Chile is full of woven goods, using alpaca and llama wool in the north and lambswool in the south. Carved wood is common to the forest-dense south. It's also one of two countries where the semiprecious stone lapiz lazuli is found.
Many cities have good antiques markets, notably Santiago's Mercado Franklin and Valparaíso's Plaza O'Higgins. Flea markets are known as ferias persas (Persian fairs).
Fundación Artesanías de Chile (Chilean Craft Foundation, www.artesaniasdechile.cl) showcases quality artesanía.
Crafts markets are the only acceptable venue for bargaining. Transport and accommodations rates are generally fixed and prominently displayed. Chileans can be easily offended by aggressive haggling as it isn't part of the culture.
Chile is one of few countries in the world where the semiprecious stone lapiz lazuli is found. It is a deep navy-blue color and makes sophisticated jewelry that can be bought in most Chilean jewelers and a few ferias artesanal (artisans markets). Check the quality of the setting and silver used – they are often only silver-plated and very soft.
Craft markets can be found throughout the country. In the north, artisans put shaggy llama and alpaca wool to good use by making thick jumpers, scarves and other garments to take the bite off the frigid highland nights. Many of these goods are similar to those in Bolivia and Peru. You'll also see crafts made with cactus wood and painstakingly crafted leather goods in Norte Chico.
In Chiloé and Patagonia, hand-knit woolens such as bulky fishers' sweaters and blankets are reasonably priced and useful in winter. In the Araucanía, look for jewelry based on Mapuche designs, which are unique to Chile. They also produce quality weavings and basketry. In the Lakes District and Patagonia, artisans carve wooden plates and bowls out of the (sustainable) hardwood raulí.
Wine lovers have plenty of Chilean wines to choose from: stick to the boutique wineries with wines that you can't find in your own country, or pick up bottles of the powerful grape-brandy pisco, which is difficult to find outside Chile. Other artisanal edibles include miel de ulmo, a very aromatic and tasty honey special to Patagonia, and mermelada de murta, a jam made of a tart red berry. As long as such goods are still sealed, there shouldn't be a problem getting through international customs.