1. It's so so wrong, but you need to encode the data before passing to to XML::Smart. You seem to be doing that already.

2. You need to pass decode => 1 to save.

use strict;
use warnings;

use Encode     qw( encode_utf8 );
use XML::Smart qw( );

my $text = chr(0xC9);
my $utf8 = encode_utf8($text);

my $doc = XML::Smart->new('<?xml version="1.0" encoding="UTF-8"?><root
+></root>');
$doc->{root}{node}{CONTENT} = $utf8;
$doc->save('a.xml', decode=>1);
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