'Anybody who goes into business, particularly in the Internet in China, with rose-coloured glasses on, expecting that it's going to be easy, are setting themselves up for a very expensive failure,' he said.

Mr Earnshaw, who lives in Shanghai and was visiting Hong Kong last week, has edited a highly specialised book. It is billed as the first detailed account of Internet investment on the mainland.

The work, a collaboration of at least 32 Internet, legal and business experts, has two tracks: a story about a fictional Web site called MaoPortal, and workbook-like insertions and checklists for dotcom start-ups.

Publisher Asia Law & Practice has published a book called The Life and Death of a Joint Venture in China , but the latest book was a departure from the style of the previous tome, Mr Earnshaw said.

Instead of pages of dry text, it attempts to add life to regulatory, legal and other details by providing the make-believe tale of Jefferson Huang, a United States MBA graduate who returns to his homeland to start a portal that cashes in on the craze for Mao memorabilia.

A series of problems and a rival site shoot down the hopes of Mr Huang and his band of followers, so readers can learn what mistakes to avoid.

'The Chinese environment is very different from that outside, including Hong Kong. The situation changes, the line moves almost every day,' said Mr Earnshaw, who first went to Beijing in 1979.

He has followed the collision of the Cultural and Internet revolutions on the mainland as a journalist and businessman.

People believe the Chinese Government has been harsh about Internet laws, but Mr Earnshaw believes Beijing has taken a lax approach, allowing entrepreneurs to get away with almost anything as long as they phrase their intent within the letter of the law.

However, he does not believe China is ready for sites that cater for consumers by selling books, electronics and goods.

It would take years for China's business-to-consumer industry to reach the level of the US, he predicted, because consumers and banks had been slow to adopt credit cards and systems.

The concept that entrepreneurs need to learn from the successes and failures of other people is popular in Silicon Valley. For example, John Nesheim, author of High Tech Start Up , believes Hong Kong entrepreneurs and their backers need to learn from the failings of Western start-ups to help their own ideas take flight.

The publisher of The Life and Death of a Dotcom in China has sold about 130 books out of a run of 700.

It is supposed to be available on the online arm of bookseller Barnes & Noble, but the Web site last week said it was out of stock.

The book might not have a happy ending, but Mr Huang remains optimistic:

'All that remained for them to do was to compile a liquidation report, cancel the company registration and then it was over' - Jefferson's first enterprise officially deemed a failure and terminated.

'But hey, you live and learn.'

The Life and Death of a Dotcom in China, editor and story, Graham Earnshaw. Price: HK$1,950. Published by Asia Law & Practice. Available at bookshops, by direct mail and on the Internet.