While Hong Kong has cottoned on to pet pampering with designer dog leashes and jackets, pet-sitting and pet cafes, Japan, as ever, is way ahead of the game. Here, you can get dog shoes and dresses for pets at outrageous prices, or hire pets at day rates, allowing potential owners a trial run.

A service called Catwan, which caters to owners on holiday, even sends photos and descriptions of the bodily functions of cats by e-mail to reassure them that their moggies are staying regular.

A one-day stay in the Daktari animal hotel costs up to 13,000 yen (HK$920), which is more expensive than many of the business hotels in the district. But then dogs need more attention than the average salary man, says self-described veterinary technician Maiko Tamaoki. 'A lot of the animals, especially the dogs, miss their owners when they're away, so we comfort them,' he says.

With its cramped housing and dearth of parks, Japan once trailed far behind in the world league of pet lovers. No longer. The country now has a pet market to match its economic muscle, and is second only to the US in the amount it spends on caring for animals.

The Japan Pet Food Association estimates there are 10.4 million dogs and 8.5 million cats in the country, and that the number of dogs is growing by a rate of 2.4 per cent a year - much faster than humans are reproducing. Some commentators say the pet boom is a reflection of anxieties about Japan's demographic time bomb.

'Japan needs more children,' says sociologist Yoshihisa Yoshida. 'But for various reasons people here seem unwilling to have them. People are worried about the future and women especially are increasingly putting off having children because it's so demanding here. When they do have children they have them late, meaning more one-child families. In the absence of children and grandchildren, pets and other substitutes bring comfort.'

Japan's health ministry announced in June that the fertility rate of Japanese women last year dropped under 1.3 for the first time to 1.28 - well below the rate needed to maintain the population of 127 million. The population is set to fall to just over 100 million by 2050, shrinking the country's labour pool by more than a third and dragging down national wealth.

Bureaucrats are nervously watching the other end of the population pyramid, where life expectancy rates continue to stretch ahead of the rest of the world, meaning the contracting workforce will have to support a growing army of pensioners. By next year, there'll be just two younger workers supporting each retired person, down from 11 in 1960. This is a system headed for collapse.

One solution is to persuade women to have more babies, but many are working longer, having children later and enjoying freedom their mothers never dreamt of. The idea of giving all this up for motherhood in a cramped flat with a workaholic husband, almost two million of whom work more than 60 hours a week, doesn't hold much appeal.

Single women, lonely grandparents and, increasingly, unmarried men are compensating for the lack of human contact by buying dogs, cats and other animals - Japan's third most popular pet is a ferret, and jellyfish have enjoyed a recent boom. According to one survey, some two million reptiles were legally imported into Japan in 1999.

The country seems to have been overrun with chihuahuas, after their appearance in a successful commercial for a consumer finance company, and thousands can be seen poking out of the designer bags of trendy young female shoppers.

Manufacturers, meanwhile, have stepped in to fill the human void with electronic substitutes. Sega Toys has sold millions of robot dogs and nearly 500,000 of its Yumeneko cats in Japan. Takura has had great success with a device called Bow-lingual and its follow-up Meow-lingual, which supposedly translate dog barks and cat meows into human speech. Bandai, the maker of Tamagotchi - the bleeping bird that first swept the world in the mid-90s - has had another big hit with a cuddly toy called PrimoPuel, a talking robot marketed as a comfort product to lonely women.

Japan could embrace mass immigration as a solution to its demographic crisis, but this is problematic. Foreigners have trickled into this still homogenous country at a rate far below the 600,000-plus needed to stop the population from falling. Hidenori Sakanaka, director of the Tokyo Immigration Bureau, said recently that Japan should accept almost 30 million immigrants during the next half century.

Japan has dealt so far with its looming population crisis by avoiding a much-needed national debate, and allowing foreigners to dribble in under a variety of disguises. Young Chinese pay huge fees to universities at which they'll never study, disappearing into the illegal economy. Thousands of foreigners enter on technical trainee visas and help to prop up the small-business sector. About 250,000 people live in fear of being deported.

In the meantime, Japan seems content to robotise many of the jobs that poor workers from third world countries do elsewhere. In the recent hit movie Lost in Translation, staring Bill Murray as a washed-up movie star adrift in a hi-tech Tokyo, the drapes in Murray's hotel room fling themselves open in the morning and his personal trainer is a machine. In the real world, manufacturers such as Sanyo and Matsushita are already marketing robots to care for the elderly, a substitute for the foreign nurses and care workers who do this work in other advanced countries.

Robot health care promises to be one of the big growth industries in Japan in the 21st century. 'Japan seems to be trying to explore all options before it faces the inevitable shortage of people,' says Yoshida. 'Pets and robots are just substitutes, but many people seem to prefer them to the alternatives, which involve a lot of pain and compromise.'

The robots and animal are humanised to make them easier to accept as substitutes for people. Sony's best-selling robot dog Aibo, which means 'companion', is an example. In a recent public relations document, Toyota says it wants its robots to 'have human characteristics, such as being agile, warm and kind, and also intelligent enough to skilfully operate a variety of devices in the areas of personal assistance, care for the elderly, manufacturing and mobility'.

The company says it has developed 'artificial lips that move with the same finesse as human lips, which, together with robot's hands, enables the robots to play trumpets like humans do.'

Many businesses now offer animal services that were once reserved for humans. Tender loving care for the dearly departed at the Tama Dog & Cat Spiritual Home in Tokyo includes a service that combines the ashes of master and pet, provided the master has no relatives.

Dog-lover Mariko Fujita, who calls pets 'the great healer', sees no problem with that. 'My husband left and my two kids are grown up, so I've grown really close to my dog,' she says. 'Sometimes I joke that she's better company than my ex-husband. I would certainly consider bringing my dog with me when I die.' She admits to giving her dog expensive treats and once taking her for a massage. 'Why not?' she asks. 'She's been good to me.'

The rise of pets and robots as human substitutes may smack of a country facing a profound identity crisis, but Gen Kato is not complaining. The director of the Hiroo clinic and owner of 23 other Daktari animal hospitals around Japan, Kato has been a practising vet for more than 35 years and business has never been better.

The reason for his success, he says, is because the hospitals take care of the human-animal bond. 'Technically, we'll treat any kind of animal,' he says. 'Although for larger, wild animals like tigers, lions or elephants, we prefer to make house calls.'