"City want to spend millions to buy players to build a team," he said.
"They won the FA Cup but if they only want to do that, they will not be as strong as United. United work on the long term, with young talent."
Asked about criticisms of Manchester by City's Carlos Tevez and Mario Balotelli Cantona said: "I had a great time here and a great time in the city."
During the close season Tevez told an Argentine chat show he would never return to Manchester, while Balotelli has also had his problems with the north-west.
"It depends upon where they come from. If they come from Milan, maybe. Also it depends why they have come," Cantona insisted.
"The most important thing for me was to play for the best club in the world, with the best players in the world.
"I was a professional player. I didn't try to find a city to enjoy it. The greatest time you can have is on the pitch."
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City's multi-million pound squad has been further strengthened this summer by the signings of Sergio Aguero, Gael Clichy and Stefan Savic, with Arsenal midfielder Samir Nasri also targeted.
However, last season manager Roberto Martini highlighted a lack of players with first-team potential in the club's academy.
"United are still one of the best clubs in the world," Cantona said. "When a player leaves, you think the club won't win any more. But they still do.
"They have a great history and they work a lot every day so any player can be replaced."
The Frenchman, now 45, is back at Old Trafford in his capacity as director of the New York Cosmos, and will coach the team against United in a testimonial for Paul Scholes on Friday.
"I knew Paul when he was young," said Cantona. "He started here with us. He has been a great player. He could play anywhere, midfield, up front, he could score goals, make them, defend, tackle. He could do anything.
"He is a great player. I am very proud of him. But you can replace any player, especially at a club like Manchester United, with a great manager like [Sir Alex] Ferguson.
"Maybe I will die before Sir Alex. I am sure he will be on the bench forever. It is his life."
Manchester United legend Eric Cantona says Manchester City need to focus on their academy to win major honours.