Quite simply, the M16 faced more competition. In the West, there existed multiple rifles that equipped NATO armies, as well as the nations aligned with the West. The M16 was joined by its predecessor the M14, the Belgian FN FAL(which was often referred to as 'the right arm of the free world' due to its common adoption in many NATO armies, very nearly including the United States Army until losing out to the M14), the German G3, the Spanish CETME, among others. By contrast, the Warsaw Pact and Chinese industries produced almost exclusively local copies of Soviet small arms, of varying quality instead of developing their own designs(with a larger degree of exception in the case of the Chinese arms industry, with a widening gap as time progressed)