You should read FAQ number 10.

By default, exiftool assumes all input is in UTF-8 and converts it appropriately for the type of information you are writing (adding "UNICODE\0" as necessary, etc).

Writing non-ASCII characters to ASCII tags is possible, and exiftool passes through these characters without translation. This is not advisable though, because it is very likely that these characters may display differently on different systems. I would imagine that most software would display them according to the default codepage for that locale, (which would be 8859-1 for the majority of systems in North America for instance).

- Phil