The developed countries of EU have entered the period of “reindustrialization”. In this process, the modern service industry represented by Knowledge Intensive Service plays an important role in increasing productivity and creating employment opportunities. As the vital force of EU modern service industry, the small and mediumsized enterprises have made remarkable achievements in promoting economic development through active and effective innovation. On the basis of clarifying a few confusing definitions like Highend Service Industry and Knowledge Intensive Service, the paper analyzes the latest data including the reports on the newest investigation of EU innovation, elaborates on the status quo of EU modern service industry, summarizes the importance of EU modern service industry, demonstrates new features in the innovation of EU modern service industry against the background of EU “reindustrialization” and related environmental factors, and finally proposes strategies and suggestions of developing China’s Highend Service Industry in relation to actual domestic issues under the background of China’s economic transition.