NEW YORK -- Wal-Mart’s competitive edge may be strong in the United States; however, the big-box retailer is facing strong competition abroad, most notably in China.

According to CNNMoney, several European and Chinese supermarket chains are expanding throughout China “at a fast clip,” therefore leaving Wal-Mart in the dust as retailers such as Tesco, Carrefour and Metro continue to increase their presence.

Wal-Mart, which currently operates 56 stores in China, is far behind the French retailer Carrefour, which operates more than 240 supermarkets and discount stores in the Asian nation, notes the news source.

European retail giant Tesco operates about 50 hypermarkets in China through its partnership with Chinese grocery chain Hymall. Together, Tesco and Hymall are planning to open 15 new stores in 2006. German retailer Metro, which has 30 discount stores in China, is planning about eight new stores in China over the next three to four years, writes CNNMoney.

According to Frank Badillo, senior economist and director of Retail Forward's global research program, Wal-Mart still has plenty of room to expand in the United States, but over the next five years, “that pace will slow and it [Wal-Mart] will have to focus on the global opportunities.”

Wal-Mart’s international growth will likely face firm competition from large European retailers. Tesco CEO Terry Leahy recently commented that the U.K. retailer is moving “full steam ahead” to boost its presence in China, writes CNNMoney.

“Tesco’s entry is particularly ominous for Wal-Mart,” said Badillo. “Even though the company is not as big as Wal-Mart or Carrefour, it’s proven it can successfully expand internationally, particularly in Eastern Europe, and in Korea where Wal-Mart's struggled.”

While China possesses great expansion opportunities for American companies, India, notes Jay McIntosh, director of retail and consumer products with Ernst & Young, is a country worth paying attention to.

“No doubt China is very important to American companies looking to expand globally, but India may be a better [opportunity] once the government relaxes its regulations,” McIntosh said, adding that research conducted by Ernst & Young found India’s population tends to “spend more and save less versus Chinese consumers who save up to 40 percent of their income,” and that a typical retail store in India is a small, mom-and-pop specialty store.

“This gives foreign retailers the opportunity to go in and compete in any number of ways,” said McIntosh. “They can set up the one-stop-shopping destinations like supercenters, or smaller discount store formats like Wal-Mart's neighborhood markets.”