China's luxury boom runs out of steam

Sparkly gems, fancy cars and a parade of upscale stores have made Hong Kong a playground for luxury consumption.

CHINA-LUXURY - The city is largely tax free with goods about 30% cheaper here than in the mainland.

But as busy as the streets may seem - the shopping spree is slowing down.

Retail sales in Hong Kong are falling as shoppers think twice.Some say it's China's weakenening economy. Others cite Beijing's crackdown on conspicious consumption after a series of scandals showing extravagant purchases by officials.

REUTERS REPORTER, TARA JOSEPH, SAID:

"But there's a third argument - after years of shopping like mad, wealthy Chinese customers are getting picky, choosy about what they buy."

Torsten Stocker of consulting firm Monitor Group:

PARTNER, MONITOR GROUP, TORSTEN STOCKER, SAID:

"Brands have expanded in China in the last few years quite significantly. I think they are also maybe to some extent, this year and next year, maybe a little bit of a period of consolidation."

Not all brands are performing equally.

Burberry's recent profit warning has been a drag on its shares while Italian fashion house Prada has surged on strong profits, especially in Asia.

And despite a blitz of publicity, Chinese consumers are becoming more selective.

Mariana Kou of CLSA:

CLSA ANALYST, MARIANA KOU, SAID:

"Chinese consumers are becoming more sophisticated very quickly - we're seeing them moving away from local products towards more brands that are a little more subtle in terms of design."

Over at Sotheby's auction house - high prices for these sparkly watches on display - some with an unusual twist.

But like all wisened consumers, Chinese bidders are becoming more aware of the massive array of choices they have.

And that means changes in how they spend their hard-earned money.