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This post is written for those who use VLC in the language "Chinese Simplified" or "zh-CN".
Solution tested in Windows 7 only.
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VLC 1.1.10 & 1.1.11 still fail to show the subtitles in Chinese Simplified , even if you set encoding be "GB18030" & type be some Chinese Simplified types.
Inspired by an article (http://fangzili.blogspot.com/2011/06/vlc1110.html),I found a temporary solution for this problem.
Solution:
Set encoding be "GB18030",and set TYPE be some CHINESE TRADITIONAL TYPES!
I tested in Windows 7 , both independent *.srt subtitles and the subtitles merged in .mkv video , can be displayed properly in VLC 1.1.10+ versions.
Some examples for CHINESE TRADITIONAL types on my Windows 7 computer : DFKai-SB, Microsoft JhengHei, MingLiU, MingLiU-ExtB, MingLiU_HKSCS, MingLiU_HKSCS-ExtB, PMingLiU, PMingLiU-ExtB.
Hope my post will help.