Redefining Shell

Ask AI · Why is Shell launching large-scale transformation during a real estate downturn?

Reporter Tian Guobao

“Customers probably won’t get those disruptive phone calls from Lianjia agents anymore.” On April 4, inside a Lianjia outlet in Beijing, when agent Yang Xue said this, she looked visibly relieved, as if letting go of a weight. She said agents actually don’t want to call customers frequently either. It was just that, previously, they were forced to do so under KPI pressure—calling not only buyers but also sellers. She also knows this kind of behavior is especially off-putting.

This situation is gradually improving. Some Lianjia outlets in Beijing have started adjusting their KPI targets, gradually removing existing evaluation items such as check-in requirements and two-way confirmations. The relatively broad metric of “earning customers’ trust” has been raised to an unprecedented level, becoming the new work objective for agents like Yang Xue.

At the end of March, Peng Yongdong, Chairman and CEO of Shell Holdings Co., Ltd., issued an internal letter titled “Consumer-Centered: Rebuilding Our Organization,” announcing that the company would launch a round of systematic architecture adjustments. The changes involve multiple areas, including the group governance structure, regional management system, business segment delineation, and the cadre appointment mechanism.

In this 10,000-word letter, Peng Yongdong instructs all managers—especially managers on the front line—that they must go deeper into the front line, get closer to agents, and stay close to consumers, directly participating in business execution. As for Peng Yongdong himself, he personally sits at the helm of Lianjia in Beijing, leading the exploration of a new model for the company’s future development.

“We don’t have a choice.” Peng Yongdong said that when the real estate market enters a phase of differentiation and volatility, what buyers worry about most is “buying the wrong home,” and what sellers care about most is “whether someone truly understands my home and helps me sell it well.” “Whoever can maintain a neutral view of the market, and who can stand more firmly on the side of consumers, helping them make better choices—only then can they truly create value.”

A major overhaul

An employee of Shell told the Economic Observer that before this, everyone had only heard sporadically that the company planned to promote change, but no one expected the magnitude of the adjustments to be this big.

First, at the group level, Shell set up a transformation management committee led by Peng Yongdong with senior vice presidents participating. It is responsible for breaking down departmental silos and rebuilding the business architecture, the evaluation and incentive system, and the mechanism governing how resources flow. At the same time, it established five special management committees—human capital, strategy and operations, production and research, safety, and culture and discipline—strengthening the group’s vertical management of key operational elements.

Second, Shell reorganized its back-office support departments. The original production-and-research affairs line was split into an independent product affairs line and a research and development affairs line. It also formed a General Cadre Department, incorporating the functions of the Human Resources Organization Department in full, with a particular emphasis that cadres must “sink down to the front line.”

Third, Shell abolished the previous two major regions in the north and south. It will switch to direct group management of the 10 regions: Chengdu, Chongqing, Guangzhou, Hangzhou, Nanjing, Shenzhen, Suzhou, Tianjin, Wuhan, and Xi’an. Senior vice president Li Fengyan will serve as Chief Operating Officer for the cities, responsible for overall operation and management of the 10 regions.

Shanghai became an independent battle zone. Huang Yueping, former general manager of Suzhou, was promoted to group vice president, fully responsible for the overall operations and management of Lianjia Shanghai. Given that Shanghai is a bellwether for the stock real estate market, Huang Yueping also has the responsibility of exploring a “one-stop integrated residential services” closed-loop model in Shanghai.

Fourth, Lianjia Beijing became the headquarters for this business transformation. Peng Yongdong personally sits there. Lianjia Beijing established a strategic committee and set up a professional middle platform, an Eastern region, and a Western region. These were led by former Beijing Lianjia general manager Hao Yufeng, former Whole-Renovation Beijing general manager Liang Lei, and former Huiju Beijing general manager Zhang Shanshan, respectively. At the city level, they integrated three business segments: real estate transactions (new homes and secondhand homes), Huiju (rentals), and whole-renovation.

Multiple people familiar with Shell’s internal matters said the company’s transformation is still in its early stages. Although the architecture framework and personnel appointments have been formally announced, it will still take some time before the adjustment is fully implemented and completed.

Aside from Lianjia Beijing, where Peng Yongdong personally sits at the helm, the 10 regions and Shanghai, in principle, maintain the existing business operating order. Going forward, new exploratory integration will be carried out for “a three-in-one” model of new homes, secondhand homes, and residential services, based on the market characteristics of each region and city.

It is understood that, in terms of owner services, Lianjia Beijing has begun small-scale pilots for multiple new products, including automatic deal-making at owners’ private-domain base prices, Open Day centralized home viewings, agents letting owners select from recommendation lists on their own, and AI-generated competitive analysis and pricing recommendations.

Redefine

In Peng Yongdong’s view, the core problems consumers face today are not that there is insufficient real estate information, but rather information overload; not that the transaction process itself is the problem, but that the transaction decision itself is. “When we talk today about ‘meeting consumer needs,’ in essence this is no longer the kind of simple needs fulfillment of the past. Instead, we need to rebuild our service capabilities around consumers’ new decision-making methods, their risk perceptions, information acquisition habits, and housing expectations. At the same time, we also need to rebuild our content system, product system, and organizational approach around the value of long-term customers.”

A store manager at Lianjia Beijing told the Economic Observer that the performance at its outlet has declined in a way that is clearly visible. Both the new home and secondhand home businesses have been affected. Under the previous mechanism, most agents were in a “doing little, achieving nothing” state. Therefore, “everyone is full of expectations for this reform.”

Shell’s launch of a large-scale strategy and architecture adjustment is driven both by external market pressure as the real estate industry moves from the incremental era into the stock/volume era, and by internal real-world reasons: revenue and profit targets faced pressure as well.

Data from the National Bureau of Statistics shows that in 2025, the sales area of newly built commodity housing nationwide fell by 8.7% year over year, and the year-on-year decline for the first two months of 2026 was 13.5%.

A person in the intermediary industry in a first-tier city told the Economic Observer that this year’s first quarter showed that secondhand home transaction volume in their city performed reasonably well. For listings priced at RMB 3 million and below, their share of transactions exceeded half; for listings priced at RMB 5 million and below, their share exceeded 80%. The commission income that intermediary companies actually earn is not ideal. The commission rate for new home transactions is relatively higher, but some outlets or agents, to secure customer resources, may promise rebate commissions to customers, further lowering deal profits. The traditional real estate intermediary model has been deeply over-optimized and crowded out, and new profit channels are needed.

Shell’s 2025 performance report shows that the company’s total transaction value (GTV) decreased 5% year over year. Among this, the transaction value for stock/secondhand homes decreased 4.2%, and the transaction value for new homes decreased 8.2%. Although net revenue recorded a modest increase of 1.2%, GAAP net profit fell 26.7% year over year, and non-GAAP net profit fell 30.4%.

Besides pressure on performance, Shell also faces many issues with its internal operating mechanisms. In an internal letter, Peng Yongdong frankly acknowledged that Shell has “an illness of big organizations”—thick departmental walls, processes that are more important than common sense, and piles of complex metrics that conceal the true creation of value.

An agent at Shell believes that when performance in the local city or at the outlet is under pressure, evaluations of agents are easy to become mere formality. For example, evaluating how many customers an agent contacts in a day, or how many self-media contents they publish.

Against this backdrop, Shell faces two core tasks. On the one hand, based on performance in 2025, the contribution share of Shell’s non-property transaction businesses is rising. Shell needs to explore more possibilities by leveraging the coordinated development of transaction, rental, and renovation businesses.

On the other hand, from the perspective of a single business line, regardless of property transactions, home rentals, or home renovation, these are still areas heavily criticized by the market. Shell needs to reshape core service capabilities, repair the trust relationship with customers, and unlock more potential performance.

Peng Yongdong said in the internal letter that the reason Shell was able to drive industry transformation in its first phase is fundamentally based on collaboration—through the ACN agent collaboration network, the authentic listing system, and the platform-based collaboration model. This enabled real estate transactions, for the first time, to have the foundation for large-scale collaborative cooperation, allowing previously fragmented and inefficient transaction relationships to operate on a more transparent platform.

But as of today, the existing collaboration model is no longer able to meet the development needs of the industry and the company. According to Peng Yongdong’s vision, in the new collaboration ecosystem, stores will be an important minimum unit of operation. In the future, every store will need to answer one question: how to strengthen its capabilities in serving consumers, operating listings, and providing community services.

Therefore, Peng Yongdong believes the ACN system must be upgraded. In the future, those joining the ACN system will not only include real estate agents. They will also include consultative service providers for customers; specialized service providers who solve special issues such as schools, communities, loans, and policies; service providers who maintain relationships with homeowners under long-term delegation; and even new collaborators formed around different scenarios such as home renovation, rentals, asset management, and community services. In the future ACN system, what will be connected will no longer be just a single property transaction at a time, but a complete set of integrated residential services.