During the past decade, Asia--traditionally one of the largest exporters of mobile students--has experienced major changes in student mobility within higher education. As the worldwide competition for international students has escalated, many Asian countries have adopted a wide range of mechanisms and strategies in facilitating student mobility. This paper argues that although most Asian nations face a problem of net outflow of students to Western countries, a trend of regionalization or horizontal mobility of students within the region is emerging. As the Asian countries mainly compete for the same pool of students in the region, the competition will intensify. Therefore, the role of leading universities in the West in helping to attract international students to Asia in the form of transnational higher education has become problematic. The growing competition for international students between domestic and foreign higher education institutions poses new governance challenges for host countries in Asia.