With economic uncertainty continuing in Europe and the United States, an increasing number of companies and individuals arrive in Hong Kong looking to do business on the mainland. While setting up a business is fast and straightforward in Hong Kong, the process can become complicated on the mainland. Serviced-office provider Bridges Executive Centre highlighted the pitfalls of establishing an enterprise over the border in one of its recent seminars for expatriate business clients. Setting up a business on the mainland can take roughly three to six months, according to the seminar's speaker, Alvan Liu, of law firm Alvan Liu & Partners. Some mainland consultants who are well-connected with officials may be able to arrange permits faster, but such speed may come at the cost of contravening some laws or regulations, which may cause problems later for the company or individual, says Liu, a solicitor and attesting officer appointed by the Ministry of Justice of the People's Republic of China. "The investor has to bear in mind that the consultants cannot give legal advice, and if the set-up goes beyond a standard incorporation, lawyers should be instructed," he says. Entrepreneurs planning to invest on the mainland should first identify whether the industry of their interest is encouraged, permitted, restricted or prohibited. "Encouraged industries may enjoy tax benefits or a financial subsidy, such as land provided to the investor by the local government through administrative measures," Liu says. The industry's status will influence the type of company that the investor can set up. There are five types of company permitted on the mainland: wholly foreign-owned enterprise (WFOE); two types of Sino-foreign joint venture, equity joint venture (EJV) and co-operative or contractual joint venture; a foreign-invested company limited by shares, which is also called a joint-stock company; and foreign-invested partnership. The vast majority of foreign-investment enterprises are WFOE or EJV, but entrepreneurs should check in the Foreign Investment Industry Guidance Catalogue to learn whether their preferred format is permitted for the relevant industry. Local rules differ on the mainland, too. There are different regulations for investment in the less developed and more actively promoted central and western regions of China, and yet another set of rules govern investment from qualifying Hong Kong and Macau companies.