Sorry, but this is not jqGrid problem and this issue is discussed many times here:
Short:
1. Your html page should have appropriate meta for your language.
2. When you insert/update/delete your connection should have the appropriate caharcter set – in mysql this is done with SET NAMES command before doing evrething.
3. Your database should be encoded in the appropriate way.
4. When you send the output to the grid you should set the appropriate headers.
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