Beijing – European luxury brands may be all smiles as the weakening euro gives them opportunities to increase prices, said industry insiders.

The luxury sector could be a big potential winner of a falling euro which makes price rises possible to preserve brand value, said a recent report by World Luxury Association (WLA).

"Hiking prices is a common means of preserving the value of luxury goods, while filling the price gap due to the exchange rate," said Michael Ouyang, chief executive officer of WLA in China.

Since 2010, the euro has lost a fifth of its value against the dollar, effectively offering a discount of 20 percent to overseas consumers, according to the report.

For luxury goods companies, from watchmakers to dress designers, which outsource their production to European countries, their costs fell sharply thanks to the depreciating euro. Meanwhile, their revenues jump as more overseas shoppers are drawn to the continent.

With an increasing purchasing power, China has become the world's biggest overseas shopper of luxury products.

What is remarkable is not only the high and growing number of Chinese travelling overseas, but also the bigger amount of cash they splurge on their sojourns abroad than that by tourists from any other country.

According to a research conducted by WLA from 2010 to 2011, Asians accounted for 65 percent of the luxury consumption in France, Italy and England, among others, while the Chinese account for 75 percent of the Asian purchases.

In 2010, Chinese consumers spent US$50 billion on luxury goods in Europe, cashing in on a weaker euro against the Chinese currency, renminbi.

"Though luxury brands are set to increase their prices, it can't stop Chinese tourists going to Europe for shopping as their appetite for luxury goods has become stronger and stronger," Ouyang said.