To make the dressing, place the vinegar, oil and garlic in a small bowl. Season with salt and mix well. The salt will take away excessive acidity but if you prefer you can add a little sugar to do this as well.
To make the salad, place the watercress, shallot and red capsicum in a shallow salad bowl and drizzle over the dressing. Set aside.
Heat a large frying pan over high heat. Rub the oil over the beef strips. In batches, add the beef strips to the hot pan and cook quickly for 1-2 minutes until browned on both sides. Cook in batches to prevent steaming the beef. Season with salt and freshly ground white or black pepper.
For the spicy fish sauce (this can be made ahead of time) place the water, fish sauce, vinegar and sugar in a small saucepan over low heat. Allow the sugar to dissolve, increase the heat and bring to boiling point. Remove and allow to cool. Add the garlic, chilli and lime or lemon juice. Pour into a clean jar, cover with a tight-fitting lid and keep in the fridge till ready to use.
To serve, gently toss the dressing through the watercress salad. Add the beef. Sprinkle over the mung bean sprouts and drizzle over the spicy fish sauce. Finish with chilli slices and a side of pickled carrot and coconut rice (note to Silke - link to other recipes).