Over the past year, many companies have been advocating against internal inefficiency—reducing meetings, streamlining processes, eliminating ineffective KPIs, and refocusing the organization on the customer. This resonates widely because, as large corporations mature, too many employees become preoccupied with procedures, metrics, and reporting, often pushing the client into the background. KE Holdings' recent restructuring should be viewed within this context. On March 29, the company issued eight documents announcing its most significant organizational reshuffle since inception: establishing a Group Transformation Management Committee chaired by Peng Yongdong; creating a Corporate Executive Department; cutting redundant metrics and non-essential positions; and, for the first time, appointing three Chief Customer Officers at Beijing Lianjia, who will report directly to Peng Yongdong. Simultaneously, KE Holdings is sharpening its strategic focus on becoming a "community living services platform," reducing its reliance on short-term transaction cycles.
The changes at KE Holdings have already progressed from corporate-level directives to the day-to-day work of frontline agents. Public reports indicate that some Beijing Lianjia branches have begun adjusting KPIs, phasing out previous assessment items like mandatory check-ins and mutual confirmations, while elevating "gaining customer trust" as a primary objective for agents. Another key initiative involves capability reassessment. KE Holdings announced that starting in June, its "Boxue" proficiency exam will be upgraded into a comprehensive "Service Provider Certification System," with all levels of certification exams offered free of charge. This system establishes five competency tiers, from L1 to L5. L1 targets newcomers and does not require re-examination after passing. L2 to L5 are optional, allowing service providers to voluntarily upgrade based on their career development needs. The certification is available to all 500,000 service providers on the platform, with the company covering annual operational costs exceeding 150 million yuan. The pilot will launch first in Beijing before a nationwide rollout.
Interpreting this move merely as "self-preservation amid a property market downturn" is overly simplistic. KE Holdings is not a company that has lost its initiative. In 2025, it reported net revenue of 94.6 billion yuan, a 1% year-on-year increase; net profit of 2.99 billion yuan, and an adjusted net profit of 5.02 billion yuan. The proportion of non-property transaction business rose to 41%, with home renovation and furnishings revenue reaching 15.4 billion yuan, and the rental business achieving full-year profitability. Secondary housing transaction volume grew 11% year-on-year, hitting a record high. While facing pressure, KE Holdings still maintains flexibility.
The counterintuitive aspect is why a leading company, which still holds its industry position and is updating its business structure, would proactively dismantle elements of the system that once underpinned its success. This reform, driven and directly overseen by Peng Yongdong, addresses not just how KE Holdings can reduce costs and improve efficiency, but also whether the organizational system that enabled its initial rise can remain effective as the real estate services industry enters a new era characterized by low growth, a heightened focus on service, and the critical importance of trust.
The challenges of this restructuring lie in its impact on the very organizational order that previously powered the company. KE Holdings' historical advantage stemmed from a complex system encompassing its store network, agent collaboration, platform rules, commission-sharing mechanisms, regional management, and performance metrics. This system helped build scale and synergistic advantages, facilitating Lianjia's transition from a traditional agency to a platform-based company. However, under shifting industry cycles, the same system reveals drawbacks. Peng Yongdong explicitly identified KE Holdings' "large organization ailments" in a company-wide letter: thickening departmental silos, processes overriding common sense, and complex metrics obscuring genuine value creation. What appears to be management can often be internal friction; what seems like a pursuit of efficiency may actually be self-perpetuation, increasingly distant from consumers. These statements clarify that the reform's essence is enhancing efficiency and iterating processes.
Many companies equate efficiency improvements with straightforward "downsizing," but KE Holdings is clearly taking a different approach. If the goal were merely cost reduction, companies would typically target expenses, budgets, and headcount first. However, the keywords of KE Holdings' reform—Corporate Executive Department, Chief Customer Officers, ineffective metrics, departmental silos—point not to the cost sheet but to the chain of responsibility: who is truly accountable to the customer, who is responsible for long-term value, and which management actions merely justify their own existence. The anticipated difficulties of reform originate here. Middle managers, previously reliant on processes and metrics, must now re-engage with business value; frontline staff, formerly focused on closing deals, must adapt to fostering longer-term client relationships; executives, once evaluated on operational results, are being pulled back into more concrete customer accountability. Such adjustments are unlikely to please everyone immediately. Consumers may not quickly perceive the benefits of organizational changes, capital markets may not promptly reward the stock with a higher valuation, and internal "resistance" will likely emerge first.
Complicating matters further, KE Holdings' past organizational capabilities constituted its competitive moat. Its stores, agents, partnership network, ACN collaboration mechanism, and platform rules were key to its success in the real estate brokerage industry. The current reforms target precisely those elements within its successful formula that have begun to lose effectiveness. The most difficult changes for any organization often involve pathways validated by past achievements. Because they worked, they easily become entrenched habits. Herein lies the difficulty of KE Holdings' reform: Peng Yongdong must dismantle today's inefficiencies embedded within yesterday's successes.
Why would KE Holdings, while still performing relatively well, choose this path? The key is that "relatively good" periods are often when large organizations become most complacent. Based solely on the present, KE Holdings retains its industry standing, store foundation, user scale, and brand strength. In 2025, its total number of stores grew to 61,139, an 18.5% year-on-year increase, with monthly active users reaching 43.8 million. However, the data also reveals a structural contradiction. On one hand, KE Holdings continues expanding its reach, with growth in both stores and monthly active users. On the other hand, its traditional core transaction businesses are under pressure. In 2025, net revenue from existing home transactions was 25 billion yuan, down 11.3% year-on-year; net revenue from new home transactions was 30.6 billion yuan, down 9.1% year-on-year; total gross transaction value was 31.8 trillion yuan, a 5% decrease. This indicates that advantages built on transaction growth, store expansion, and agent scale cannot automatically translate into future competitiveness.
Peng Yongdong's push to transition KE Holdings from a "transaction platform" to a "community living services platform" is a direct response to this contradiction. Property transactions are infrequent events, whereas living services imply long-term relationships. Organizing the company solely around transactions keeps the platform vulnerable to market cycles. By establishing longer-term, more stable service relationships with community residents, KE Holdings can potentially reduce its dependence on single transaction cycles. In 2025, its home renovation and furnishings revenue reached 15.4 billion yuan, the rental business achieved full-year profitability, and non-property transaction business rose to 41% of the total. These figures suggest KE Holdings is migrating the customer acquisition, service, organizational, and data capabilities honed in property transactions to higher-frequency, longer-term living service scenarios.
This path is not easy. Property transactions, leasing, renovation, maintenance, and cleaning are inherently non-standardized services. The challenge lies not merely in adding another business line but in stabilizing processes, quality, user experience, and delivery. While user living needs are continuous, organizations are naturally prone to segmentation into different units. For KE Holdings to become a community living services platform, it must first enable the organization to operate consistently around the same customer over the long term.
Maintaining the status quo might not cause immediate problems for KE Holdings in the short term; financial performance could even appear more stable. However, risks would become chronic and latent: transaction opportunities gradually diminish while the organization chases diminishing returns with more metrics; middle management continues justifying its existence through processes; frontline staff remain driven by short-term deals; the platform seems functional, but its capacity for creating new value declines. On the afternoon of April 23, 2026, KE Holdings' eighth anniversary, Peng Yongdong addressed leaders at the level of national center heads and above, sharing the rationale behind the strategic transformation. For KE Holdings, maintaining the status quo isn't necessarily prudent; it might merely postpone the risk of organizational stagnation. As the chief architect of its systems, Peng Yongdong appears to recognize this ahead of others.
The challenges Peng Yongdong is tackling are systemic to the real estate services industry. The difficulty for the brokerage sector has never been solely about "selling more houses." A greater challenge for the industry and platforms involves trust, collaboration, and benefit distribution: how agents cooperate, how stores share commissions, how franchisees and the platform jointly uphold rules, and how clients can trust that service providers aren't just chasing a single transaction. The industry is inherently fragmented, incentive-driven, and low-trust, making sales tactics alone insufficient for long-term solutions. KE Holdings' early promotion of the ACN collaboration mechanism essentially addressed this by creating a rule system that enables coordination, imposes constraints, and ensures sustainable operation, organizing disparate agents and stores. This also explains why the current reform focuses on the executive system, customer officers, ineffective metrics, and organizational layers. It deals not with the efficiency of a single business unit but with how the entire system can be reoriented around the customer.
Reviewing KE Holdings' development path, Peng Yongdong has been involved in several key organizational shifts: Lianjia's transformation into a platform company, building KE Holdings' "One Body, Three Wings" business framework, and now driving a new round of organizational change amid an industry downturn. These efforts address the same fundamental question: can a real estate services company organize dispersed individuals, stores, clients, and services into a coordinated, constrained, and sustainably operational system?
Discussions surrounding the controversy over Peng Yongdong's compensation should also be considered within this context, as they touch on governance issues in platform companies. Several experts have commented on KE Holdings' equity structure. Guo Yi, Chief Analyst at Heshuo Institution, suggested that granting restricted shares to Peng Yongdong essentially meets compliance requirements under the Hong Kong WVR (Weighted Voting Rights) framework, rather than constituting simple cash compensation. Tian Yuan, Partner at DeHeng Law Offices, noted that HKEX has clear requirements for WVR structures, including that the economic interest of relevant beneficiaries must meet regulatory minimums. Following the passing of founder Zuo Hui, the company needed arrangements to continue complying with Hong Kong listing rules. KE Holdings' use of a WVR structure aims primarily to maintain strategic continuity and decision-making efficiency. According to public information, as of end-2025, Peng Yongdong held 5.0% of shares with 22.1% voting power; Shan Yigang held 2.7% with 10.0% voting power; combined with voting rights authorized to Baihui Partnership from the Zuo Hui family trust, core management controls 49.3% of voting rights. This structure inevitably attracts controversy but also clarifies that Peng Yongdong is not an external professional manager focused solely on tenure performance; he co-founded KE Holdings with Zuo Hui and others, binding him to the company through control rights, equity, reputation, and long-term responsibility. Consequently, reforms impacting the executive system and customer accountability chain cannot be outsourced but must be led by him.
The compensation figures themselves need interpretation within capital market regulations. Zheng Peimin, Member of the Investment Banking Professional Committee of the Securities Association of China, highlighted significant differences in compensation disclosure rules between A-shares and Hong Kong stocks, with the latter including share-based compensation, which does not represent actual cash outflow for the company. Guo Yi also mentioned that Hong Kong uses IFRS, requiring the fair value of restricted shares to be amortized over the service period, which can be misinterpreted as cash compensation. This does not preclude discussion of executive pay, but more meaningful debate should focus on whether such equity arrangements serve control stability, strategic continuity, and long-term value creation.
KE Holdings' recent donation initiatives can also be viewed within this framework. The 2025 annual report indicated that Peng Yongdong and Shan Yigang donated the full value of their 2025 restricted shares, with post-tax funds allocated to medical security, children's education for industry service providers and their families, support for new graduates, and the establishment of a "Healthy Home KE Guardian Fund." Previously, Peng Yongdong donated 9 million KE Holdings Class A ordinary shares for medical benefits for industry service providers and rental assistance for new graduates. On the day the Guardian Fund launched, two service providers had already applied and received critical illness payments. One Beijing service provider was diagnosed with non-Hodgkin lymphoma; a Chengdu Lianjia agent, besides receiving 20,000 yuan for critical illness, also qualified for "Home Warmth Support" and "Children's Education" funds. The project covers over 500,000 industry service providers, including brand owners, store principals, agents, cleaners, and maintenance staff. Zhang Chenggang, Associate Professor at the Capital University of Economics and Business, suggested such保障 extends the safety net from corporate employees to platform-based industry workers, reflecting the platform's expanding role as "employment infrastructure," with features like immediate, fast-track critical illness payments resembling proactive support in social assistance mechanisms.
While these donations and the organizational reform operate on different planes, they both underscore KE Holdings' platform nature: for a living services platform to operate sustainably long-term, it must address not just transaction efficiency but also service provider stability, customer trust, organizational synergy, and long-term responsibility. Therefore, Peng Yongdong is tackling systemic issues within the real estate services industry.
In conclusion, KE Holdings' reform should not be seen as a prelude to individual heroism nor simplistically interpreted as contraction under pressure. It is better viewed as a leading platform proactively modifying its organizational system as the industry enters a low-growth cycle. Whether this reform successfully transitions the company from a transaction platform to a community living services platform remains to be validated by results. KE Holdings faces significant challenges: further standardizing large, non-standardized services; integrating multiple business lines; extending customer relationships from infrequent transactions to long-term services; and genuinely enhancing organizational efficiency after streamlining. These are not issues resolvable by issuing documents alone. However, this reform at least signals that competition in the real estate services industry has changed. The past competition centered on store count, agent scale, property listings, and transaction value. Moving forward, it will also depend on whether organizations can consistently stay close to customers, reduce internal friction, and navigate low-growth cycles. By bringing this reform to the forefront, Peng Yongdong is effectively pushing KE Holdings to recalibrate its platform role: it must not only facilitate transactions but also sustain living services over longer cycles. What KE Holdings truly aims to transform is not just its structure, but its operational mode as essential industry infrastructure.