Qingdao is famous in Shandong for its variety of commercial products, from the well renowned Laoshan mineral water to its shell carvings. The main shopping and commercial street runs along Zhongshan Lu, although most of the shops here are either clothing or food orientated.

Zhong Shan Road has a lot of small shops and boutiques, plus a lot of tourist-oriented shops. Spend a day walking the full length of the road and you'll get a variety of experiences.
Jimo Lu is the primary bargain market in Qingdao, the best place to find all the cheapest goods, knockoffs, bootlegs, etc. It's located near the far end of Zhong Shan Road, but any cab driver will recognize "Jimo Lu" and get you there.
Cultural Market is a little artist colony in Qingdao, where you get great deals on art, antiques, etc. This is the same stuff they sell in the big Beijing "Friendship Stores" at about 1/10 the price, and open for heavy bargaining. The market is hard to find, however, and most taxi drivers don't know it. It's located near the Tai Dong district, actually just a few blocks behind the old Tsingtao Brewery. This street is currently undergoing a major renovation, like everything else in China probably targeted towards 2008.
Laoshan Tea

Laoshan has long been regarded as a mountain tinged with an ethereal touch, a place for hermitage and Taoist cultivation.
With the mild temperature and unsullied mineral water, tea here is considered of high quality around China and is an interesting present, or refreshing cup, for all occasions.
Shell Carvings As a city by the sea, Qingdao contains all kinds of shell resources. Since long ago local people have seen the huge market potential in shell carving.
Nowadays, shell carving is made into tapestry, handwear and souvenirs, which is not only ideal for decoration at home, but also for gifts.
For an introduction into the shell carving of Qingdao, beyond sifting through the rather tacky versions around the pier area, you can arrange a tour through CITS (in the Huiquan Hotel on Nanhai Road) to the local factory.