I have a valid German work permit visa for 6 months. However, I have never used that visa as the project for which I had it for got cancelled. I have applied for a Finland business visa within that duration for another project. But, the Finland consulate asked to cancel the current German work permit visa before proceeding on the Finland business visa.
Why is it required to cancel my existing work permit visa?
There would be no point in issuing a short-stay Schengen visa as long as you have a valid national type D visa from Germany, because the type D visa already allows you to do everything a short-stay visa would allow you to do, including a short visit to Finland.
The Finnish consulate apparently has rules not to issue visas that would be pointless. (We haven't been able to locate the exact chapter and verse in the Schengen rules that say they must refuse such an application, but presumably they at least don't want the PR fallout of taking application fees from travelers who don't need what they'd be paying for). They're helpfully suggesting that they could cancel the German visa if you really really want a Finnish one instead -- but you shouldn't need one.
The work permit part of what you have may be specific to one client, but a long-stay visa is a long-stay visa as far as the Schengen rules are concerned, and those are what Finnish border guards (and border guards elsewhere in the Schengen area) are following.
