I guess you probably are very confused now, like always :) Do not worry, let me start with a story.
There was a guy invited a foreign friend for dinner at home for the first time. After was introduced to the wife and the son the friend complemented how lovely the son was. The wife replied "没有啦! ( méi yǒu la) "which literally translated into English means no, not at all. The friends got confused . Then when he was complementing the beauty of wife, she replied "哪里哪里( nǎ lǐ nǎ lǐ )" which means where where. So the friend got more confused and even shocked. Chinese were famous for being modest, why she asked me like this? So he answered "Everywhere, everywhere".
So let me explain now. This is how a Chinese normally respond to a complement, by using 没有啦! ( méi yǒu la) and 哪里哪里 ( nǎ lǐ nǎ lǐ ) . He/she is not expecting a response from you. So you do not need to say anything to respond, just smile back genuinely.
Funny, right? Now you can start to complement your Chinese friends now :)
Is modesty also highly valued in your country? Share with us. Every opinion deserve to be heard.