I did virtually the same thing, but I took Ghent, Brussels and not Oudenaerd and charleroi, and I took Rethel to Sedan, Rochefort and Huy. It was actually my first campaign. I kind of expected them to keep fighting and was a little disappointed when the game ended.

yes after some turns they lose the areas and for that they lose morale

Oh wow. so the encirclement brings moral down by a ton? that's really encouraging. to bring it down from such high support, does that mean the more companies are surrounded the more demoralized they become?

yes I won the game after the encirclement was done after like 3 turns. and then the german morale went to 0

did they surrender like they would have in real life?

good job! did you win the game using that??