Nothing wrong with Laowai.
In Chinese language, LAO is a respectable prefix. You offen heard "Laoli","Laozhang". People name the older. "Laobiao" in the south mears "brother(s)", "Laoxiong" in the north. So is Laowai.
It sometimes do mean:
1.Look, there is a foreigner! When one yells.
2.If it was said to you, then the peoson was talking to
you. Because he didn't know your name.
There was absolutely no insult.Just because most of the people in China seldom see a foreigner.
Ofcourse, if you had done anything wrong, you might thought the people was yelling "There is the culprit!"
So, what do you do? Just weqr q smile. If you like, you may wave. Otherwise, ignore them.
During WW II, Allied forces in China handled this by thrusting a thumb, and saying "Dinghao", that meant "Verygood"
Alex Wu, a Chinese-Canadian in China.