A cashmere exhibitor from Inner Mongolia shows visitors how to tell genuine from fake cashmere products at an exhibition in Suzhou, Jiangsu Province. Inner Mongolia, home to famous cashmere brands like Erdos and Deer King, has been using intellectual properties like well-known brands for an economic transformation.

What comes to mind when you think of Inner Mongolia? The vast Gobi Desert, boundless grasslands, men and women in colorful ethnic clothes, or abundant coal and gas reserves?

Perhaps so, but Inner Mongolia can also mean the Yili and Mengniu dairies, Erdos or Deer King Cashmere and the Little Sheep hotpot restaurant chain.

There is one well-known brand in Inner Mongolia for every 1,700 trademarks, while the national average is one in every 6,000.

Last year, well-known brands in key industries - dairy products, energy, metallurgy, petrochemicals and hi-tech - contributed more than half of total sales in those sectors.

Well-known dairy brands actually accounted for three-fourths of total sales in their industry.

"Inner Mongolia has been the fastest-growing region in China and our well-known brand strategy is a key," says Yu Dehui, vice-chairman of the autonomous region, an innovation and brand development summit in Hohhot, capital of the region.

Creating well-known and famous trademarks has been a key strategy for the autonomous regions since 1995.

In 1993, the region only had 549 trademark applications. The number jumped to almost 5,000 last year.

It took half a century for the region to grow its gross domestic product (GDP) to 100 billion yuan by 1997, but it took just six years to reach 200 billion yuan. It took another year to break the 300 billion yuan mark in 2004 and in the following year, the record was set at 400 billion yuan.

"As a region with poor infrastructure and rich natural resources, innovation is our most powerful tool to leapfrog ahead," says Yu, who is also head of the intellectual property protection committee of the North China region.

The region is rich in many resources: it has the world's largest rare earth metals reserves, one-fifth of China's grassland, the country's largest coal reserves and many other resources, so most famous brands in the region are related to dairy products, cashmere and petrochemicals.

"It is good to have so many resources, but we should not only sit on them and do nothing," says Yu, a scientist-turned official who has a degree from a French university.

Pan Gang, CEO of dairy Sproduct maker Yili Group, says competition is a key to his company's success.

In 1996, when Yili floated shares on the Shanghai Stock Exchange, it was focused on making ice cream, competing against foreign giants like Nestle and Meadow Gold.

But in 2000, it sensed an opportunity in milk, so with help from the packaging giant Tetra Pak, Yili started its own dairy production lines.

Yet it then faced more intense competition from foreign producers like Danone and domestic rivals Sanyuan and Bright, as well as Mengniu, which was founded by former Yili employees in the same city of Hohhot.

"Only when you find your own value in the market, can you win in the intense fights," says Pan.

Last year, Yili became the first intellectual property pilot organization to be granted by the State Intellectual Property Office in the dairy industry.

In 2004 and 2005, the company generated 113 patents and built the first research academy in the domestic dairy industry. It also saved millions of dollars over imported products with its self-developed filling machine.

Yili also signed a sponsorship agreement in 2005 for the Beijing Olympic Games, which brings the company an opportunity to expose its brand to the world.

"The opportunity to provide dairy products to the Olympic Games is a certificate of our quality and is a pass into global markets," says Pan.

While enterprises should take the initiative in building brands, Yu says the government should be ready to help innovative companies when they are in difficulty.

"When a brand is small, nobody wants to copy you," says Yu. "Neither will others copy you when you have a large lead. But when the development of a brand is in the fast lane it is the most dangerous time, and that is when the government can play an active role."

Little Sheep was the second-largest restaurant chain in China last year, following only Yum! Brands, Inc, parent of KFC and Pizza Hut. It even has restaurants in Toronto and San Francisco.

The business, founded eight years ago, has received investments from UK-based venture capital giant 3i Group and is now planning a public listing.

But it also has many copycats using similar trademarks or names.

Two years ago, there were over 700 restaurants copying the brand across the country, three times the number of genuine ones.

In response, the provincial government sent industry and commerce administration officers to various regions and asked for cooperation from local counterparts to stop the fake restaurants.

In June, the local administration of industry and commerce in Hohhot went to Anhui and Henan provinces to work with local authorities to stop fake Mengniu dairy products from being sold there.

There is a reporting center for fake products in every city, in the autonomous region for consumers to call if they find counterfeits.

"It is the consumer who has the final vote, so if they recognize the value of a well-branded product, they will take action themselves," says Yu.