1.) Replace Kodi's default arial.ttf ( or add ) a font that has full unicode support. Most tutorials online use DejaVuSans+DriodSansFallback.ttf. Unfortunately the post I found had a faulty link, but a bit of quick googling showed it was available here:
DejaVu Sans Font Free by DejaVu Fonts | Font Squirrel
2.) Place the .ttf file in Kodi's "Fonts" folder. Depending on your platform this can be in different places. Here are the common ones I've found:
(For OSX, the Fonts folder wasn't there, so I had to create it).
3.) Choose the font in: Settings>Video>Subtitles>Font for use for Subtitles.
4.) Choose the right character set: Settings>Video>Subtitles>Character Set (for Chinese I used "Chinese Simplified (GBK)". Without this step, you will get garbage output, regardless of the font.
5.) Optional: Add the language you'd like to Download for, if you use the subtitle downloaders, which are quite helpful.
If any options don't appear, make sure you're in the "Expert" mode for the settings.
If you're seeing BOXES for the text, then your font doesn't support the right character set, change your font.
If you're seeing GARBAGE for the test, then you haven't chosen the correct character in the settings. Choose the correct one.