Many people breed Chao to raise grade levels or to make a cool looking Chao. Chao breed two ways, either by it being mating season (about two or more years old), or by being given a heart fruit (which it appears that giving Chao heart fruit shortens its life). When your Chao has a ring of flowers around it, it is trying to mate. Note that Chaos Chao and Character Chao can't mate. Now, if a Normal Chao mates with a Shiny White, the possibilities are:

• A Normal Chao
• A White Chao
• A Shiny Normal Chao
• A Shiny White Chao
• A White Two Tone Chao
• A Shiny White Two Tone Chao

"Two Tone Chao" are Chao with highlights (i.e. a Normal Chao is blue with yellow markings, making it a Two Tone Chao). Chao you buy at the Black Market are all monotone Chao (monotone Chao are a single color). Remember that only adult Chao can breed.