The Mayo Clinic describes a cyst as a sac filled with air, fluid or other material. The Shih Tzu is thought to be prone to sebaceous cysts--also called epidermal cysts and epidermal inclusion cysts. The Pekinese is considered to be prone to interdigital cysts, a type of cyst that occurs between the toes.
Sebaceous cysts are believed to result from an obstruction of the hair follicles, leading to abnormal accumulations of sebum (the oily substance the sebaceous glands produce to lubricate the skin). Interdigital cysts are the result of inflammatory changes in the sweat glands of the feet.
Other issues or conditions can produce cyst-like papules, including warts, canine acne, dermatitis, bites and stings, and drug or injection reactions as well as skin cancers.
With their long double coats, the Shih Tzu and the Pekinese must be groomed regularly. The owner should feel and examine the skin through the dog's fur, being mindful of any changes. If the dog has any form of skin cyst, the owner should take care not to graze or rip it during grooming.
While sebaceous cysts and interdigital cysts are not usually life-threatening, they can become infected. Further, what appears to be a simple cyst might be something far more serious. Take your dog to a veterinarian if you find any lumps or unusual bumps on its skin.