TAIPEI, Taiwan ( TheStreet) -- Less than a year ago I was threading my way up Canton Road in Hong Kong between lines of mainland Chinese shoppers who waited to step into clothing boutiques selling the world's best known brands.Earlier this year I spoke to an executive with Sands China, a unit of Las Vegas Sands, ( LVS) about plans to build space for 600 luxury stores in a planned $2.7 billion casino. China will make up about 20% of global luxury sales by that year, worth $27 billion, McKinsey & Co. added in a 2011 report. But something has changed. Credit Suisse is saying that Chinese consumers, the top source of business for some of the world's glitziest fashion brands, are slowing purchases. Blame the aversion to glitter on China's crackdown against excessive gift giving, analysts at the Swiss bank say. For two months in mid-2013 the Swiss investment bank interviewed 22 high-end retailers and distributors in greater China to learn that luxury demand had slowed through August. Credit Suisse had already found signs of the same slowdown when a survey in the first quarter of last year identified a dip after strong luxury growth in 2011. It came up with more such evidence in a global watch-buying survey in the first quarter this year. I'm guessing that its European base makes the investment bank particularly keen for info about major luxury goods that emanate largely from the same region. Credit Suisse's mid-2013 survey found that 15 of the respondents had seen a slowdown, particularly in watches. It said watch Rolex, LVMH's Louis Vuitton, Kering's Gucci and Richemont's Cartier watch brands were "facing relatively more challenging near-term prospects." That trend could also soil business for luxury store hosts such as Sands China, which has invested an unusually large $10 billion in China, if gamblers hold back on shopping. The large number of Hong Kong entrepreneurs who rely on customers from the rest of China may also find business down. Buyers believe luxury goods sold in Hong Kong are less likely to be fake than those sold in the rest of China, so many Chinese travel to Hong Kong just to shop.
Credit Suisse's summary of its survey results identifies "political factors" as a core reason that shoppers avoid luxury spending, not property prices or credit availability as in the past. It's referring to China's crackdown last year on gifts given by government officials, part of an effort to present a cleaner public image under new leadership headed by President Xi Jinping. "Political factors refer to the change in leadership in China creating uncertainty and encouraging frugality when it comes to gifting, which has historically been a feature of the Chinese luxury market," said Credit Suisse research analyst Rogerio Fujimori. "So a pullback in gift giving has led to demand weakness, particularly for luxury items like high-end watches since mid-last year." But luxury sales are expected to start glimmering again, at least dimly, the survey result summary says. "The worst is probably behind us but we do not expect a meaningful pick-up," it says, forecasting "mid-single-digit growth on average." Some brands will probably "perform significantly better than others," the summary says. It picks Hermes, Burberry (BURBY:OTC), Prada (PRDSY:OTC), Tiffany ( TIF), Coach ( COH) and Chow Tai Fook to succeed. Ralph Jennings is on LinkedIn. This article was written by an independent contributor, separate from TheStreet's regular news coverage. At the time of publication he had no position in any of the stocks mentioned.