How do people set up sites like mangareader.net and mangafox.me? Aren't they illegal?
Just because it's illegal doesn't mean you can't do it.
(You'll probably have a lot of legal headaches and risk going to jail etc - but you can still do it - killing people is also illegal, yet people do it)
Just as how the PirateBay is still around, despite many copyright claimers' objections - these site use loopholes in the law to get around legal restrictions.
- Ignoring take-down notices
Usually blatant copyright infringement will have relevant parties emailing take-down notices, but many of these sites will ignore these. The next step for interested parties is to file a law-suit - which many smaller groups do not have the funds to pay for.
- Selectively applying takedown notices
Some sites simply take down the particular series that have been claimed against - and no more. Seeing as English companies are the most interested in preventing English copyright infringement, series that haven't been licensed usually get ignored in take-down lists.
- Complying with take-down notices, but restarting under a new alias
There are several sites that close down after legal pressure, but then start right back up again under a new alias - this means legal pursuers have to start the process all over again, for presumably the same result.
- Hosting tricks
Sometimes these sites will get around copyright laws by hosting their website in a country that has a copyright policy that makes this website legal. I don't know of many examples but I do know the Pirate Bay tried to buy the micronation Sealand.
- Not actually Hosting the content
Manga readers sometimes don't actually store the content on their servers - they are simply an interface to someone elses' server and consequently, they try to blame that group if anything is contested. Some countries have enforced ISP-level blockages on some piracy sites to stop infringements in their country.
There are some other tricks they use to avoid getting caught, mostly to do with international differences & ambuguity in law.
I do not recommend you try to set one up yourself. Firstly for your own wellbeing, secondly because in doing so you are taking away from manga artists, who already don't make much money as it is.