do{
  len = is.read(buffer);
  if (len>0) {
    if(outstring==null) outstring=new StringBuffer();
    outstring.append(new String(buffer,0,len, "UTF8"));
  }
}while(len>0);

do{
  len = is.read(buffer);
  if (len>0) {
    if(outstring==null) outstring=new StringBuffer();
    outstring.append(new String(buffer,0,len, "UTF8"));
  }
}while(len>0);

do{
  len = is.read(buffer);
  if (len>0) {
    if(outstring==null) outstring=new StringBuffer();
    outstring.append(new String(buffer,0,len, "UTF8"));
  }
}while(len>0);

do{
  len = is.read(buffer);
  if (len>0) {
    if(outstring==null) outstring=new StringBuffer();
    outstring.append(new String(buffer,0,len, "UTF8"));
  }
}while(len>0);

do{
  len = is.read(buffer);
  if (len>0) {
    if(outstring==null) outstring=new StringBuffer();
    outstring.append(new String(buffer,0,len, "UTF8"));
  }
}while(len>0);

@Override
  protected void doGet(HttpServletRequest request, HttpServletResponse response)
      throws ServletException, IOException {
    response.setContentType("text/xml; charset=UTF-8");
    PrintWriter pw = response.getWriter();
    pw.write("<?xml version="1.0" encoding="UTF-8"?>");
    pw.write("<data>Ku00F6nigsberger</data>");
    pw.flush();
    pw.close();
  }

4b c3 b6 6e 69 67 73 62 65 72 67 65 72

public static void main(String[] args) throws IOException {
    String konigsberger = "Ku00F6nigsberger";
    dumpHex(System.out, konigsberger.getBytes("UTF-8"));
  }

  private static void dumpHex(PrintStream out, byte[] data) {
    for (byte b : data) {
      out.format("%02x ", b);
    }
    out.println();
  }

response.setContentType("text/html; charset=UTF-8");
response.setCharacterEncoding("UTF-8");
ServletOutputStream out =response.getOutputStream();
out.write(output.getBytes("UTF-8"));

<test>
&#228;
&#252;
&#229;
</test>

<test>
ä
ü
å
</test>

byte[] k =xml.getBytes(UTF8_CHARSET); // xml is the string with unicode content.  getBytes("UTF-16") encodes given String into a sequence of bytes and returns an array of bytes. you can use xml.getBytes(UTF-16); for utf-16 encoding

response.setContentType("text/xml");
response.setContentLength(k.length);
response.getOutputStream().write(k);
response.getOutputStream().flush();
response.getOutputStream().close();