Kindly, a lot of people are upset about my comment because they're American and have never worked with (or in particular, for) Chinese professionals. Losing face plays a very different role for them than mere embarrassment which is the closest analog in western contexts. For example read this[1].
Individualism does explain many aspects of American culture as do other cultural traits, such as puritanism, a focus on hypocrisy, etc. Face is just one of those aspects of Chinese culture westerns don't really understand unless they've had exposure to it. It however explains many things about modern Chinese culture that are hard to fathom otherwise.
How does your example sound funny?