from their cost price - they desperately need to find a way to pay for their fathers, mothers, spouses and children. So, there is no such word as 'rip-off' because every price is going to be specifically designed to earn the owner a profit. People get the idea of 'rip-off' by comparison. That's why the stores that do best, are the ones which have no other stores to compete with, such as the ones before the establishment of the Internet. In these cases, people have no idea what the 'standard' price is, so they buy according to their willingness to pay.

Consider a simple story. In a marketplace in a chinese village, there is a man selling meats, a woman selling vegetables, a man selling fresh water, and a woman selling fish. These people are ordinary people who have needs to provide for. They sell their goods at the intersection of a main road of the village, with one in each corner. For the particular day, the marketplace is not a very prosperous place; the number of people that have walked through in the day doesn't even amount to the number of stalls. Despite that, every once in a while, the men and the women would yell: 'meats, quality and quantity meats', and 'water, big bottles of water'. It was until evening, when a man of rich appearance strolls onto the marketplace main street. As the four marketers look at him with polite intent, he approaches the fish stall, and says: "I want to buy four fishes to cook for dinner." The fish woman is overjoyed. She picks, cuts and packs the fishes into a container and makes an exchange with the man, who strolls happily home. About ten minutes later, the man selling fresh water says: "Okay, I think that should be enough for today, I am going home." And about two minutes later, the marketplace is empty.

What happened? The four marketers are new to the market and don't know each other very well. All they ever wanted to do is to work for a day to put food on the table for their families at home. The rich man bought fish from the fish woman, who in turn set off a domino effect to provide the other three marketers enough money to provide the other three marketers enough money to provide the other three marketers enough money to buy a wholesome meal for their families that night, and still earn a small margin of profits.


If you look carefully at the stall keepers in the picture, they are not really doing their jobs properly. The girl attending the girl stall is checking out the products at the other girl stall, while the man crushing oranges is drooling over something else, possibly food.

When buying something from any shop, the question to ask is not always 'is this the cheapest item for the best quality i get?' but rather 'is this a win-win situation for you and i?' or even 'some of you and i?' If there is a price equal to or below your willingness to pay, why make them lose more when you have already won? Why thrash someone at a sport game and make them cry when you can just beat them by a whisker and then tell them: "whoa that was a close game"? I will be ever appreciative of the power that money has, to bring the giver joy when he takes a step of faith to help others in their times of need.