How Logitech Protects Its Manufacturing Secrets in China

Stock Chart for Logitech International SA (LOGI)

Nelson Ching/Bloomberg

A worker assembles computer mice at the Logitech International SA factory in Suzhou, Jiangsu Province, China, on March 2, 2012.

(Company corrects previous location of manufacturing operations in 4th paragraph.)

Electronics makers have had to make a difficult choice: Farm out their manufacturing to China, where operations are usually cheaper and more efficient but more vulnerable to trade-secret theft, or try to do it themselves. Logitech International, which makes gadget accessories, does both.

"We make everything in China," Logitech CEO Bracken Darrell said on Bloomberg TV. "About half of what we sell, we make, and half of what we sell, we source from somebody else. It's an interesting strategy. It's really worked for us over time."

For example, Logitech built its UE Boom portable speaker at its own factories in China instead of using a contractor in order to keep the product under wraps, Darrell said.

Logitech co-founder Daniel Borel concocted many of the secret manufacturing processes that the company still uses today, Darrell told me in an interview in San Francisco earlier this year. Over time, Borel relocated manufacturing for the Switzerland-based company from Ireland to Taiwan and eventually to China, today's global factory, according to the company.

"China is about speed," Darrell told me. "There's a lot to love about the Swiss model, but I won't confuse you -- we're not a Swiss company. We're kind of a Swiss company, an American company, a Chinese company."

Darrell, an American who previously worked at Whirlpool in Switzerland and Gillette's Braun in Germany, said Logitech's two-pronged approach in China helps the company to save money and protect secrets.

"If the price isn't right, we just bring it in and make it ourselves," Darrell said. Likewise, if proprietary technology is involved, "we make it internally so that we can keep that quiet as long as possible."

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Sept. 25 (Bloomberg) -- Bracken Darrell, chief executive officer of Logitech International SA, talks about the company's business strategy, peripheral products for the mobile market and manufacturing locations. He speaks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)