SEOUL-- New growth drivers like cutting-edge products that can appeal to the global audience has emerged as the critical drivers needed by South Korean businesses to survive in the new era of innovation, economists here said Sunday.

Before the 1997 Asian financial crisis, the country's major manufacturing industries, including automobiles, shipbuilding and even electronics, experienced strong gains in their businesses due to higher overseas demand for affordable goods, but this took a hit after economies of many Asian countries struggled to cope with the sudden outflow of capital and the chaos this created.

As a result, nearly half of the country's top 30 conglomerates went bankrupt at the time with many failing because of their drive to expand and diversify their portfolios without putting more into their core businesses.

"Unlike old times, in the era of the fourth industrial revolution, South Korean companies badly need to come up with cutting-edge technologies and value-added products as new growth engines," Hyun Jung-taik, president of the Korea Institute for International Economic Policy, said.

Kim Dong-won, an economics professor at Korea University, seconded this view. He said in late 1990s through the early 2000s companies followed the trend of "globalization" to survive, yet today survival depends on whether they have "digital competitiveness."

Many economists picked Samsung Electronics Co. and SK hynix Inc. as examples of businesses that have successfully made the transition from "old practices" to what is needed now.

Both have invested heavily in facilities and research and development to secure advanced technologies. The Korean chipmakers continue to invest in new technologies as their Chinese rivals are trying to catch up, they said.

As a result of such efforts, South Korea's semiconductor exports are expected to exceed $90 billion this year, jumping from $62 billion achieved last year, according to the Korea International Trade Association (KITA).

Sung Tae-yoon, who teaches economics at Yonsei University, also said leading global players such as Samsung Electronics have made a massive amount of investment in technologies to stay ahead of the crowd.

In the July-September quarter, the Korean chip giant even beat Apple Inc. in terms of operating profit. Its operating profit soared to 14.53 trillion won ($13.2 billion) in the third quarter from 5.20 trillion won a year earlier.

Others advised Korean companies to further improve their governance structure to meet the global standards and the top-down management style still seen in some local conglomerates should be eliminated in the digital era.

They said while the shock of the financial crisis may be waning with the passage of time, businesses should bear in mind the collapse of Daewoo Group, then the country's fourth-largest conglomerate by assets.

The construction-to-financial conglomerate went belly up in 1999 after increasing the number of affiliates to 32 and running capital of 34.2 trillion won, with many citing its inability to be a true leader in any of the business areas it was engaged in at the time.

"The lesson of Daewoo should not be taken lightly," an industry source said, warning that failure to change for the times can have dire consequences for companies.

Source: Yonhap News Agency