"When they said Canada, I thought it would be up in the mountains somewhere."-Marilyn Monroe

"I don't even know what street Canada is on."-Al Capone

A great way to see the difference between a Canadian and an American is for the American to tell a Canadian there's no difference at all. The American probably means it as a compliment. But the Canadian is insulted, and the American bewildered.

Now with the North American Free Trade Agreement encouraging U.S. companies to look beyond their borders, the lesson to be learned is simple: Canadians feel different from their neighbors to the south and want that difference recognized.

U.S. companies who think they can simply do business the same way in both countries risk learning a lesson the hard way.

Just ask Shelly Ambrose, VP and co-creative director of the Toronto office of J. Walter Thompson Co. She bristles at any assumption that Canadians are simply Americans living north of the 49th parallel, and that what works in the U.S. should fit Canada.

"We have specific marketing conditions in this country," Ms. Ambrose said. "We are temperamentally different from Americans and we have governmental regulations which differ from the United States."

Learning the hard way

It's not an easy lesson to learn; take Wal-Mart Stores, for example. The gargantuan retailer stepped into the Canadian market when it bought 122 Woolco stores in 1994, but stubbed a few toes.

As Canada's main weekly newsmagazine, Maclean's, wrote at the time: "We may look like Americans and we may placidly consume American culture, but Canada, as the fellas from Wal-Mart are just starting to grasp, is a whole different kettle of crawfish."

Wal-Mart's first misstep was over the language of advertising and the Canadian laws governing it. For years Wal-Mart had been profiting from Canadian dollars that flowed across the border and it responded by sending direct mail advertisements into Canada.

Wal-Mart's advertising was in English only-which violated a 1977 Qu?bec law which says that most advertising should be in French. Although Wal-Mart's ads were clearly against the law, nobody made a fuss until Wal-Mart bought Woolco.

That's when "the rules changed," said Edward Gould, managing partner of National Public Relations. Mr. Gould, a Toronto marketing executive who now handles Wal-Mart Canada's communications, said Canadian attitudes toward Wal-Mart changed very quickly.

"Within the first 90 days following Wal-Mart's announcement that they were coming to Canada, the focus changed from Wal-Mart being a destination for customer value across the border to how would Wal-Mart conduct itself as a corporate citizen in Canada."

Bill Woodard, Wal-Mart's VP and chief administrative officer, was one of the leaders of the transition team. He admits the mailings and a subsequent English-only message from the home office were goofs. "We sent out a message to our assistant managers and it didn't get translated." But Mr. Woodard, who later set up a committee to oversee language issues in Wal-Mart's Quebec operation, added, "It created more of a PR issue than a problem with our people."

Under Mr. Gould's tutelage, Wal-Mart has worked hard to calm the sensitivities of both Quebecers and Canadians in general. Realizing that Quebecers were more than a little touchy about language, Wal-Mart quickly went French in its Quebec operations. Now its 22 Quebec stores are operated entirely in French, including internal communications and all of Wal-Mart's considerable computer operations.

As Mr. Gould said, "from the moment you park your car until you get your receipt at the cashier, it's all in French."

Wal-Mart's Mr. Woodard said the company worked hard to become legally correct in Canada and has tried to take it one step further. "It's an ongoing situation to make sure that you're legal and to make sure you're culturally correct."

Mr. Woodard added, "Being culturally correct is more important to your customer than being legally correct."

Surviving in the marketplace

The Canadian marketplace has been difficult in recent years for another major foreign retailer, Marks & Spencer from the U.K. Clive Coombes, general manager of store operations for Toronto-based Marks & Spencer Canada, said the Canadian operation was losing money until about three years ago when the number of stores was cut to the current 48 across the country from 90 at the peak of expansion in 1988.

The problems were "purely Canadian," Mr. Coombes said, explaining that the U.K. stores remained profitable. In Canada, "we were over-optimistic at what we could achieve. We tried to adopt a format from the U.K. and apply it in Canada without properly evaluating the differences in the marketplace."

Marketplace differences have also checked the expansion of the Home Depot's Canadian operation. A June 23 press statement by Home Depot Canada President Stephen Bebis confirmed the company would scale back its expansion to eight from nine new stores in 1995 and to five from 10 in 1996, even though it is growing at even more aggressive rates than its U.S. counterpart.

A crucial difference between the U.S. and Canada according to National's Mr. Gould is "the insatiable need of the Canadian media to explain what was happening." This scrutiny threw Wal-Mart executives off-balance, but Mr. Gould convinced the traditionally closed-mouthed Wal-Mart management to open up to the Canadian media and to "share the plan."

This is especially important because some Canadians, like some Americans, are petrified at the idea of the world's largest retailer rolling through town and ravaging Main Street.

But "sharing the plan" seems to be working. After a flurry of negative coverage, Wal-Mart is getting much easier treatment in the Canadian press. As Mr. Gould puts it: "Canadians are not truly anti-American. They like many things, American or European; they just don't like to feel threatened that something is going to be taken away from them. American firms simply have to respect the unique cultural differences of the new country."

Of course all the goodwill in the world is not going to make everything easy for U.S. firms opening in the vastness of Canada. For one thing, there's the requirement for bilingual and metric product packaging.

Wal-Mart's Mr. Woodard put it this way: "We had a real opportunity getting 70,000 [stock-keeping units] bilingually packaged and spread from St. John's to Vancouver."

For those unfamiliar with Canadian geography, the distance between St. John's and Vancouver is more than 3,000 miles.

For those unfamiliar with Wal-Mart Speak, "opportunity" is what the rest of us would call a problem.

Don Angus contributed to this story.