During the past two decades, a growing number of universities, mainly from developed countries, have established branch campuses in developing countries. From the developing country perspective, attracting foreign universities can help mitigate financial constraints and capacity shortages that impair the state's ability to provide greater access to higher education, while also improving teaching and research in general. However, foreign universities may also be detrimental if they crowd out their domestic counterparts. We explore different scenarios and policy options for developing countries aiming to attract foreign universities, building upon a review of four case studies from Chile, China, Kazakhstan, and Malaysia. Our analysis illustrates how host countries can provide incentives to align incoming foreign universities to complement and strengthen the areas of weakness in their higher education systems. We also reflect on how policy-makers can deal with the challenges associated with the dual embeddedness of international branch campuses.