GUANGZHOU, China (Reuters) - If you're a dog in China then you'd better hope to be of the cute and furry variety sold in pet shops rather than a homely-looking mutt sold at a live animal market as the main ingredient in dog meat stew.
"We still eat dog, but not this kind of dog," Liu Ming, a pet shop salesman said, pointing to a toffee-colored puppy with floppy ears on sale for about 500 yuan or $70.
"We eat much bigger dogs."
Keeping pets is becoming all the rage among the affluent in China, even though some Chinese still consume dog and cat meat.
Combined spending on pet food and pet care in China will be worth an estimated $870 million in 2008, according to Euromonitor International. That's up roughly 15 percent from the $757 million spent in 2007.
"In China, more and more people are raising pets. It's not as difficult as before," Liu said, as curious onlookers crowded his stall in a dusty street of the southern boomtown of Guangzhou.
One thing is certain: the old belief that pets are a bourgeois indulgence held during the rule of Mao Zedong no longer has currency in the booming economy of the world's most populous country.
In the marquee cities of Beijing, Shanghai, and Guangzhou, a growing nouveau-riche class even sees pets -- particularly dogs -- as fashion items, outfitting them in designer clothing, paying for spa treatments and dyeing their fur unnatural colors.
That trend, experts say, is a stark contrast to the tradition of eating everything from silkworms to pangolins.
"In Beijing, there's a huge market with pitiful dogs waiting in cages to be sold as meat, and literally a few yards away standard poodles dyed in all colors of the rainbow," said Jill Robinson, CEO of Animals Asia Foundation, a Hong-Kong based animal welfare charity.
China's thriving industry of fake designer goods is even taking on designer doggywear. In Guangzhou, hawkers sell fake Louis Vuitton dog carriers as a dog in a faux Louis Vuitton sweater naps nearby on the dusty sidewalk.
There were nearly 11 billion pets in China in 2007, according to Euromonitor International, up from 10.8 billion in 2006. The bulk of the animals were birds, fish and reptiles.
China estimates it has 150 million pet dogs. Statistics are scant on the burgeoning industry as many pets are unregistered. Euromonitor puts that figure at 26.8 million, and says China has 10.7 million pet cats.
Despite the emergence of Western-style pet rearing, dog meat remains a popular winter cuisine in parts of China.
Beijing has more than 120 restaurants serving dog meat, although recent media reports say that many are closing as the city tries to change its image before it hosts the Olympic Games in August.
Known as "fragrant meat," dog meat is purported to have medicinal benefits and improve blood circulation in winter.
The meat, culled from farmed animals that are mixtures of Chinese dogs and St. Bernards or other big breeds, are served stewed, roasted, or sliced in a hot pot. Dogs with collars are sometimes seen at live animal markets, according to Animals Asia Foundation, suggesting runaways sometimes end up on the dinner table.
China's pet industry is still tiny compared to its counterpart in the United States where owners are projected to spend over $43 billion on their pets this year.
But experts say the industry's potential in China is enormous as incomes rise and more of the country's elite "DINK" couples -- double income, no kids -- see pets as less needy child-substitutes while they balance white-collar careers with family life.
Spending on pet food and pet care is projected to reach $995 million by 2009, up over 100 percent from $463 million in 2004, experts say.
Effem Foods (Beijing) Co Ltd, a subsidiary of family-owned U.S. food giant Mars -- owners of Pedigree and Whiskas brands-- claims 53.8 percent of dog and cat food sales in 2006, Euromonitor says.
Nestle SA, the world's largest food group, is in second place with 17.7 percent, and U.S. consumer product giant Proctor and Gamble in third with 1.7 percent.
Nestle set up a production site in Tianjin in 2007 to be more competitive locally, a move that some analysts suggest may not be wise given a spate of food safety scandals in China. Last year, 800 metric tons of China-sourced wheat gluten tainted with dangerous melamine was sold to U.S. pet food makers, triggering millions of recalls there and killing over 200 cats and 100 dogs.
"There are industry sources who express doubts about local production of international brands," said Michelle Huang, an analyst at Euromonitor.
"They point out that a pricing strategy is not a sound basis for expansion, especially within premium products, since pet owners may perceive imported brands to contain higher-quality ingredients than locally sourced and produced varieties."
Despite popular perceptions that dogs and cats are poorly treated in China compared to Western countries, both animals have long histories there.
Some scientists believe dogs emerged 15,000 years ago from a group of wolves tamed in China. Since ancient times, cats have been valued for their pest-catching skills.
The region's pet craze has also caught on in Hong Kong, which has around 200,000 registered dogs, according to government data, though a dog serial killer -- dubbed the Bowen Road Poisoner -- has haunted the city for 19 years, dropping poisoned meat on walking trails which kills most dogs that eat it.
But the hard life for dogs and cats in greater China could be changing as Western pet culture takes root.
In December, Taiwan legislators passed a law that calls for fines of up to $7,730 on sellers of dog meat, a winter staple once popular in military units.
"The animal markets keep getting smaller and smaller," said Marek Michalski, 43, a Polish trader in Guangzhou who spoke at a cafe near a market where live cats are sold as food.
"Many Chinese I know say if they buy a cat like that at the market, they'll set it free."
Editing by Megan Goldin