WordPress and Woocommerce Chinese Permalink

Turns out this was caused by IIS. If you already have <action type="Rewrite" url="index.php" /> in your web.config, that should be enough with this addition to your index.php in the WordPress root installation directory

if (isset($_SERVER['UNENCODED_URL'])) {
$_SERVER['REQUEST_URI'] = $_SERVER['UNENCODED_URL'];
}

The php code is quite self explanatory.