A tobacco industry has been a fairly linear and predictable industry. You know what's going to happen every year. You know from time to time you are going to have a tax increase, you are going to have regulatory restriction, but, as it applies to everybody, I think we are doing very well. But now it's much more technology-driven. Competitors other than our traditional competitors can come in, whether legitimate or fly-by-night ones, and you have to anticipate all those things. The whole organization has to gear up to this new reality and these new competitive rules around it.

Innovation, in the minds of people, cannot be something extremely cheap. If you are an average person and you hear that something that is much better than cigarettes comes to the market at the cheapest possible price, you'll not trust it. This is the reason we didn't initially manufacture in China, because you need to create that credibility. Over time you need to make the products available and affordable to different categories of people.

Shifting Philip Morris to the new a non-risk products doesn't mean that I will give market share to my competitors free of charge. In the markets where we are not present with IQOS yet or the other reduced-risk products, you still need to defend your share of the market. They still represent the bulk of our income, and so far they have financed the billions of dollars we have put behind these new products. But once we go national in a market, and absent capacity constraints, then you shift your resources and your focus to these new products.

When you look at the potential of such a zero-risk products as electronic cigarettes you need to understand what is the readiness of smokers to switch. That relates to public-health concerns, social pressure, concern for people around you and many other more subtle things. You cannot say that Indonesia is at the same level of readiness as the U.K, Western Europe or the U.S.

A tobacco industry has been a fairly linear and predictable industry. You know what's going to happen every year. You know from time to time you are going to have a tax increase, you are going to have regulatory restriction, but, as it applies to everybody, I think we are doing very well. But now it's much more technology-driven. Competitors other than our traditional competitors can come in, whether legitimate or fly-by-night ones, and you have to anticipate all those things. The whole organization has to gear up to this new reality and these new competitive rules around it.

The problem Philip Morris had with electronic cigarettes since the beginning of development was the satisfaction of the smoker. Because the taste is dramatically different and, at the initial stages, the nicotine pharmacokinetics were very slow. You could not get the satisfaction. It's not so easy to crack this code. The taste satisfaction is very important. The closest you are to this, the more chances you have to switch people. It's very nice to have a zero-risk product, but if nobody uses it, you don't have any reduction in public health risk.

It's pretty clear that we will need measures to accelerate the conversion to new products. Governments can either make measures even worse for cigarettes or do something different on these new zero-risk products to show consumers they are different. I think they should do both.