Bargaining is the rule here in Beijing, at least, this is the case at many markets and street-level clothes stalls. The tips here are Beijing specific but may help you anywhere in the world where bargaining is practiced.

 DO NOT say how much you want to pay for an item unless nearing the end of the process. Always try and drop the seller's offering price as much as possible before opening your mouth with a price. DO throw out really low prices like 10 RMB as long as you have a big smile. DO keep smiling throughout, the seller is much more likely to continue bargaining with a happy smiling face. Getting angry rarely gets you the price you want. BE AWARE that the initial price offered by the seller is usually at least 40% over the general price acceptable and can be up to 500% over. DO have an idea of what the item is worth. You can ask Chinese friends, hotel staff, expats. DO walk away once you've given them your final price, even before. If you get called back, you know you are close. If you do not get called back, go to a similar stall and try again with a slightly higher price.  

(beijing.gov.cn October 16, 2006)