One impact of globalisation has been the expansion of higher education to meet changing current socio-economic and political requirements. This expansion places considerable stress on the public purse and many states have turned to alternative solutions. In China, a new phenomenon has emerged: independent higher education institutions that complement public and private institutions in helping to cater for the expanded numbers of students. These independent institutions are formed through partnerships between existing institutions and the business sector. After analysing the political, socio-economic and cultural contexts that shape the policy of developing independent institutions, this paper explores the dilemmas and challenges that have arisen at the implementation level and critiques some of the solutions that have been found.