Actually, this has probably been discussed before, but if not, maybe it would be nice to put together a discussion for bargaining in Asia. Even though you, Orientvisiter (sic), already know what you're doing over a bargaining table, it's likely that with all of you replica watchophiles, there will be others of you that will someday get to Asia and want to barter over some of these things.
First, I agree with everything tz12r said.
The main principle is that both you and the watch seller need to be convinced that he needs to sell the product to you more than you need to buy it.
The first problem is always knowing what IS a reasonable price to pay. Typically whenever I go to a market of any time, I'll do a reconnaissance mission first, just to look at what everyone has. I don't stop to look at anything much, I don't touch anything, and if the sellers want to talk to me, sometimes I'll pretend not to understand them. I never buy the first example of whatever it is I want until I've seen everyone else's wares. Usually I can get a pretty good feel of what the bottom price ought to be by then.
When I decide on the vendor I want, I'll look at his product, but I try not to show much interest in it. My experience is that this is where a lot of people go wrong bargaining. And not to offend anyone, but I find that American women are the worst for this.
Actual quote of American woman finding bright shiny thing she wants: "Oh! This is SO CUTE!!! I LOVE THIS!! I HAVE TO HAVE IT!"
Sigh. They're not idiots, mind you, I know it's all cultural. It's polite in the US to show enthusiasm and admire stuff in stores. In Asia the vendor won't think, "what a nice, polite young lady" so much as they'll look at her like she has dollar signs tattooed to her forehead.
So then, follow the instructions posted by tz12r and when you get to a price that you feel firm on, I stop there. And if I know that someone else has a similar product, I'll definitely have no compunction about heading off in that direction. Typically yes, you can tell how close you're getting to rock bottom price based on whether they try to chase you down or not. And if they look really grumpy when you've bought your item, then you know you've won.
Also, know that Chinese people will duel to the death over what might be the equivalent of a quarter. One other thing, in Shenzhen (which is just across the border from Hong Kong), one common trick is that when the vendors do their bargaining, you'll settle on a price only to find that the vendor was offering you that price only if you paid in Hong Kong dollars (which are usually worth fractionally more than RMB). It's up to you whether you want to pay the difference. For some, it's worth it just to be done with it and be out of there. The vendors are counting on this too.
For those of us who are stubborn and find this a worthy sport, this is what it means to be Chinese--never to say die!

Good luck.