Is China starting to turn its back on bling?

What have Tiffany, Burberry, Mulberry and Hugo Boss got in common? Yes, they all make expensive products for the global wealthy. But they also all recently warned of a slowdown in sales in once-booming China.

Chinese consumers have been the reason luxury goods brands have enjoyed up to 20 per cent annual growth rates throughout the darkest days of the recession. But the desire for diamond-encrusted watches and handbags has started to weaken. Even the mighty luxury superstar LVMH, home to TAG Heuer watches and Krug champagne, reported lower-than-expected sales growth of 6 per cent last month, well below its previous growth rate of 10-15 per cent.

But is it a desertion of luxury goods, a logical stabilisation after three years of exceptional growth, or just a change in style? Erwan Rambourg, a luxury goods expert at HSBC in Hong Kong, said: "We have seen that gifting has changed in China. We have also noted a change in how people display wealth, with more subtlety. Logo-heavy brands like Louis Vuitton and Gucci have been toning down their logos while Prada is much more focused on leather than on canvas/fabric and logo-adorned products. The more discreet brands like Bottega Venata and Tod's are doing very well in Asia these days and never really had a logo to speak of."

Brokers at CA Cheuvreux think Louis Vuitton and Gucci could be suffering from "overexposure" in China. The two were among the first to enter the region in the 1990s and Cheuvreux's brokers think "Chinese consumers are now looking for very exclusive brands… We understand Louis Vuitton and Gucci are suffering."

However, the latest Chinese manufacturing index beat expectations last week, showing for the first time in three months that the Chinese economy is expanding again. Some analysts think the worst could be past.