Alibaba’s plans for a giant initial public offering (IPO) in New York highlight vast potential for e-commerce in China – and the weak link the logistics industry must fix if explosive growth projections are to be reached. The ageing warehouses that supply goods to customers in China are lacking the automation and state-of-the-art technology that has fueled the rise in the United States and Europe of amazon.com. By 2020, China’s e-commerce sector will be larger than those of the U.S., Britain, Japan, Germany and France combined, consultancy KPMG said in a recent report. To cope with the China surge, as much as USD2.5 trillion may need to be invested in buying land and constructing warehouses alone over the next decade and a half. “Over the next 15 to 20 years, the real cost of building warehouses is going to be staggering,” said Jeff Schwarz, co-founder of Global Logistic Properties, the biggest foreign builder of logistics facilities in China. With each new facility the size of several large sports stadiums, that translates to about 2.4 billion square meters of new warehouses – an area close to two-thirds of the total land mass of Taiwan. Global Logistic estimates the USD2.5 trillion needed over the next 15 years will still only increase per capita fully-automated modern warehouse space to just a third of that in the U.S. Alibaba controls 80% of all online retail in China, and its logistics partners delivered five billion packages last year. Warehousing is a key to the supply chain across the e-commerce industry. Boston has more modern warehouses than the whole of China, says Stuart Ross, Director of Industrial at property consultancy firm JLL China. Less than 20% of China’s warehouses are categorized as modern. Improving the logistics of China’s warehouses has been prioritized by Alibaba co-founder Jack Ma, who announced a plan to lead a consortium to invest USD16 billion in the first phase of building Alibaba’s national logistics business unit. Since the beginning of last year, about USD22 billion has been earmarked by buyout firms, including Blackstone and Carlyle, and private companies, to buy land and build new warehouses in China, the South China Morning Post reports.