Kunming is a nice place, but the people here do not speak standard Mandarin at all. My wife, who is from Jiangsu near Shangahai, says she has a hard time herself understanding what many people here are saying. She says they refuse to speak putonghua typically. They actually may not be able to unless they went to a good high school and college. Many people here have never even finished middle school so unlikely they will speak text book Mandarin or anything near it.
I get so criticized for my bad tones (and they are bad) and yet know now that local Kunmingers and Yunnan minorities do not use tones correctly or at all, since their dialect may not have tones or the same tones as putonghua. Many of my students are studying Mandarin (!) in order to maybe get a better job where good mandarin is required. Many students from KM laugh at the Chinese spoken by kids from farming villages the same as they do me, while my wife says they have nothing to laugh at really as their mandarin is pretty bad too and full of poor tones and wrong vocabulary. I was at a restaurant with my wife and and some Chinese friends of hers. They were Miaozu and they were asking my wife what all the different vegetables were called in putonghua, they did not know.
I often have a hard time when using even simple out of the book Mandarin (like when I say zenme shuo zhongwen 怎么说中文, or "how do you say this thing in Chinese", but all I ever get is "ting bu dong, ting bu dong!" or today I asked the shopkeeper that and he told me the price of the item, how frustrating. My Chinese is not that bad because sometimes they understand me and answer me, if my Chinese sucked they would never know what I was saying. Gasp.) but have found I usually get what I need. I usually ask taxi drivers and shopkeepers to speak slowly and use Mandarin, and they seem to most of the time. Other times they just hear me speak some Chinese and then they go off even faster and are speaking I don't know what. Not putonghua or Beijinghua.
Like blobbles said, you will need to speak some level of Chinese here. A good level of just survival Chinese is needed. You have to at least be able to give a command or ask a question. The listening is another issue altogether. I just tried to buy some guitar strings with a certain gauge and a magnifying glass earlier. All I hear is "ting bu dong... ting bu dong" from a sales girl with a shocked face. I found other people in the shop, used the same Chinese phrases and got what I needed.
Man, thinking about it, I really get annoyed by those laowai that come here and stay here for years and never speak any Chinese at all. But they soon have an entourage of students and teachers who do all their bidding for them. They sometimes will call here and want me wife to do some shopping for them or buy them tickets and arrange an itinerary . Yea, let me tell her to oil up the rickshaw and scuttle right over to your place oh great one. it has been a source of direct conflict with me and other teachers here for sure.
Even speaking decent survival Chinese here is not like it in Beijing or Shanghai (I have lived in those places too) where locals speak more English and/or Mandarin, and are used to hearing foreigners attempt to speak to speak Mandarin. In those cities I definitely got laughed at less and saw less shocked faces the moment I try to ask for something. My wife tells me I may be the first foreigner that that person has ever been fact to face to in their lives. They are genuinely shocked. I have noticed that after a bit they chill out and then are pretty nice and glad to help, but at first it can be frustrating and you may get a little angry, but try not to show it much andhave a sense of humor about it and go with the flow.
