Kowtow is Chinese for "knock head". It was a way of showing submission or homage in ancient China. It was performed by kneeling and "knocking" your head to the ground. Usually, no more than three knockings were performed, but when Dutch merchants approached the Emperor (of China) they had to perform 9 kowtows in order for them to show their submission and to humilitate them. The emperor then decided to give them limited trading rights with the then very isolated China.
When British merchants (led by Lord George Macartney) approached the Emperor they refused to kowtow, but agreed to kneel before him as to their own King. This angered the emperor who threw them out of the country along with an angry letter to the King of England.
gn0sis points out that "...there is no "Chinese", but the words "hit head" are indeed kou4 tou2 (kòu tóu) in Mandarin." Thanks gn0sis!
Also, there seems to be at least three spellings of this; kowtow, koutou and kotow. Thanks to liveforever for pointing that out.